The absence of any trigger – positive or negative – will keep Nifty drifting sideways
Last week we had mentioned that Sensex, Nifty may give up some gains. We had anticipated Nifty to head lower, if it closes below 7,570. This week Nifty was down 2%, with most of the loss coming on Tuesday when the Reserve Bank of India cut repo rate by 25 basis points. The weekly trends of the major indices are given in the table below:
This week which began on a positive note saw Nifty closing in the positive on three trading session. A positive close to the US markets previous Friday and stable Asian market on Monday made the indices back home close in the green on Monday. The market looked ahead for the new fiscal's first bi-monthly monetary policy review due on Tuesday where it was widely anticipated that RBI Governor Raghuram Rajan may cut interest rates by at least a quarter of a percentage point. Nifty closed at 7,759 (up 0.59%).
On Tuesday the indices suffered a major correction. Nifty closed at 7,603, falling 2%. Negative global cues, along with profit booking and weak crude oil prices, plunged the Indian equity markets. In line with market anticipation, RBI cut its key lending rate by 25 basis points (bps) resulting in the repurchase rate to be lowered to 6.5% from 6.75%. The reverse repurchase rate, or the short-term borrowing rate, has been adjusted upward to 6% from 5.75%.
On Wednesday after a range bound session Nifty closed marginally higher at 7,614 (up 0.15%). The market moved cautiously ahead of the FOMC (Federal Open Market Committee) minutes which was to be released on late Wednesday evening and the start of the fourth quarter (Q4) results.
On Thursday Nifty closed at 7,546, down 0.89%. A rebound in global crude oil prices was wiped off by selling and unwinding of long positions ahead of the fourth quarter (Q4) results season dented sentiments. On Friday Nifty witnessed a listless session, even the negative cues from FOMC (Federal Open Market Committee) minutes released late on Wednesday evening led to a selloff in the US markets. Occasionally the index moved into the red but did not remain there for long. Nifty closed at 7555 (up 0.12%). Overall the positive move was supported cues from the European market. On Thursday European Central Bank officials' expressed their willingness to launch fresh stimulus.