Nifty has to close above 7,600 for a rally to materialise
We had mentioned in last week’s closing report that Nifty, Sensex may record a minor bounce and that Nifty has to close above 7,670 for the first sign of a bullish trend. The market trend for most of the week was bearish on account of negative global cues and weak macroeconomic data. Weekly losses were around 2% or higher for the major indices, in spite of thin volumes. The trends of the major indices during the week are given in the table below:
Negative global trends, coupled with the upcoming third-quarter results and macro-economic data, depressed Indian equity markets on Monday. This resulted in the 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) provisionally close the day's choppy trade session down 109 points. Initially, both the bellwether indices opened on a negative note in sync with their Asian peers and last week's massive falls. Other Asian markets were deep in the red after Chinese stocks receded by 5%. However, the bellwether indices pared their losses as investors were attracted by a sizeable number of stocks that were trading at their yearly lows. Apart from value buying, short covering amidst thin volumes led the morning relief rally. However, markets soon resumed correction. In addition, investors were hopeful for a better third quarter (Q3) results by India Inc on the back of an economic recovery and low commodity prices. The Q3 earnings results will start coming out from Tuesday. However, the gains were soon capped by the long-liquidation positions and Friday's US-based data which showed a strengthening jobs market. The data hinted at a potential future rate hike. Another rate hike by the US Fed will lead more FPIs (foreign portfolio investors) away from emerging markets such as India, denting the equity and currency markets. Besides, caution prevailed over the upcoming domestic macro-data on industrial output, and retail inflation. Both the data points are slated to be released on Tuesday. The choppy trade session again led to value buying, but gains were soon ceded due to prevailing negative bias.
Caution over third-quarter results, coupled with anxiety over the upcoming macro-data points subdued the Indian equity markets on Tuesday. This led to the BSE Sensex to decline by 143 points. Initially, both the bellwether indices of the Indian equity markets made modest gains as investors were attracted by a sizeable number of stocks that are trading near their yearly lows. Besides value buying, short covering amidst thin volumes led to the morning relief rally. However, both the indices soon ceded their gains, as anxiety was stroked by the third quarter (Q3) results which will start coming in from Tuesday. Amongst the companies which will release their Q3 results on Tuesday are information technology (IT) major Tata Consultancy Services (TCS), Federal Bank and IndusInd Bank. In addition, long-liquidation positions and lacklustre Asian markets, too, dented investors' sentiments. Caution also prevailed over the upcoming domestic macro-data on industrial output, and retail inflation. Both the data points are slated to be released on Tuesday.
Positive European indices, coupled with short-covering and attractive prices, buoyed the Indian equity markets on Wednesday. This led to the S& P BSE Sensex to close the day's trade with a gain of 172 points. However, the indices soon ceded all their gains. Anxiety was stoked by the third quarter (Q3) results season that started on Tuesday. Long-liquidation positions and sliding Chinese markets, too, dented investors' sentiments on Wednesday.
Diminishing hopes of an interest rate cut, coupled with caution over the third quarter results and thin volumes depressed the Indian equity markets during a volatile late-afternoon trade session on Thursday. The bellwether indices' receded after making healthy gains as key macro-data showed acceleration in inflation trends. The rise in wholesale price index (WPI) diminished hopes of a rate cut by the country's apex bank and subdued investors' sentiments. Caution over the third quarter (Q3) results season, long-liquidation positions and sliding Asian markets, too, dented sentiments. Initially, the bellwether indices opened deep in the red, following lower closing of the US markets on Wednesday and a further plunge in oil prices. However, both indices pared their initial losses as healthy Q3 results, recovering European markets and short-covering restored investors' risk-taking appetite. Value buying at lower levels, which was prompted by attractive prices, supported the markets' upward movement.
Bearish global markets, coupled with disappointing macro-data and caution over the third quarter results, subdued Indian equity markets on Friday with S & P BSE Sensex provisionally closing 318 points in the red. Initially, both the bellwether indices opened on a firm note, following higher closing of the US markets on Thursday and value buying at lower levels. However, both indices soon ceded their initial gains due to bearish Asian markets, lack of fresh triggers and caution over Q3 results. Besides, the bellwether index receded after Thursday's macro-economic data showed acceleration in inflation trends. The rising wholesale price index (WPI), coupled with a higher annual retail inflation, have diminished hopes of a rate cut by the country's apex bank. Moreover, long-liquidation positions, sliding European markets and upcoming US macro-data dented sentiments.
Out of the 27 main sectors tracked by Moneylife, top five and the bottom five sectors for this week were: