Nifty will weaken only on a close below 8,820
The S&P BSE Sensex closed the week that ended on 28th February at 29,362 (up 130 points or 0.45%), while the NSE’s CNX Nifty closed at 8,902 (up 68 points or 0.77%). In the previous week, we had mentioned that Nifty may be headed lower, if it closes below 8,750, while Bank Nifty was already in a downtrend.
On Monday, Nifty slipped lower in the noon session and closed at 8,755 (down 79 points or 0.89%) after hitting a five-day low. There were uncertainties about Bills being passed in the Budget session. The Prime Minister reached out to the opposition, saying the Government will listen to their views, and efforts will be made to discuss all issues of national importance.
Rating agency Standard & Poor's warned that India's weak fiscal and debt indicators, coupled with the low-income levels, "constrain" the sovereign rating.
On Tuesday, Nifty witnessed a highly volatile session but managed to close marginally higher. Nifty closed at 8,762 (up 7 points or 0.08%). We anticipated the market to continue witnessing a weak move. The union government said that it was hopeful that the much-delayed Goods and Services Tax (GST) bill will be passed during the ongoing budget session. The Finance Commission has suggested raising share of states in central taxes to 42% from current 32%.
Gold prices dipped below the Rs27,000-mark by losing another Rs100 to trade at a 10-week low of Rs26,970 per 10 gram.
Weakness on the Nifty continued on Wednesday. Although it opened higher in the noon session it gave up all the intra-day gain and closed marginally higher. Nifty closed at 8,767 (up 5 points or 0.06%).
Rating agency Moody's Investors Service said its assessment of India's credit ratings will be determined mainly by the extent of the country's fiscal reforms, and not on recent revisions to its economic growth data. Moody's rates India at "Baa3", the lowest investment grade rating, with a "stable" outlook.
Much awaited railway budget did not boost up the market sentiment and Nifty moved lower. After hitting nine-day low on Thursday Nifty closed at 8,684 (down 83 points or 0.95%). Railway Minister Suresh Prabhu said the railways will invest Rs8.5 lakh crore over the next five years. Ratings agency S&P raised its India GDP growth forecast to 7.9% from 6.2% for the year ending March 2016.
On Friday, Nifty moved higher throughout the session and closed near the day’s high. Nifty closed at 8,845 (up 161 points or 1.85%) in anticipation of a good budget.
In the Economic Survey 2014-15, Finance Minister Arun Jaitley stated that the government remains committed to fiscal consolidation and that the deficit target of 4.1% as envisaged in the Budget 2014-15 will be met.
The much awaited Budget for 2015-16 was welcomed with a positive opening on the Nifty. During the speech, it witnessed a highly volatile session with the benchmark giving up all the gains made at the beginning of the session. Post the budget speech, the market traded in negative but started rallying around 2 and finally closed higher. Nifty closed at 8,902 (up 57 points or 0.65%).
The government announced that corporate tax rate will be reduced from the current 30% to 25% over the next four years, will be defer the roll out of General Anti Avoidance Rule by two years until 1 April 2017 and increased the excise duty on cigarettes. It also proposed to merge Forward Markets Commission with Sebi, increase in service tax rate to 14% from 12% plus Education Cess. GST is to be put in place by 1 April 2016. It has abolished wealth tax and replaced it with an additional surcharge of 2% on the super-rich, with a taxable income of over Rs1 crore annually.
Of the 1,449 companies on the NSE, 516 companies closed in the green, 902 companies closed in the red while 31 companies closed flat.
Out of the 27 main sectors tracked by Moneylife, top five and the bottom five sectors for this week were: