Key Indian equity indices rally after previous flat week (Market Review)

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Mumbai, July 16 (IANS) Indian equity markets had a decent run during the week ended Friday, with key indices gaining over 2.5 per cent, even though some counters succumbed to profit booking and weak macro-economic data, notably on inflation and low factory output growth.

The two key equity indices — the sensitive index (Sensex) of the BSE and the Nifty of the National Stock Exchange (NSE) — gained 2.6 per cent each, even though they ended in the red on the last day of the trading week.

The 30-scrip Sensex closed the week’s trade with a substantial gain of 709.60 points or 2.62 per cent at 27,836.50 points.

Similarly, the 51-scrip NSE Nifty surged to 8,541.40 points — up 218.20 points or 2.62 per cent.

“This was one of those weeks when the markets did very well but somehow it doesn’t feel like that. May be it is because of IT (information technology) results, especially Infosys, and because of which the week ended on a low note,” Pankaj Sharma, Head of Equities, Equirus Securities, told IANS.

“But, except for how Infosys cracked after the results on Friday morning, things were not really that bad overall and the markets were up more than two-and-a-half per cent this week.”

The benchmark indices had a buoyant start to the week as investors’ sentiments perked up on positive global cues and healthy inflow of foreign funds. Both indices surged to their new 11-month closing high levels, supported by the healthy progress of monsoon season, short covering and a strong rupee.

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The markets surged in sync with their Asian peers, especially the Japanese markets, supported by a healthy rise in the US jobs market. European stocks, too, gained on hopes of more monetary easing measures by central banks.

Further, value buying after last week’s falls and expectations of recapitalisation of state-run banks also enhanced the risk-taking appetite of investors.

But, the positive sentiment was soon curbed as investors resorted to booking profits on the back of disappointing macro-economic inflation data and lower crude oil prices, which dragged the markets to end the week’s trade in the negative territory.

The macro-economic inflation data showed a rise in June’s inflation levels, which dampened hopes of a rate cut by the Reserve Bank of India (RBI). The data further disclosed that the consumer price index (CPI) in June rose to 5.77 per cent from 5.76 per cent in May due to a rise in food prices.

The other key macro-economic data — Index of Industrial Production (IIP) — revealed a marginal increase of just 1.2 per cent year-on-year (YoY) in May 2016.

Another discouraging data pointed to the wholesale inflation (WPI) surging to a 20-month high of 1.62 per cent in June from 0.79 per cent in May.

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Besides, investors’ confidence was eroded due to the quarterly results IT major Infosys released on Friday, which showed a decline in its annual revenue guidance for fiscal 2016-17 to 10-11.5 per cent from 11.8-13.8 per cent projected in April, resulting in the company’s scrip plunging.

Moreover, mixed global cues and apprehensions relating to further quarterly results aided to cap gains and dragged the markets lower on the last day of trade.

However, expectations of the Goods and Services Tax (GST) bill passing in the monsoon session of parliament beginning Monday helped pare some losses.

“Week-long gains were pared on Friday as a soft start to the earnings season prompted investors to skim profits,” Anand James, Chief Market Strategist at Geojit BNP Paribas Financial Services, told IANS.

“The terror attack in Nice also ensured that investors were largely risk averse on Friday, but the week still registered handsome gains in GST-themed stocks as well as state-owned banks.”

According to Dhruv Desai, Director and Chief Operating Officer of Tradebulls, the markets traded with firm sentiments last week mainly due to buying support from traders and positive global markets.

“On the domestic front, sentiments got some support with global ratings agency Crisil report that India’s economy will grow at 7.9 per cent in the current financial year compared with 7.6 per cent in fiscal 2016. If the country receives normal (average) monsoon, it will boost agriculture growth and lift rural demand,” Desai said.

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“Good money inflow was seen by FIIs (foreign institutional investors) in the Indian market last week which supported the firm sentiments throughout the week.”

Sector-wise, the metal index was up 8.31 per cent, the telecom index was up 5.59 per cent, and the banking index was up 5.27 per cent.

On the other hand, the IT index was down by 3.56 per cent and the technology, media and entertainment (TECK) index was down by 1.97 per cent.

Among the individual Sensex stocks, Tata Steel was the top gainer at 17.03 per cent, followed by ICICI Bank (9.79 per cent), Maruti Suzuki (7.18 per cent), Bharti Airtel (6.62 per cent) and Adani Ports (6.16 per cent).

The losers were led by Infosys (down 7.46 per cent), Wipro (1.31 per cent), Sun Pharmaceuticals (1.05 per cent), Cipla (0.69 per cent) and PowerGrid (0.62 per cent).

The week witnessed a sizeable influx of foreign funds. Provisional figures from the stock exchanges showed that FIIs bought stocks worth Rs 3,890.35 crore.

Figures from the National Securities Depository (NSDL) showed that foreign portfolio investors were net buyers of equities worth Rs 8,297.40 crore, or $1,235.62 million from July 11-15.

(Porisma Pompi Gogoi can be contacted at [email protected] )



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