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Nifty, Sensex under Pressure – Weekly closing report

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

 

 
The major indices of the Indian stock markets rallied on Monday and closed with gains over Friday’s close. On the NSE, there were 979 advances, 748 declines and 350 unchanged.
 
Sensex advanced over 250 points and the Nifty traded over 10,850 on Monday. Finance stocks, the index pivotal, traded higher. Oil and gas metal, power and energy stocks gained over 1%. 
 
The US Federal Food and Drug Administration (FDA) inspected the good manufacturing practices of Biocon's new active pharmaceutical ingredients (API) facility near Hyderabad in Telangana last week, said the biotech firm on Monday and concluded without any observation," said the pharma major in a statement here. 
 
Buoyed by increasing domestic demand on the back of infrastructural development, state-run National Aluminium Company Ltd (Nalco) plans to embark upon a Rs25,000 crore brownfield and Rs20,000 crore greenfield expansion in the next few years, its Chairman and Managing Director T.K. Chand said, adding this should eventually improve the bottomline by Rs1,100 crore. 
The major indices of the Indian stock markets were range-bound on Tuesday and closed with minor gains over Monday’s close. On the NSE, there were 965 advances, 755 declines and 342 unchanged.
 
The indices trimmed their major losses during the afternoon session of trade on Tuesday on the back of gains by the domestic currency. IT (information technology) along with financial stocks dragged the benchmark index down. Earlier the BSE Sensex and Nifty opened in the red ending gains in five consecutive trading sessions. Sensex lost around 200 points during the initial session, but pared its losses. Both global and domestic markets were subdued as investors traded with caution ahead of the US Federal Open Market Committee's (FOMC) two-day meet starting on Tuesday. The committee is expected to raise interest rates, which has kept the sentiments tepid, analysts said. The Indian rupee was trading 71.01 per US dollar from its previous close of 71.55.
 
Financially strained Jet Airways said a forensic audit is being conducted by state-owned lender State Bank of India on specific transactions of the company and it is cooperating with the same. The statement comes after the state owned-lender commenced the audit of specific transactions of the company for the period April 1, 2014 to March 31, 2018. "The company is fully cooperating with the auditors and providing them all the information, as is being sought in this connection," the airline said in a regulatory filing after stock exchanges sought clarification from Jet Airways on reports over SBI's forensic audit. "The company has been regular in making the required disclosures in accordance with regulation 30 of the listing regulations. The company is, however, unable to comment on the reasons for the decrease in its share price on the stock exchanges." 
 
Within hours of being sworn-in as Chhattisgarh Chief Minister, Bhupesh Baghel announced to waive off farm loans amounting to Rs6,100 crore. The new government has also decided to raise minimum support price of paddy to Rs2,500 per quintal. Immediately after taking over as the new Chief Minister of Madhya Pradesh, Kamal Nath waived loans of farmers to the tune of Rs2 lakh each, delivering on the Congress pre-poll promise of cancelling farm loans within 10 days of coming to power. Relief in the agricultural sector is likely to increase aggregate demand in the Indian economy and is an indicator of a long term bullish trend in the domestic stock markets.
 
The major indices of the Indian stock markets were range-bound on Wednesday and closed with gains over Tuesday’s close. On the NSE, there were 1,136 advances, 562 declines and 362 unchanged.
 
Amid mixed Asian cues and falling crude oil prices, the benchmark Sensex extended its early gains on Wednesday. Apart from the export-oriented IT (information technology) and pharma stocks all other sectors gained on both NSE and BSE.
 
The domestic currency continued to gain against the US dollar on Wednesday after registering a Rs1.11 rise -- the strongest single day gain in five years. Rupee was trading at Rs70.16 against the US dollar from its previous close of 70.44 after the benchmark Brent Crude slipped to $56.68 a barrel.
 
Indian bonds, equity and the currency have outperformed other major markets by a big margin, pointed out market analysts.
 
The Life Insurance Corporation (LIC) has made an open offer to acquire 26% stake in the public sector lender IDBI Bank for Rs61.73 a share. Currently, the Securities and Exchange Board of India (SEBI) norms mandate an open offer if a company acquires up to 25% stake in a listed entity. 
 
