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Expect the Nifty to remain range-bound between 5,160 and 5,310
The uncertainties associated with Greece’s debt issues and weak economic indicators kept the market sharply lower in the early part of the week. Pressures eased on the last two trading days after Greek prime minister George Papandreou cancelled his plans to hold a referendum on a fresh bailout package. But the gains were not sufficient to offset the losses suffered on the first three days, resulting in the market closing 1% lower.
The market closed lower on profit-booking by institutional investors on Monday after a 6% rally in the previous week. Fresh concerns after the Greek prime minister sought a referendum on a fresh bailout package pulled the market sharply lower on Tuesday. The market closed flat on Wednesday on news that retail fuel prices might rise later this month.
The indices closed higher on Thursday despite food inflation climbing to a nine-month high for the week ended 22nd October. While the market opened higher on Friday, it gave up the gains in post-noon trade, but a late recovery ensured a green close.
At the end of the week, the Sensex settled 242 points down at 17,562 and the Nifty lost 77 points at 5,284. The index may move in the range of 5,160 and 5,310.
The BSE Fast Moving Consumer Goods index was the lone gainer in the sectoral space (up 1%). BSE Auto (down 3%) and BSE Metal (down 2%) were the top losers.
The top Sensex performers were Hindustan Unilever, or HUL (up 8%), State Bank of India (up 3%), BHEL, Tata Power and Bharti Airtel (up 2% each). Tata Motors (down 9%), Sterlite Industries (down 7%), ICICI Bank (down 5%), Mahindra & Mahindra (down 4%) and Coal India (down 3%) were the major losers on the index.
Among Nifty stocks, HUL (up 8%), Reliance Power (up 5%), Reliance Communications (up 4%), SBI (up 3%) and Sesa Goa (up 2%) were the major gainers. The laggards were led by Tata Motors (down 9%), Sterlite Ind (down 8%), ICICI Bank (down 5%), SAIL India and M&M (down 4% each).
Food inflation in India rose to 12.21% during the week ended 22nd October from 11.43% in the previous week. Commenting on the latest food inflation numbers, finance minister Pranab Mukherjee said the rise in rate of price rise was a matter of ‘grave concern’, but attributed this to the festive season, which led to an increase in demand.
Manufacturing output, as measured by the HSBC Factory Purchase Managers’ Index (PMI), rose to 52 in October from 50.4 in the previous month. The improvement has been attributed to a rise in new business orders during the reporting month.
Meanwhile, India’s services sector registered its slowest growth in the last two-and-a-half years. The seasonally-adjusted HSBC Service Sector Business Activity Index posted a reading of 49.1, from 49.8 in September, down for the second month in a row. The October reading is the weakest since April 2009, the HSBC Services’ PMI release stated.
State-owned oil companies on Thursday evening effected yet another hike in petrol price, by Rs1.80 per litre with effect from Friday, the 5th increase this year, coming on top of a falling rupee and rising cost of imported crude. However, with the price hike coming in for sharp criticism from all quarters, public-sector oil firms said they are ready to rollback the increase if the Indian government directs them to do so.
The growth in eight key infrastructure sectors slowed down to 2.3% in September from 3.3% a year ago. Coal, natural gas and fertiliser sectors showed decline in output raising concerns for the industry and government. The dismal performance of the infrastructure sectors with a weightage of 37.90% in the overall industrial production is likely to weigh on the factory output numbers for September, scheduled to be released later this month.
On the international front, while Greek prime minister George Papandreou earlier this week announced that the government would hold a referendum in December for the fresh bailout package, he later backtracked on his decision following pressure from France and Germany who told Mr Papandreou that the debt-ridden country would not get a single cent of the EU package if it failed to approve the bailout.
In latest news, the Greek prime minister survived a Parliamentary confidence vote early Saturday, easing some uncertainty that gripped Europe this week over whether the latest bailout would go ahead.