Nifty will rise next week subject to dips
We had mentioned in last week’s closing report that Nifty, Sensex are deeply oversold and that Nifty has to close above 7,600 for a rally to materialise. The Indian stock markets have been volatile with no significant weekly progress. However, on Friday, the major indices advanced by around 2% and there were handsome gains for investors on a daily basis. The trends of the major indices over the week’s trading are given in the table below:
Falling exports, coupled with a slump in global crude oil prices, accelerated selling pressure in the Indian equity markets on Monday and led the benchmark indices to their lowest close in the last 20 months. The selling frenzy led both the bellwether indices of the Indian equity markets to end the day's trade at levels last seen during May 2014. They even touched their new 52-week low during the intra-day trade. Overall, the market breadth ended with extreme weakness -- as seven shares declined for every one share that advanced. The selling pressure was stoked by disappointing December exports' data, which touched a 13-month low, absence of fresh triggers and bearish global cues. Furthermore, investors were seen cautious regarding the upcoming global macro-economic data from China, the UK and the US.
On Tuesday, Indian markets, especially at open, got a breather after Chinese GDP numbers came in more or less as expected. Rise in oil prices also helped sentiments, which were further boosted by rise in European markets. Further, bounce-back in commodity prices, rally in global markets and cues thereof and decent corporate earnings of India Inc so far has uplifted the sentiment of the Street. In Tuesday's trade, good buying was observed in industrials, capital goods, telecom and banking sectors. Among the sector-specific indices, industrials index gained by 3.01%, capital goods index surged by 2.85%, telecom index moved up by 2.74% and bankex inched up by 1.68 points. The foreign institutional investors (FIIs) were net sellers in the equity markets on Tuesday. They divested Rs.857.70 crore.
On Wednesday, huge declines in Asian markets, coupled with a slump in global crude oil prices and a weak rupee depressed the Indian equity markets. The selling frenzy led both the bellwether indices of the Indian equity markets to trade at levels which were last seen during May-June 2014. The selling pressure was accelerated by absence of any fresh positive trigger and below expected third quarter (Q3) results. Furthermore, investors were seen cautious regarding the sliding value of rupee which touched a low of 68.05 to a US dollar -- its weakest level since September 2013 during the intra-day trade. The rupee previously closed at 67.64-65 to a greenback.
The weakness in the rupee value indicates the massive foreign funds outflow from the Indian equity and debt markets. Besides, long-liquidation positions and disappointing macro-data points for December which eroded investors' hopes for an interest rate cut during the upcoming monetary policy review of the apex bank dented sentiments. The S&P BSE market breadth favoured the bears -- with 2,091 declines and only 384 advances on Wednesday. On Wednesday, the foreign institutional investors (FIIs) were net sellers again. According to data with stock exchanges, FIIs divested Rs1,324.69 crore on Wednesday.
Bearish global indices, coupled with a weak rupee and long-liquidation positions pushed down the Indian equity markets on Thursday. This led to major indices of the Indian equity markets to trading flat. The selling pressure led the bellwether indices to trade at levels which were last seen during May-June 2014. Initially, the bellwether indices opened on a positive note due to recovery in the US markets after a huge decline in the opening and also due to higher opening in Asian markets. The US futures were also quoting higher. However, the US futures soon ceded gains and went into negative which led to a sharp decline in all Asian markets including India.
The S&P BSE market breadth favoured the bulls -- with 1,344 advances and 1,188 declines, on Thursday. While valuations have turned attractive, FIIs continue to remain net sellers which would limit any gains in the market, observed market analysts. The major indices in the Indian stock markets ended flat on Thursday after huge volatility in the day’s trading.
On Friday, based on favourable cues from Chinese and Japanese stock markets and strong preopen futures of the US market, the Indian stock markets turned bullish. Gains were in the range of 2% over Thursday’s close. Good buying was observed in banking, auto, basic materials and utilities sectors on Friday. Friday’s gains are the first indication for market optimists that the short-term troubles may be near an end. Over the week, the major indices have ended flat with the exception of the Bank Nifty.
Out of the 27 main sectors tracked by Moneylife, top five and the bottom five sectors for this week were: