A fall below 8,400 would lead to a decline
We had mentioned in last week’s closing report that Nifty, Sensex were headed higher and that Nifty has to close above 8,460 for the uptrend to continue. The 50-scrip Nifty had closed the previous week at 8,532.85. For Friday, the losses have been marginal and for the week, as a whole, the market has ended flat. The indices are moving sideways, while the market struggles to gain the momentum for a rally.
On Monday, the Nifty moved in the green for almost the entire session and dipped in the end, recording marginal gains. Last week's announcement of Rs70,000 crore infusion into public sector banks (PSBs) in the next four years continued to boost banking stocks. According to analysts, domestic markets remained positive on the back of a surge in banking and auto stocks ahead of the RBI's (Reserve Bank of India) monetary policy review on Tuesday. The markets’ rise was arrested by the higher levels of profit booking which trimmed some of the early gains due to weak Greece and Chinese stock markets, cited analysts.
On Tuesday, the RBI, in its third monetary policy review, kept the repurchase rate, or its short-term lending rate, unchanged at 7.25%. Accordingly, the reverse repo rate, or the short-term borrowing rate, was unchanged at 6.25%. The cash reserve ratio (CRR), or the liquid money banks have to compulsorily hold, stood unchanged at 4%. The decision to maintain the status-quo disappointed investors, as a general consensus had appeared that showed that the current review might be the last chance that RBI had to cut rates in this calendar year. Markets are doubtful over the RBI's ability for a future easing of the monetary policy in the hindsight that inflation might spiral up again and the US Fed's decision on its own rates is coming up in September.
On Tuesday, the 50-stock index opened marginally higher but made a quick move into the negative. It stayed in the red for almost the entire session. The Nifty broke the 8,500 support but recovered and closed marginally in the red.
For the entire session Wednesday, the 50-stock benchmark remained above the previous day’s close albeit moving in a narrow range. According to analysts, bargain hunting was observed in the market after Tuesday's fall. RBI's announcements of changing the cap on bond investment limit from being dollar-linked to rupee-denominated, segregation of the bond market and its engagements with the government over the new financial code also boosted the markets, they said. Sector wise, healthy buying was observed in healthcare, automobile, information technology (IT), fast moving consumer goods (FMCG) and capital goods sectors. However, the banking, consumer durables and metal sectors came under selling pressure.
On Thursday, the major indices in the Indian stock markets were range-bound and made marginal gains during the day’s trading. According to analysts, Indian markets opened positively tracking the SGX Nifty and Wednesday's data which showed healthy growth in services PMI (purchasing managers' index). Sentiment was also helped by upbeat economic data from China. Markets gained due to the positive response to the RBI governor's comments on the economy. Positive sentiments surrounding Cognizant’s quarterly results supported the rally across information technology stocks.
On Friday, the market failed to gain momentum for a rally, and the indices closed marginally in the red. A logjam in parliament, impending US rate hike decision and other negative global cues led to the close in the red. Sector-wise, healthy buying was observed in oil and gas, automobile and consumer durables stocks. However, banking, capital goods and healthcare sectors came under selling pressure.
Out of the 27 main sectors tracked by Moneylife, top five and the bottom five sectors for this week were: