Healthy global and local macro-data buoys markets (Weekly Review)

Mumbai, Dec 26 (IANS) Healthy macro-data, coupled with the government’s efforts to build consensus on the bankruptcy bill and renewed interest of foreign investors, fuelled the rise of the Indian equity markets during the just concluded weekly trade.

Both the bellwether indices of the Indian equity markets gained over one percent each during the week under review.

The barometer 30-scrip sensitive index (S&P Sensex) of the Bombay Stock Exchange (BSE), rose 319.49 points or 1.25 percent to 25,838.71 points from its previous weekly close at 25,519.22 points.

Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) gained during the week under review. It ended higher by 99.1 points or 1.27 percent to 7,861.05 points.

“Markets continued to rise for a second week in a row led by strong data coming out of the US,” Vaibhav Agarwal, vice president and research head at Angel Broking, told IANS.

“New home sales data rose for a second consecutive month in November, while personal spending also rose by 0.3 percent.”

Global markets rallied, after a series of key macro-economic data indicated healthy growth in the world’s largest economy, which is a major trading partner of India.

“With the uncertainty of the fed behind us, volatility has reduced sharply since then,” Agarwal added.

The India VIX (volatility index) has declined by more than 20 percent to 13.7, as against 17.8 on December 14 — when it peaked ahead of the FOMC (Federal Open Market Committee) meet.

The US Fed’s FOMC had decided to hike key interest rates by 25 basis points. This had led to a selling frenzy by the foreign investors in the Indian equity markets.

Even the domestic macro economic data which showed a narrowing of current account deficit (CAD) for quarter ended September 30, 2015, improved sentiments.

In addition, government’s efforts to build a consensus to pass the crucial bankruptcy bill during the last days of the parliament’s winter session restored investors’ confidence.

The bill has been referred to a joint parliamentary committee which will iron out any differences on the legislation before the budget session which is slated for February.

“The decisive action on the bankruptcy bill by sending it to a joint parliamentary committee gave a boost to the markets,” said Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services.

Besides, renewed buying interest by foreign portfolio investors (FPIs) and strong rupee improved the market’s sentiments.

“Rebound in commodity and crude prices after sharp sell off, renewed buying interest by FPIs and strong rupee help the sentiments of the market,” said Sandeep Sharma, equity research analyst with Hem Securities.

The National Securities Depository Limited (NSDL) figures showed that the FPIs were net buyers during the week ended December 24. They bought Rs.961.76 crore or $145.04 million in equity and debt markets from December 21-24.

The data with stock exchanges showed that the FPIs bought stocks worth Rs.479.89 crore in the week ended December 24.

Nevertheless, the FPIs had taken out Rs.23,352 crore during the period August-September. In November alone, the foreign investors off-loaded stocks worth around Rs.9,000 crore.

Not just equities, even the rupee rose on a weekly basis. It strengthened by 19 paise at 66.21 (December 23) to a US dollar from its previous close of 66.40 (December 18) to a greenback.

However, on the downside the government’s inability to get the crucial GST (Goods and Services Tax) bill passed during the winter session of parliament continued to weigh heavy on investors’ sentiment.

“One big disappointment locally was on GST. The winter session of parliament was not very fruitful and dashed the hopes that GST could become a reality from 1st April 2016,” Pankaj Sharma, head for equities with Equirus Securities told IANS.

“Now, a bigger worry is that the way political narrative is evolving, it doesn’t look very easy how the contentious issues like this would be resolved politically.”

Moreover, lack of investors participation in the cash markets segment during the week under review subdued sentiments.

Data with the stock exchanges showed that the volumes in cash markets across key bellwether indices eased to Rs.16,000 crore in the last couple of trading sessions from a robust Rs.20,000 crore level seen last week.

(Rohit Vaid can be contacted at rohit.v@ians.in)

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