Nifty may rise upto 8,100 subject to dips
We had mentioned in last week’s closing report that Nifty, Sensex are weak and that while Nifty may bounce back during the week, the rallies will be met by selling until Nifty reclaims 8,200. Over the week, the indices steadily lost ground (though making small losses in each day’s trading). Considering the whole week, the losses have been on the scale of 1%-1.5% in each of the indices. Based on the current cautious mood of the investors, it can be said that the indices are not likely to make big gains immediately next week, even though we expect a small rally. The trends of the major indices in the Indian stock markets are given in the table below:
A slowdown in manufacturing activity, uncertainty over Bihar election results and heightened chances of a US rate hike depressed the Indian stock markets and the major indices closed lower on Monday. Furthermore, falling Asian markets on the back of weak Chinese factory data caused the Indian indices to a downward trend.
The latest Nikkei India Manufacturing PMI (Purchasing Manufacturers Index) for the last month showed a contraction due to a slower increase in new orders. The PMI was at a 22-month low of 50.7 in October 2015. China's PMI came in at 49.8 in October, unchanged from September, signalling stagnation in manufacturing.
On Tuesday, choppy market conditions prevailed, as caution grew over Bihar election results, ongoing results season and heightened chances of a US rate hike. Initially, both the bellwether indices of the Indian equity markets opened in the positive territory. However, both indices ceded their initial gains as caution grew on the heightened chances of a US rate hike. Furthermore, investors were seen anxious about the Bihar election results and ongoing results season. Short covering was observed, as investors exited their investment positions after six consecutive sessions of losses at both the bellwether indices.
On Wednesday, caution on quarterly earnings and the likelihood of a US Federal Reserve interest rates hike in December 2015 kept the indices range-bound and to finally close in the red. Positive Chinese macro-economic data and enthusiastic response to Japan Post's initial public offering (IPO) buoyed the Asian markets elsewhere.
On Thursday, anxiety over the outcome of the Bihar assembly polls coupled with upcoming US jobs data dented investors' sentiments in the Indian equity markets and led to a sharp correction. The US jobs data, to be released on Friday, is expected to give cues on whether the US Fed will raise interest rates in its December meeting.
On Thursday, in a bid to put some 20,000 tonnes of idle gold to productive use and cut imports worth $35-$45 billion annually, India today launched three schemes related to the metal, including domestically minted coins with the images of Ashok Chakra and Mahatma Gandhi. The schemes launched by Prime Minister Narendra Modi also included one to convert jewellery and other similar yellow metal assets with the people into interest-bearing deposits, as also sovereign bonds with an eight-year tenure but with an exit option after five years. According to the World Gold Council, an estimated 22,000-23,000 tonnes of gold is lying idle with households and institutions in India. The annual imports amount to around 850-1,000 tonnes valued at $35-$45 billion.
On Friday, caution was in the air for the investors due to elections in Bihar and a potential interest rate hike from the US Federal Reserve. The major indices in the Indian stock markets were range-bound for most of the day. Nifty closed marginally lower at the end of the day and Bank Nifty marginally higher. The BSE Sensex closed with a small loss of 0.15% over Thursday’s close.