As long as Nifty stays above 8,000, bulls will be in control
We had mentioned in last week’s closing report that Nifty, Sensex may rally and that Nifty must stay above 7,700 to go higher. As expected, there has been a rally but in fits and starts and driven entirely by the mood in the overseas market. The weekly trend in the major indices of the Indian stock market has been summarised in the table below:
Factors that pushed equity prices higher on Monday included stable Asian markets, continuation of the positive bias imbibed by last week's monetary easing, and optimism surrounding the earnings season due to lower commodities’ prices.
Market observers cited that lower chances of a US rate hike in October due to a slowdown in the US jobs market had relieved investors and increased their risk taking appetite.
Last month, the US economy added just 142,000 jobs from 173,000 jobs created in August 2015. The August figures are being revised downwards. The jobs data is expected to deter the US Fed from raising rates. The rates were last raised in 2006. The US Fed will decide whether to raise interest rates during its Federal Open Market Committee meet scheduled for October 27-28. With higher interest rates in the US, the Foreign Portfolio Investors are expected to be led away from emerging markets such as India.
On Tuesday, profit booking coupled with caution over the upcoming quarterly results subdued investor sentiments and led both Sensex and Nifty to give up gains. Furthermore, both indices receded after key data showed a fall in services output for the month of September 2015. The Nikkei purchasing managers’ index (PMI) services data for September fell to 51.3 from 51.8 level in August 2015.
On Tuesday, rupee too gave up its early gains and depreciated by 13 paise to close at 65.41 to a US dollar from its previous close of 65.28 against the greenback. It touched a day's high of 65.11.
Market observers cited value buying and continuation of positive momentum due to last week's monetary easing for the gains in the stock market on Tuesday.
The indices were choppy throughout Wednesday's trade driven by investors’ anxiety over the upcoming quarterly results and rising crude prices. The indices were depressed after the International Monetary Fund (IMF) report downgraded India's growth to 7.3% for the current fiscal. Another major dampener that was the sharp rise in international crude oil prices in the past few days and the prices were hovering around the $50-mark, after rallying nearly five dollars on Tuesday. The jump in the oil prices comes after the US Energy Information Administration cited lower inventory build-up and Russia's decision to hold talks with other major producers to discuss the market situation. Profit booking was witnessed in information technology (IT) and banking stocks on Wednesday.
The Indian equity markets, which had rallied for six consecutive sessions till Wednesday, fell on Thursday following uncertainty over Bank of England's rate hike decision expected on Thursday and investors' anxiety before the release of second-quarter results. Sector-wise, healthcare, banking, capital goods, automobile and fast moving consumer goods (FMCG) stocks came under selling pressure on Thursday.
On Friday, the market indices were range-bound and closed with small gains of less than 1% each. Lower chances of a US rate hike this month cheered investor sentiments and were a positive for the market, supported by continued rally in the US.