Nifty may head lower, if it closes below 7,570
We had mentioned in last week’s closing report that Nifty, Sensex uptrend would continue and that Nifty would head higher as long as it remained above 7,600. The major indices of the Indian stock markets closed marginally lower on a weekly basis due to negative global cues. Bank Nifty was an exception, as it gained 1.81% over the week. The weekly trends of the major indices are given in the table below:
Profit booking, coupled with heightened chances of a US rate hike and a weak rupee subdued the Indian equity markets during late-afternoon trade session on Monday. Consequently, the barometer 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) traded deep in the red. The wider 50-scrip Nifty of the National Stock Exchange (NSE) receded into the negative territory. The BSE market breadth favoured the bears -- with 1,950 declines and 644 advances. The index had closed the last trade session flat on March 23. The Indian equity markets were closed from March 24-25, on account of Holi and Good Friday.
Profit booking, unwinding of long positions ahead of derivatives expiry and caution over a likely US rate hike dragged the key equity markets lower throughout the day's trade on Tuesday. The BSE market breadth favoured the bears -- with 1,690 declines and 948 advances.
One of the biggest losers on Tuesday was Lupin. Brokerage IIFL in a note said that Lupin's Mandideep facility in Madhya Pradesh has received Form 483 from US Food and Drug Administration (US FDA) after an inspection. According to the US regulator, a Form 483 is issued to a company at the conclusion of an inspection when investigators have observed any conditions that in their judgement may constitute violations of the Food Drug and Cosmetic (FD&C) Act and related Acts. Lupin's US business is significantly dependent on Mandideep unit, which contributes revenues of more than $200 million annually, IIFL said. The Bombay Stock Exchange later sought a clarification from Lupin over the matter. Lupin in a clarification said FDA observations on Mandideep facility are minor in nature and there were total of three observations. "We believe that these observations are minor in nature and have already addressed these observations. We don't expect any disruption to product supply from our Mandideep location," Lupin said. Lupin’s shares closed at Rs1,401.45, down 6.27% on the BSE.
Short-covering ahead of derivatives expiry, coupled with lessened chances of a US rate hike and a recent economic reform buoyed the Indian equity markets on Wednesday. The BSE market breadth favoured the bulls - with 1,724 advances and 694 declines. Initially, both the key indices of the Indian equity markets opened on a positive note, in-sync with their Asian peers, especially the Chinese indices and a firm close of the US exchanges on Tuesday. Market observers cited that short-covering ahead of the derivatives expiry and increased chances of a rate cut by the Reserve Bank of India (RBI) supported share prices. Investors expect the RBI to cut key lending rates on the back of the union budget's fiscal prudence measures, reduction in small savings interest rates and low inflation. The RBI will conduct its first bi-monthly monetary policy review for 2016-17 on April 5. In addition, Tuesday's economic reform measure to allow 100% foreign capital in e-commerce with some riders cheered investors. The move is expected to benefit not just foreign multi-brand retail entities like Amazon and e-Bay, but also single-brand overseas chains like Adidas, Ikea and Nike.
Besides, dovish comments from the US Federal Reserve chairman Janet Yellen on Tuesday indicated lessened chances of a US rate hike. A hike in the US interest rates is expected to have led away Foreign Portfolio Investors (FPIs) from emerging markets such as India. Further, an appreciating rupee boosted investors' sentiments on Wednesday. Bank Nifty was trading sharply higher on Wednesday after Vijay Mallya of Kingfisher Airlines submitted a repayment plan of Rs4,000 crore to the Supreme Court.
Caution on the derivatives expiry day, coupled with weak crude oil prices, subdued the Indian equity markets on Thursday. Consequently, the key indices of the Indian equity markets traded flat. Initially, the key indices of the Indian equity markets opened on a flat-to-positive note, in-sync with their Asian peers. Besides, upcoming US non-farm payrolls data and key domestic macro-economic data deterred investors from chasing prices. In addition, weak crude oil prices due to supply side issues dented sentiments. Rupee too opened flat at 66.36 to a US dollar from its previous close of 66.37-38 to a greenback. Major Asian indices closed with small losses over Wednesday’s close on Thursday. The major indices made small losses on Friday over Thursday’s close with the exception of the Bank Nifty.