We had mentioned in the last week’s closing report that Nifty, Sensex were in a bullish mode still. The major indices of the Indian stock markets were bullish on most trading days of the week and scaled some recent highs. The trends of the major indices in the course of the week are given in the table below:
Short covering, coupled with expectations of major economic legislation getting parliament's approval, buoyed the Indian equity markets on Monday. The benchmark indices closed the day's trade with substantial gains as healthy buying was witnessed in banking, automobile and consumer durables stocks. On the NSE, there were 1,001 advances, 469 declines and 63 unchanged. On the BSE, there were 1,724 advances, 990 declines and unchanged 197.
On Monday, initially, the benchmark indices opened on a flat-to-positive note, in sync with their Asian peers. Besides, the equity markets were pushed up by higher European indices, healthy quarterly earnings and above average monsoon rain falls. In addition, hopes on the passage of the GST (Goods and Services Tax) Bill during parliament's ongoing monsoon session supported prices. Further, investors' expected US Fed to maintain its key lending rates during the upcoming FOMC (Federal Open Market Committee) meet.
On Tuesday, the benchmark indices opened on a flat-to-positive note in sync with their Asian peers. However, negative Japanese indices, lower crude oil prices and a weak rupee dented sentiments. Besides, investors were seen cautious ahead of Finance Minister Arun Jaitley's meeting with his counterparts from the states to discuss proposed amendments to the GST (Goods and Services Tax) Bill. The pan-India tax reform has been passed by the Lok Sabha but is stuck in the Rajya Sabha, where the government lacks a majority. It is widely expected that the bill will be listed for discussion in the Rajya Sabha following Jaitley's consultations with the Empowered Committee of State Finance Ministers. Nevertheless, a logjam in parliament has spooked investors over the prospects of the bill getting passed. In addition, volatility was flared by the start of the US Fed's FOMC (Federal Open Market Committee) meet.
On Wednesday, profit booking, combined with caution ahead of derivatives expiry, and a key announcement over the US interest rates, made the Sensex oscillate in a 300-point range. Sensex had earlier receded during the mid-afternoon trade session after touching new intra-day highs for the last 11 months. The BSE market breadth was slightly tilted in favour of the bears -- with 1,341 declines and 1,317 advances. On the NSE advances, there were 787 advances, 798 declines and 78 unchanged.
The Indian equity markets on Thursday closed at new highs in almost a year, riding on short covering and expectations of a major economic legislation getting parliament's approval. On a closing basis, the wider 51-scrip Nifty of the National Stock Exchange (NSE) touched a new 52-week high. The 30-scrip sensitive index (Sensex) of the BSE also reached its highest closing levels in 11 months. Healthy buying was witnessed in consumer durables, automobiles and FMCG (fast moving consumer goods) stocks. On the NSE, there were 818 advances, 638 declines and 62 unchanged. The BSE market breadth was slightly tilted in favour of the bulls -- with 1,486 advances and 1,164 declines.
US Federal Reserve on Wednesday (India’s trading day of Thursday) kept federal funds rate unchanged, reiterating that it continues to closely monitor inflation indicators and global economic and financial developments. "Near-term risks to the economic outlook have diminished," said the Fed in a statement after concluding two-day monetary policy meeting. This new expression might indicate that conditions are getting more favourable for further interest rate hikes in the future. Fed officials gave more upbeat description of the economy. There was some increase in labour utilisation in recent months, pointing to a healthy labour market despite the slowdown in April and May. Household spending have grown "strongly." Inflation continues to run below the Fed's 2% target, a major concern for Fed officials. But they expected inflation to rise to the target over the medium term as the transitory effects of past declines in energy and import prices dissipate and the labour market strengthens further. The policy to keep interest rates unchanged is good news for emerging markets like India, as it attracts foreign institutional investors.
On Friday, Indian equity markets traded in the red as selling pressure was witnessed in banking, consumer durables, and capital goods stocks. The indices closed lower by around 0.50% over Thursday’s close.