Equities recover marginally, indices reclaim lost positions (Market Review)
Mumbai, Nov 26 (IANS) Value buying, coupled with expectation of a lending rate cut and macro-data showing strong economic recovery in the US, buoyed the Indian equity markets during the just concluded weekly trade on Friday.
The slim gains aided the Nifty of the National Stock Exchange (NSE) to reclaim the 8,000-mark, while the 30-scrip sensitive index (Sensex) of the BSE closed above the 26,000 points level.
However, an immense depreciation of the rupee, heightened chances of a US rate hike and prolonged outflow of foreign funds, continued to erode the risk-taking appetite of investors.
Besides, subdued derivatives expiry roll-overs, the logjam in parliament on the demonetisation move and fears of an economic contraction it could cause hampered the upward movement of the key indices.
The BSE Sensex closed the week’s trade with a gain of 166.1 points or 0.64 per cent at 26,316.34 points.
Similarly, the 51-scrip Nifty inched up by 1.55 points or 0.02 per cent to 8,075.65 points.
“Domestic markets witnessed mixed trends on the back of some positive global cues amid November F&O (futures and options) series expiry and weak Indian currency,” D.K. Aggarwal, Chairman and Managing Director, SMC Investments and Advisors, told IANS.
“The expectation of interest rates hike in the US sparked capital outflows from the emerging equity markets, including India.”
A hike in US interest rates can potentially lead foreign portfolio investors (FPI) away from emerging markets such as India. It is also expected to dent the business margins of the corporate sector as access to capital from the US will become more expensive.
In terms of investments, provisional figures from the stock exchanges showed a massive outflow of Rs 5,409.82 crore in foreign funds during the just-concluded week.
Figures from the National Securities Depository (NSDL) disclosed that foreign portfolio investors (FPIs) were net sellers of equities worth Rs 5,22.12 crore, or $865.72 million from November 21-25.
“Indian markets were subdued for most of the week due to FII (foreign institutional investors) selling,” Angel Broking said in a commentary to IANS.
“However, the rally on Friday covered the week’s losses and helped the indices close in the green. Global markets remained subdued on low volumes as US markets were closed on Thursday for Thanksgiving.”
Since November 8, when the government demonetised high denomination currency notes and the surprise victory of Republican Donald Trump in the US Presidential election, the Indian equity markets have seen foreign fund outflows worth Rs 15,952.69 crore (November 9-25).
The outflows had an impact on the Indian rupee, too, which plunged to its record lowest level during the week. It had touched a new intra-day record low of 68.86 to a US dollar on Thursday following a tremendous rise in the dollar worldwide.
During the week, it depreciated by 33 paise to 68.47 against a US dollar from last week’s close of 68.14 to a greenback.
Anindya Banerjee, Associate Vice President for Currency Derivatives with Kotak Securities, explained that rising bond yields in the US and a stronger US dollar overseas negatively impacted EMs (emerging markets) currencies, including the Indian rupee.
According to Dhruv Desai, Director and Chief Operating Officer of Tradebulls, investors remained cautious over concern of India’s demonetisation move, which is expected to pull down gross domestic product (GDP) growth during the current financial year from last year’s 7.6 per cent.
“However, some support came with Agriculture Minister Radha Mohan Singh’s assurance that sowing of rabi crops like wheat, pulses and oilseeds has not been affected due to banning of old Rs 500 and Rs 1,000 notes,” Desai said.
The top weekly Sensex gainers were: Tata Consultancy Services (TCS), up 8.37 per cent at Rs 2,300.85, followed by Lupin (up 6.49 per cent at Rs 1,509.30), Wipro (up 6.36 per cent at Rs 464.90), Infosys (up 6.25 per cent at Rs 977.30) and Tata Steel (up 5.87 per cent at Rs 407.70).
The losers were: State Bank of India (SBI) (down 5.35 per cent at Rs 260.95), Mahindra and Mahindra (M&M) (down 4.73 per cent at Rs 1,180.50), Tata Motors (down 3.77 per cent at Rs 453.25), Gail (down 2.34 per cent at Rs 1,417.35) and Power Grid (down 2.27 per cent at Rs 187.55).
(Porisma P. Gogoi can be contacted at firstname.lastname@example.org)