The gains may get capped at around 5,450-5,500 on the Nifty
The 25-basis-point hike in key policy rates by the Reserve Bank of India (RBI), higher headline inflation for May and worries about a slowdown in the global economy along with the contagion effect of the Greek debt crisis, pulled down the Indian market by 2% this week.
The market, which was largely volatile, closed flat on Monday as the broader indices helped to limit the losses. The indices snapped their four-day losing streak, ending with modest gains on Tuesday, despite a sharp spike in headline inflation for May. Nervousness ahead of the RBI's policy review led to a steep fall on Wednesday.
On Thursday, the rate hike announced by the central bank together with signals of an economic slowdown, dragged the market further down on the last two trading days of the week. Overall, the Sensex tumbled 398 points, to end the week at 17,871, and the Nifty slipped 119 points to 5,366. There is a likelihood of a small gain on Monday. However, it may get capped at around 5,450, or at best around 5,500 on the Nifty.
In the sectoral space, BSE Power and BSE Fast Moving Consumer Goods ended unchanged, whereas BSE Oil & Gas and BSE IT declined 5% each.
Among Sensex stocks, Reliance Infrastructure surged 7%, Hindustan Unilever, Reliance Communications gained 3% each, Bharti Airtel rose 2% and NTPC added 1%. On the other hand, Reliance Industries, Hindalco Industries declined 8% each, TCS, Wipro fell 7% each and Maruti Suzuki settled 5% lower at the end of the week.
The RBI raised interest rates on Thursday for the 10th time since March 2010. The central bank hiked the repo (short-term lending) and reverse repo (short-term borrowing) rates by 25 basis points each, and these now stand at 7.5% and 6.5%, respectively. The central bank stated that it would continue to deal with stubbornly high inflation while balancing the adverse movements with global developments and their likely impact on domestic growth.
Headline inflation went up to 9.06% in May on rising prices of manufactured products and petrol. Inflation, as measured by the Wholesale Price Index (WPI), stood at 8.66% in April. It was 10.48% in May 2010. Inflation has been above 8% since January 2010. It has stayed above 9% since December last year and moderated to 8.66% in April this year, before the latest rise.
Food inflation for the week ended 4th June eased marginally to 8.96%, from 9.01% in the previous week. The latest fall, although very marginal, is seen as a silver lining by the government, which has been battling the high price rise across all segments for the past few months and has had to also contend with low economic growth and factory output numbers in recent months.
In the corporate world, the 13-day strike at the Manesar plant of Maruti Suzuki India (MSI) was called off late Thursday night following a deal brokered by Haryana chief minister Bhupinder Singh Hooda. MSI has agreed to reinstate the 11 workers who were sacked and it will take a lenient approach on the no-work-no-pay rule for the strike period. On the other hand, the workers have conceded the management's demand not to have a second union in the company.
Tata Steel said on Thursday that it has sold its 26.27% stake in Australian coal miner Riversdale to global mining major Rio Tinto for A$1.06 billion ($1.11 billion). "Tata Steel has decided that it would not want to hold its equity investment in Riversdale Mining, which is proposed to be delisted, without any joint venture agreement with the majority shareholder in unlisted Riversdale," the company stated.
Reliance Industries (RIL) was under pressure during the week, after a report by the Comptroller and Auditor General (CAG) said the oil ministry and its technical arm, the Directorate General of Hydrocarbons (DGH), allegedly favoured RIL by allowing it to double the development cost of its landmark KG-D6 gas field. The company denied any wrongdoing.
On the international front, China's inflation accelerated in May to a 34-month high of 5.5% and up from 5.3% in April. Also, the country's central bank announced a 50-basis-point increase in reserve requirements for banks, putting pressure on lenders.
This apart, the Bank of Japan kept its interest rates steady at 0%-0.1% and added 500 billion yen ($6 billion) to its 3-trillion-yen loan scheme, aimed at boosting lending to industries with growth potential.
German chancellor Angela Merkel on Friday dropped her government's insistence on forcing a rescheduling of Greek government bonds, ending a six-week impasse that threatened to halt any more loan payouts to Greece. The move came as the Greek prime minister reorganised his government, naming a new finance minister and pushed an austerity package into law. EU finance ministers are to meet on Sunday to discuss a new aid package for the crisis-ridden Mediterranean country.
Coal India has been doing well since the company was listed last November and has become the second most valued firm after Reliance Industries. On the other hand, RCom and Reliance Infra have not been performing well on the stock market
Mumbai: Two Anil Ambani group firms, Reliance Communications (RCom and Reliance Infrastructure (Reliance Infra), will move out of Bombay Stock Exchange’s blue chip index Sensex in August, reports PTI.
While RCom would be replaced by Sun Pharmaceuticals, Reliance Infra would be substituted by Coal India on the 30-share index.
The changes would be effective from 8th August, Bombay Stock Exchange (BSE) said in a statement yesterday.
Coal India shares have been doing well since the company was listed in November last year and has become the second most valued firm after Reliance Industries.
Last week, Coal India’s market valuation surged to Rs2,55,338.85 crore.
On the other hand, shares of RCom and Reliance Infra have not been performing well on the stock market.
Apart from the Sensex, there would be changes in BSE-100, BSE-200, BSE-500 and sectoral indices, among others.
Eight companies including IndusInd Bank, Titan Industries, Canara Bank, Adani Power and Federal Bank will make their entry into BSE-100 from 8th August.
Entities that would move out of this index include Indian Hotels Company, Torrent Power, MMTC, Financial Technologies and IVRCL.
The decision to revise constituents of various BSE indices was taken by the Index Committee of the Exchange, during the meeting held on Friday.
On Friday, the Nifty almost touched our target of 5,350. A short bounce may be on the cards, but it may get stopped at around 5,450-5,500
The market opened with good gains on positive news from Maruti Suzuki and Tata Steel overnight, despite its Asian peers trading lower, weighed down by the Greece debt crisis. Regaining the 18,000 levels, the Sensex opened at 18,060, up 74 points from its previous close. The Nifty rose 16 points to open at 5,413 and above the 5,400 mark.
The market touched the day's high in initial trade itself and moved downward thereafter. At the intra-day highs, the Sensex touched 18,065 and the Nifty at 5,421. Worries about the slowdown in the global economy and selling by institutional investors saw the indices drift southwards. The dismal opening on key European bourses also weighed on the market.
The market fell to the day's lows in post-noon trade, with the Sensex declining 142 points to 17,844 and the Nifty losing 41 points to 5,356. However, a half-hearted recovery resulted in the market closing marginally above the lows of the day. The Sensex closed at 17,871, a loss of 115 points, and the Nifty declined 30 points to settle at 5,366.
The Nifty witnessed a gradual slide today and came close to its second support of 5,350 which we have targeted for a long time. There is a likelihood of a small gain on Monday. However, it may get stopped at around 5,450 or at best around 5,500.
The advance-decline ratio on the National Stock Exchange was a dismal 445:1241.
The broader indices underperformed the Sensex today, as the BSE Mid-cap index declined 0.83% and the BSE Small-cap index tanked 0.92%.
The sectoral gainers were BSE Consumer Durables (up 0.92%), BSE Bankex and BSE Power (up 0.12% each). The losers were led by BSE IT (down 1.94%), and BSE Oil & Gas (down 1.56%), BSE Healthcare (down 1.29%), BSE TECk (down 1.21%) and BSE Auto (down 1.07%) also lost.
Tata Steel, which announced the sale of its stake in Riversdale Mining last evening, was the top gainer on the Sensex (up 3.45%), It was followed by Bharti Airtel (up 2.58%), Reliance Communications (up 1.49%), Reliance Infrastructure (up 0.97%) and NTPC (up 0.93%). The top losers were TCS (down 3.58%), Reliance Industries (down 2.21%), Mahindra & Mahindra (down 2.02%), Hindalco Industries (down 1.96%) and Maruti Suzuki (down 1.85%).
The top Nifty gainers were Tata Steel (up 3.25%), Ambuja Cement (up 2.64%), Bharti Airtel (up 2.58%), RCom (up 1.65%) and Reliance Infra (up 0.99%). Sesa Goa, TCS (down 2.93% each) Sun Pharma (down 2.87%), Grasim Industries (down 2.78%) and Maruti Suzuki (down 2.60%) were the top losers.
The likely contagion effect of the Greek debt crisis resulted in the Asian markets finishing lower today. The developments make investors jittery throughout the world, prompting them to shift to safer assets.
Amid growing political unrest in Greece and protests against the government's austerity measures, the European Union (EU) said it has postponed a decision on a second multi-billion euro rescue package for the debt-ridden nation, at least till mid-July. However, the EU said that a bankruptcy will be averted by releasing the fifth tranche of 12 billion euros from last year's bailout package of 110 billion euros (159 billion dollars) when euro zone finance ministers meet in Luxembourg over the weekend.
The Shanghai Composite declined by 0.77%, the Hang Seng tanked 1.17%, the Jakarta Composite fell by 0.49%, the Nikkei 225 was down by 0.64%, the Straits Times lost 0.49%, the Seoul Composite settled 0.72% down and the Taiwan Weighted lost 0.21%.
Back home, foreign institutional investors were net sellers of stocks worth Rs599.52 crore on Thursday, whereas domestic institutional investors were net buyers of equities worth Rs286.10 crore.
The 13-day strike at the Manesar plant of Maruti Suzuki India (MSI) was called off late last night following a deal brokered by Haryana chief minister Bhupinder Singh Hooda.
MSI has agreed to reinstate all the 11 workers who were sacked and will take a lenient approach on the no-work-no- pay rule for the strike period. On the other hand, the workers have conceded the management's demand not to have a second union in the company. The Maruti Suzuki stock closed 1.85% lower at Rs1,167.40 per share on the Bombay Stock Exchange (BSE) today.
Tata Steel said on Thursday that it has sold its 26.27% stake in Australian coal miner Riversdale to global mining major Rio Tinto for A$1.06 billion ($1.11 billion).
"Tata Steel has decided that it would not want to hold its equity investment in Riversdale Mining, which is proposed to be delisted, without any joint venture agreement with the majority shareholder in unlisted Riversdale," the company stated. The company's stock gained 3.45% to close at Rs572.25 on the BSE today.