Nifty may hit 5,040 if higher highs, higher lows continue
The continuing decline in the rupee against the dollar and the deepening crisis in Greece, political as well as economic, were the main issues in the week. The gains on the two trading days offset the losses on the other three days, helping the market settle mildly in the positive.
The Sensex closed the week with a gain of 65 points (0%) at 16,218 and the Nifty settled 29 points (1%) higher at 4,920. The market is likely to see a struggle in its attempt to rise further. The Nifty has to make higher highs and higher lows to take the benchmark up to the level of 5,040.
The steep fall in the rupee saw the market retreat in late trade and close flat with a positive bias on Monday. The continuing decline in the rupee raised concerns about the pace of economic growth resulting in the market closing sharply lower on Tuesday. However, a small recovery in late trade enabled the indices restrict their losses on Wednesday.
Brushing aside early hiccups and the weakening rupee, the market settled with gains on Thursday as state-owned oil marketing companies increased petrol prices by Rs6.28 per litre (excluding taxes). A recovery in the rupee and support from the European markets resulted in a flat close with a negative bias on Friday.
Among the sectoral indices, BSE Capital Goods and BSE Bankex (up 2% each) were the top gainers, while BSE Fast Moving Consumer Goods and BSE Consumer Durables (down 2% each) settled lower.
GAIL India (up 6%), Tata Motors, Hindalco Industries (up 4% each), HDFC and BHEL (up 3% each) were the top gainers on the Sensex. Maruti Suzuki, Sterlite Industries (down 4% each), ITC, Jindal Steel & Power (down 3%) and Tata Power (down 2%) were the key losers on the index in the week.
The Nifty was led by Ranbaxy Laboratories (up 9%), Reliance Infrastructure, GAIL India, IDFC (up 6% each) and Axis Bank (up 5%). The draggers of the index were Sesa Goa (down 6%), Maruti Suzuki, Sterlite Ind (down 4% each), ITC and Jindal Steel & Power (down 3% each).
The rupee, which witnessed all time lows earlier this week, witnessed a recovery in the last two trading sessions and closed at 55.37 on Friday following the Reserve Bank of India's (RBI) intervention in the forex market and supply of dollars from exporters. The rupee had slipped to fresh lows-55.0350 (Monday), 55.39 (Tuesday), and 56 (Wednesday), however it recouped its losses on Thursday and Friday. Analysts expect the rupee to trade flat next week.
In the steepest ever hike, petrol price was increased by Rs7.50 a litre with effect from Wednesday midnight. The increase was required on account of rising under-recoveries and a weakening rupee. The previous steepest hike in absolute terms as done last May, when the price was increased by Rs 5.
Opposition parties as well as allies of the UPA government at the Centre criticised the government's harsh move and have demanded a roll-back.
On the global front, global markets will again be pulled by new developments in Europe. In the past week, a summit of European policymakers ended with no clear path to halt the concerns about Greece. While the leaders supported Greece's continuity in the Eurozone, they stressed on the country keeping its commitments.
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