Correction Gets Deeper. Relief Rally Likely – Weekly closing report

We had mentioned in last week’s closing report that Nifty, Sensex might rise on relief rally. The major indices of the Indian stock markets suffered a correction on Friday and closed with weekly losses over last Friday’s close. The major trends of the Indian stock markets during the week’s trading are given in the table below:

 

 

The major indices of the Indian stock markets rallied on Monday. On the NSE, there were 725 advances, 1,034 declines and 318 unchanged.

 
Commercial vehicles major Ashok Leyland Ltd on Monday said it closed September 2018 with a 26% growth in sales. In a statement here, the company said it sold 19,373 units last month, up from 15,371 units sold in September 2017. 
 
Pharma major Dr Reddy's Laboratories Ltd on Monday announced the sale of its antibiotic manufacturing facility and related assets in Tennessee, US, for an undisclosed sum. 
 
Gayatri Projects has been awarded with two add-on works to the existing works of Chintalapudi Lift Irrigation Scheme (Package-1 & 2). These two additions lead to a consolidated increase of Rs548.98 crores, nearly 55% of the existing value. 
 
On Tuesday, the stock markets had a holiday on account of Gandhi Jayanthi.  
 
The major indices of the Indian stock markets suffered a correction on Wednesday. On the NSE, there were 1,033 advances, 753 declines and 276 unchanged.
 
Owing to a weak rupee and broadly negative global cues the S&P Sensex tanked over 500 points and the Nifty50 slipped by 130 points on Wednesday.
 
Automobile major Maruti Suzuki India has recalled over 600 Super Carry vehicles to inspect for a possible defect in the fuel pump assembly. According to the company, 640 vehicles in the domestic market, manufactured between January 20 and July 14, 2018, will be covered in this recall campaign. 
 
Tata Communications, a leading global digital infrastructure provider, on Wednesday said it was acquiring Teleena, a Netherlands-based Internet of Things (IoT) connectivity specialist and mobile virtual network enabler (MVNE). This acquisition follows Tata Communications' investment in Teleena in January 2017, when the company became the single largest shareholder in Teleena with a 35% stake.
 
Software major Tech Mahindra on Wednesday announced a strategic partnership with ELTA Systems Ltd., a subsidiary of Israel Aerospace Industries (IAI), to provide next generation cyber solutions and services to state and enterprise customers in India and globally. 
 
The S&P BSE Sensex, plunged over 800 points on Thursday, as a steady decline in the domestic currency and concerns that the central bank would raise the policy interest rate soured investor sentiments. The wider Nifty50 of the National Stock Exchange also lost 240 points. The Indian rupee earlier on Thursday sunk to its fresh low of 73.77 to a dollar, as global crude oil prices continued to climb. India imports nearly 80% of its crude requirements, and a higher price will potentially worsen the current account deficit of Asia's third-largest economy. The Reserve Bank of India will unveil its monetary policy on Friday, where it is likely to raise the repurchase rate by 25 basis points. The repo rate currently stands at 6.5%.
 
Global software major Tata Consultancy Services (TCS) on Thursday said it signed a Memorandum of Understanding (MoU) with the Institute of Industrial Science (IIS) at University of Tokyo to collaborate on technology research and facilitate inter-personnel exchange. 
 
The Indian equity indices plunged on Friday, even though the Reserve Bank of India (RBI) changed its policy stance and kept key benchmark lending rates intact. The RBI was expected to raise rates. Apart from the policy decision, the free-fall in the Indian rupee's value to over 74 a US dollar eroded investor’s sentiments. 
Announcing the fourth bi-monthly policy review of the fiscal, Reserve Bank of India (RBI) Governor Urjit Patel said the Monetary Policy Committee (MPC) has decided to keep the repo, or the short term lending rate for commercial banks, unchanged at 6.5%. Elaborating on the change to "calibrated tightening", the Governor said that it implied that "in this cycle, a rate cut is not the table and we are not bound to increase rates every time we meet." "With this stance we have two options, we can either increase rates or hold them," he said. A "neutral" stance allows the RBI to move either way on rates.
 
Reliance Capital Ltd. on Friday said its wholly owned Reliance Health Insurance has got the R3 approval from Insurance Regulatory Authority of India (IRDAI). Reliance Capital shares closed at Rs254.00, down 6.03% on the NSE.
 
Weak demand conditions along with a rise in inflationary pressures eased growth of India's service sector output during September, a macro-economic data showed on Thursday. Accordingly, the seasonally adjusted Nikkei India Services Business Activity Index declined to 50.9 in September from 51.5 in August. An index reading of above 50 indicates an overall increase in economic activity and below 50 indicates an overall decrease. Consequently, the seasonally adjusted Nikkei India Composite PMI Output Index posted a level of 51.6 during the month under review from 51.9 in August. "Growth of India's services economy spluttered during September amid reports of faltering demand for services. And despite a slight pick-up in manufacturing output growth during the month, overall private sector activity rose at the weakest rate since May," said Paul Smith, Economics Director at IHS Markit, and author of the report. "Rising price pressures were cited as a factor weighing on market activity, with reports from panellists of rising fuel and import prices, in turn mainly driven by the stronger US dollar."

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