If Nifty stays above 7,500, it may head for 7,850
We had mentioned in last week’s closing report that Nifty, Sensex were in a downtrend and that Nifty may head towards 7,600. Also, a close above 7,900 will be bullish. The last week has seen the Indian stock markets to be bearish throughout, except for Thursday, when there was a relief rally. The weekly losses in the major indices are of the order of 2%-3%. The weekly trends in the major indices are given in the table below:
On Monday, heightened prospects of a US rate hike, coupled with slow progress in the Indian Parliament in approving a key economic legislation, subdued Indian equity markets, leading to the BSE Sensex closing 108 points in the red. Initially, both the bellwether indices of the Indian equity markets opened higher in sync with their Asian peers which firmed up following Friday's positive close for the US markets. Furthermore, Friday's recommendations from the chief economic advisor (CEA) for a standard goods and services tax (GST) rate in the range of 17%-18% and to eliminate all taxes on inter-state trade buoyed markets.
Global software major Infosys announced on Monday that it is creating 250 new jobs over the next three years in Ireland to develop new technologies and support innovation in financial institutions. The expansion will create 95 jobs at its first dedicated product-centric research and development (R&D) centre outside India and open a second Irish facility to house up to 155 techies for providing client servicing, Infosys said in a statement.
On Tuesday, the prevailing logjam in parliament coupled with prospects of a US rate hike and the decline in oil and gas stocks subdued Indian equity markets. Besides, prospects of a US rate hike prompted selling among foreign investors and continued weakness in rupee's value depressed them. In addition, oil and gas, energy and power companies stocks fell after a dip in global crude oil prices. Markets observers said that the investors' sentiments were subdued due to the logjam in parliament which has dimmed the prospects of the Goods and Services Tax (GST) bill getting passed during the winter session.
The catastrophic loss of property and lives due to the floods in Tamil Nadu could cost insurance companies around Rs1,500 crore though exact estimates will be known only later. “We have received around 800 claims and the initial estimate of the loss is around Rs.500 crore," a senior official of United India Insurance Co. Ltd. told IANS, on Tuesday. The official said the flood loss for the general insurance industry could be around Rs1,500 crore. But if one takes into account the uninsured moveable and immovable properties, then the amount would be several times more. The heaviest rains in a century battered the districts of Chennai, Kanchipuram, Cuddalore and Thiruvallur over the past month, leaving around 325 people dead and causing widespread destruction.
On Wednesday, dimmed prospects of key economic legislations getting the parliamentary nod in the winter session, coupled with a slowdown in the Chinese economy and falling commodity prices led to losses in the major indices over Tuesday’s close. Both bellwether indices opened on a negative note following their Asian peers. Domestic cues like the parliament logjam which has reduced the chances of the Goods and Services Tax (GST) bill getting passed during the winter session, eroded investors' confidence. Should the bill not secure passage in this session, it will miss its intended roll-out date of April 1, next year. Foreign investors continued selling of equities in the Indian markets ahead of a likely US rate hike -- further depressing investors. In addition, oil and gas and energy companies stocks stayed on their downward trajectory due to a dip in global crude oil prices. Besides equities, the Indian rupee, too, remained under pressure. The negative news for the information technology (IT) industry coming from the US, where it has been proposed to cap the H1B visas, adversely impacted investors risk taking appetite.
On Thursday, bargain hunting and unravelling of short positions by investors propelled the Indian stock markets a little higher and the indices improved by a little less than 1%. Market observers said that short coverings of position by investors led the relief rally after six consecutive days of losses. It is expected that that markets positive trajectory might be short-lived due to the logjam in parliament and absence of fresh triggers.
On Friday, upcoming macro-economic data coupled with the logjam in parliament affecting passage of key economic bills and a likely US rate hike spooked investors and resulted in the major indices of the Indian stock exchanges closing in the red. Initially, both the bellwether indices of the Indian equity markets opened on a positive note. But both soon ceded their gains due to the continued parliamentary logjam which has reduced the prospects of the Goods and Services Tax (GST) bill getting passed during the ongoing winter session. Friday’s losses in the major indices were around 1% and above over Thursday’s close.
After the market close, surpassing expectations, India's factory output rose sharply by 9.8% in October, due mainly to a robust 10.6% growth in the manufacturing industry, official data showed on Friday. The growth had decelerated to 3.6% in the month before (September 2015) and was placed at (-) 2.7% in October of last fiscal year. While the electricity output grew by 9%, that in mining was higher by 4.7%, according to the official numbers on the Index for Industrial Production which were released by the Ministry of Statistics and Programme Implementation. Cumulatively, the factory output growth was 4.8% between April and October, as against 4% in the first six months of this fiscal. This was more than double the figure of 2.2% logged during the first seven months of the previous fiscal.
The market will keep an eye on the data points for consumer price index (CPI) and wholesale price index (WPI) to be released on Monday, followed by the US Federal Reserve FOMC (Federal Open Market Committee) meet on Wednesday.
Out of the 27 main sectors tracked by Moneylife, top five and the bottom five sectors for this week were: