We had mentioned in the last week’s closing report that Nifty, Sensex might head higher subject to dips. The major indices of the Indian stock markets were range-bound. On Friday, at the end of the week’s trading, the gains for the whole week were less than 1% for the major indices. The trends of the major indices in the course of the week’s trading are given in the table below:
Short covering, along with expectations of healthy quarterly results and stable crude oil prices, pushed the Indian equity markets marginally higher on Monday. The key indices oscillated in a narrow range following three days of sharp up-move and made marginal gains during the mid-afternoon trade session. Buying was witnessed in automobile, metals, and information technology (IT) stocks. However, gains were capped due to weak rupee and hawkish comments from the US Federal Reserve on a possible June rate hike. The US Fed Chairperson Janet Yellen last Friday hinted towards a possible June rate hike. A hike in the US interest rates is expected to lead away Foreign Portfolio Investors (FPIs) from emerging markets such as India. In addition, caution prevailed ahead of the upcoming release of the major macro-economic data like the fourth quarter GDP (gross domestic product), eight core industries (ECI) and the PMI (purchasing manager’s index).
Profit booking, coupled with caution ahead of release of key macro-economic data, depressed the Indian equity markets on Tuesday. Consequently, the key indices provisionally closed the day's trade flat -- marginally in the red. Selling pressure was witnessed in healthcare, IT (information technology) and capital goods stocks. The BSE market breadth was skewed in favour of the bears - with 1,564 declines and 1,001 advances. The key indices on Monday had closed at their highest levels since October 2015. Initially on Tuesday, the key indices opened on a higher note, in-sync with their Asian peers. The equity markets soon ceded their initial gains on the back of profit booking after five consecutive sessions of rise.
The Krishi Kalyan Cess of 0.5% on services imposed by Finance Minister Arun Jaitley came into force from Wednesday through which the government has proposed to collect Rs5,000 crore during the remaining 10 months of the current fiscal. The government policies have been aimed at improving the rural sector.
Initially on Wednesday, the key indices opened on a higher note, following the release of healthy domestic macro-economic data. Major domestic macro-economic data points like the fourth quarter GDP (gross domestic product), fiscal deficit and eight core industries (ECI) were released on Tuesday. The GDP data showed that the Indian economy expanded by 7.6% in 2015-16 to log the fastest growth among larger countries. Besides, India's core industrial output data, ECI edged up by 8.5% in April on the back of higher production of electricity, steel and refinery products.
Despite the positive opening on Wednesday, the key indices ceded some of their initial gains on the back of sluggish Asian markets and lower close of the US stocks on Tuesday. The US indices had closed lower on the back of disappointing consumer confidence data which stroked growth concerns in the world's largest economy. The US data also cast a doubt over the US economy's ability to withstand a speculated interest rate hike in June. In addition, lower crude oil prices, a weak rupee and profit booking dented investors' risk taking appetite. However, lower level value buying supported prices. Among the major indices, the Bank Nifty lost 1.12% over Tuesday’s close to close at 17,423.45.
Short covering, coupled with lower-level value buying, lifted the Indian equity markets on Thursday. The key indices traded in the positive territory during the late-afternoon session, as healthy buying was witnessed in metal, banking and capital goods stocks. The key indices on Wednesday had closed flat -- marginally in the green -- led by healthy macro-economic data. Initially on Thursday, the key indices opened on a weak note, in sync with their Asian peers and a lower close of the US stock on Wednesday. Asian stocks receded as investors were disappointed at the lack of further stimulus measures in Japan. Besides, the European stocks traded flat as caution prevailed ahead of the upcoming ECB (European Central Bank) meet, also later Thursday. In addition, a week rupee depressed the equity markets. However, a late afternoon bout of short covering supported prices. The recently released healthy domestic macro-economic data also aided the equity markets to pare some of their earlier losses. Overall, the markets were bullish on Thursday. The key Indian indices had closed at a fresh seven-month closing-high on Thursday.
The Indian equity markets closed flat on Friday owing to mixed global cues. Both the key indices closed the day's trade on a flat note. Healthy buying was witnessed in banking and automobile stocks, whereas scrip of consumer durables, capital goods and healthcare came under heavy selling pressure. The BSE market breadth was skewed in favour of the bears -- with 1,522 declines and 1,097 advances.
Growth in India's private sector output declined in May as manufacturing and service sectors lost momentum in conditions of softer domestic demand, while services slowed sharply to a six-month low, a business survey on performance of the services sector showed on Friday. The Nikkei Services Purchasing Managers' Index for India fell from 53.7 in April to 51.0 in May. An index reading of above 50 indicates an overall increase, while below 50 an overall decrease. The PMI series of data are published by the leading global diversified provider of financial information services "Markit".
The Reserve Bank of India is due to announce its second bi-monthly monetary policy review of the fiscal coming Tuesday in the backdrop of official data showing retail inflation in the country rose in April to 5.39%.