Private sector IDFC Bank announced that the lender's merging of non-banking finance company (NBFC) Capital First with it has become effective on Tuesday following the lodging of the relevant NCLT (National Company Law Tribunal) order with the Registrar of Companies. An IDFC stock exchange filing also said following the regulator's approval, the bank board has appointed V. Vaidyanathan as the MD and CEO of the bank with effect from December 19, 2018, in place of Rajiv B. Lall. The board also approved the appointment of Rajiv B. Lall as the part-time non-executive Chairman of IDFC Bank with effect from December 19, 2018, subject to Reserve Bank of India (RBI) approval.  
 
The major indices of the Indian stock markets were range-bound on Thursday and closed with minor losses over Wednesday’s close. On the NSE, there were 829 advances, 883 declines and 350 unchanged.
 
In line with global markets, BSE Sensex and Nifty50 traded lower on Thursday initially after the US Federal Reserve raised its short-term interest rate. Metal and telecom stocks witnessed selling pressure along with index pivotals finance and banking stocks. Fed's decision to increase the short-term interest rate and its indication for a milder path of future increase weakened the dollar which supported the domestic currency, observed market analysts. 
 
The Indian rupee gained close to 40 paise after the Fed decision. It traded at Rs70.09 against the US dollar after closing at 70.40 on Wednesday. Analysts said the rupee may soon breach the 70 a dollar mark.
 
Automobile major Maruti Suzuki is likely to log a 5% growth in wholesale sales during the upcoming January-March quarter, said the company's Chairman R.C. Bhargava. Bhargava, in a media interaction here said that the first quarter of the calendar year 2019 would reverse the recent subdued trend. 
 
"The wholesale figures in the first quarter next year will rise again, not to double digits, but to around 5%. It will reverse the trend which you had in the last five-six months of low growth," he said. He noted that likely offloading of stocks in December due to offers and incentives, would result in firm wholesale demand in the March ending quarter. "Good response" for the Ertiga also would pump sales, Bhargava told reporters. The Maruti head further said that the company would launch a new car during the first quarter of 2019, although he did not reveal any further details on it. 
 
The major indices of the Indian stock markets suffered a correction on Friday and closed with significant losses over Thursday’s close. On the NSE, there were 522 advances, 1,176 declines and 364 unchanged. All the 19 sectors on the BSE traded in the red led by selling in finance and banking stocks.
 
The US House of Representatives has approved more than $5 billion in funding for the President's border wall in its stopgap spending bill, close to 24 hours before the partial government shutdown deadline. This has lent a bearish trend to the US stock markets on account of profligate government spending on US immigration security.
 
The Indian rupee lost some ground against the US dollar on Friday as it traded at Rs70.19 from its previous close of 69.70. The decline in the rupee came after it made significant appreciation in the past few sessions.
 
Indian pharmaceutical major Torrent Pharmaceuticals Ltd is voluntarily recalling two lots of Losartan potassium tablets -- used to treat hypertension -- in the US market due to detection of traces of unexpected impurity, the US Food and Drug Administration (USFDA) said. "Torrent Pharmaceuticals Limited is voluntarily recalling two lots of Losartan potassium tablets, USP to the consumer level due to the detection of trace amounts of an unexpected impurity found in an active pharmaceutical ingredient (API) manufactured by Hetero Labs Limited," USFDA said in a statement.  According to USFDA, the impurity detected in the API is N-nitrosodiethylamine (NDEA), which is a substance that occurs naturally in certain foods, drinking water, air pollution, and industrial processes, and has been classified as a probable human carcinogen as per International Agency for Research on Cancer (IARC) classification. To date, Torrent Pharmaceuticals Ltd has not received any reports of adverse events related to this recall, the statement said. Torrent Pharmaceuticals shares closed at Rs1,779.75, down 1.47% on the NSE.
 
National Company Law Tribunal's (NCLT) Kolkata bench has directed initiation of corporate insolvency resolution process against Coal India's subsidiary Eastern Coalfields Ltd (ECL). Coal India shares closed at Rs252.20, up 0.66% on the NSE.

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Why Is the US Market Weak and Indian Market Strong?
Global markets are loosely correlated during big moves. If the US market falls by 10%-15%, Indian markets too react in the same direction. However, this month has been quite unusual. While the S&P500 has fallen by almost 11%, the Indian market is up, though marginally. What explains this? It is the tighter interest rate in the US and the prospects of higher liquidity in...
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