Sensex, Nifty will have to make a huge effort to keep the rally going: Weekly Market Report

Moneylife Digital Team 15 December 2012

Watch the lows of last week for a possibility of a further decline

The domestic market snapped the three week gaining spree to settle lower this week. The market turned weak as investors were worried about governance issues after Parliament witnessed more adjournments even as the FDI in retail was cleared by both Houses last week. The Reserve Bank of India’s (RBI) monetary policy review, due on 18th December, will give further direction to the market.

The BSE Sensex declined 107 points (0.55%) to close the week at 19,317 and the Nifty settled 28 points (0.47%) down at 5,880. The market will have to make a huge effort to keep the rally going. Watch out for a close below the low of last week for the possibility of a further decline.

The market settled flat on Monday on new worries from Europe and the absence of any domestic triggers. The uproar over the Wal-Mart issue which rocked the Parliament pulled the market down on Tuesday. The benchmarks were down on Wednesday despite the industrial growth numbers for October coming in at a 16-month high of 8.2%.

Pressure from consumer durables and fast moving consumer goods stocks kept the market in the negative on Thursday. Easing of the November headline inflation pushed the market higher on Friday on hopes that the RBI will cut interest rates at next week’s policy meeting.

In the sectoral space, BSE Auto (up 2%) and BSE Bankex (up 1%) were the top gainers whereas BSE Consumer Durables (down 5%) and BSE Power (down 3%) were the main laggards.

The chief Sensex gainers were Bajaj Auto (up 7%), Jindal Steel & Power (up 5%), Tata Motors (up 4%), Sun Pharmaceutical Industries and Hero MotoCorp (up 2% each). The major losers were BHEL (down 7%), NTPC, Tata Power (down 5% each), Bharti Airtel and Hindalco Industries (down 3% each).

Among Nifty stocks Bajaj Auto (up 7%), Bank of Baroda, Jindal Steel (up 5% each), Tata Motors (up 4%) and Reliance Infrastructure (up 3%) were the key gainers. On the other hand, BHEL (down 7%), Tata Power (down 5%), NTPC (down 4%) Jaiprakash Associates and Grasim Industries (down 3% each) settled at the bottom of the index.

Industrial production growth rate bounced back to a 16-month high of 8.2% in October. Meanwhile, the contraction in the industrial production during September this year was revised downward to 0.7% from earlier provisional estimates of 0.4% released last month. Good performance of the manufacturing, power sector and higher output of capital as well as consumer goods contributed in the industrial growth numbers last month.

Headline inflation, as measured by the Wholesale Price Index (WPI), came down to 7.24% in November from 7.45% in the previous month and 9.46% in the same month a year ago. Meanwhile, retail inflation in November moved up to 9.9%, mainly on account of higher prices of sugar, vegetables, edible oil and clothing.

In international news, the US markets settled lower as the impasse among US policymakers about a budget deal overshadowed positive economic data and the Federal Reserve’s new bond-buying plan.

Europe witnessed a rise in manufacturing growth in December, HSBC Flash PMI data showed. Eurozone December Composite Flash PMI came in at 47.3 from 46.5 in November. France's December Flash Composite PMI came in at 45.0 against 44.3 in November and Germany’s December Composite Flash PMI data came in at 50.5 over to 49.2 in November.

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