STOCKS
Across-the-board selling triggered by a host of negative factors, including announcement of macroeconomic data and concerns over the progress of monsoon, kept the market under pressure for the third straight week as the BSE Sensex tumbled by 343 points in the week.
The market, however, might get a push next week as the Index of Industrial Production (IIP) data surprisingly grew in April at an annual rate of 4.1 per cent to a two-month high, but the consumer price index (CPI) inflation rose to 5.1 per cent in May from 4.87 per cent in April.
Concerns that the US Fed will increase rates as early as September on better-than-expected jobs data, drought fears and RBI’s cautious stance on economic recovery continued to hit the sentiments.
Foreign investors turned cautious in anticipation of an inclusion of Chinese A shares in the MSCI Emerging Markets Index, which could see them move to Chinese markets, traders said.
After major index provider MSCI Inc decided against adding Chinese domestic stocks to its widely tracked emerging markets index for now, a major overhang was lifted from the Indian stock market. Such an inclusion would have resulted in a sharp increase in China’s weightage in the index, coming at an expense of other emerging markets including India.
The 30-share gauge, Sensex, began the week on a positive note to touch a high of 27,510.29 before plunging to a low of 26,307.07. Finally, it closed at an 8-month low of 26,425.30 – a level not seen since October 17, 2014 when it had finished at Rs 26,108.53. In straight three weeks, it has crashed by 1,532.20 points or 5.48 per cent.
Similarly, the 50-share Nifty of the NSE also started higher and hovered in a range of 6,163.05 and 7,940.30 before concluding the week below 8,000-mark at 7,982.90, a fall of 131.80 points or 1.62 per cent. In three weeks in a row, it has stumbled by 476.05 points or 5.63 per cent.
All-round selling was visible as the 12 sectoral indices closed in the red between 0.56 per cent and 3.98 per cent with realty, consumer durable, health care, metal, FMCG, Auto and IT segments taking the lead in the downslide.
Midcap and smallcap stocks too suffered heavily on profit booking by wary retail investors in the current uncertain scenario as their indices -the BSE-Smallcap and BSE-Midcap dropped by 2.56 per cent and 2.24 per cent, respectively, and underperformed at the sensex.
Meanwhile, Thursday, RBI had said that Current Account Deficit fell sharply to its lowest level in a year at USD 1.3 billion or 0.2 per cent of GDP in the fourth quarter of 2014-15.
“Low visibility of capex recovery and slow credit growth are…reasons for investors lightening their overweight stance on Indian equities,” said Hitesh Agrawal, head research, Reliance Securities.
“The recent disappointing Q4 earnings season, coupled with the somber management commentaries, has cast a shadow over the extent of recovery possible in the current fiscal,” added Agrawal.
The market is also looking for the next triggers to decide on its future course of action, including the progress of monsoon and June earnings by key companies.
Besides, bleak chances of any further rate cut by the RBI, too put pressure on the market.
IT stocks were also at the receiving end on reports that the US Department of Labour has initiated probe against two Indian companies – TCS and Infosys – for H1-B visa violations.
Foreign Portfolio Investors (FPIs) continued their selling spree and pulled out `3,158.05cr during the week, including provisional data of June 12.
FOREX
The rupee plunged 31 paise, to close the week at 64.06 against the American currency, on fresh demand from banks and importers owing to a firm dollar in the overseas market amidst foreign capital outflows.
Fall in the equity market in view of cautious approach of investors over concerns of a deficient monsoon for the second consecutive week also affected the rupee sentiments.
The Indian currency started lower at 64.05 a dollar from last weekend’s close of 63.75 at the Interbank Foreign Exchange (Forex) market and dropped further to a low of 64.1675 before concluding at 64.06, disclosing a loss of 31 paise or 0.49 per cent from its preceding weekend. It hovered in a range of 63.7450 and 64.1675 during the week.
Foreign investors pulled out USD 388.81 million during the first four days of the week as per the Sebi’s record.
In the global market, the dollar traded higher against its rivals, as worries surrounding Greece continued to deepen, though some investors were headed to the sidelines ahead of next week’s US Federal Open Market Committee meeting.
Mr Pramit Brahmbhatt, Veracity Group CEO said, “Rupee ended lower following weak local equities”. Traders preferred to stay cautious in the unsure market.
The trading range for the spot dollar-rupee pair is expected to be within 63.60 to 64.40, he added.
BULLION
After three-consecutive downside week stints, gold witnessed a modest rebound at the bullion market due to renewed demand from jewellery stockists and retailer despite the lack of movements and unusually quiet conditions.
It has been another roller coaster week for gold as overall market sentiment remained under pressure owing to a delay in crucial monsoon season amid growing concerns over the economic growth recovery.
In the New York comex market, gold for August contract edged up by USD 11.10 to settle at 1179.20 an ounce against USD 1168.10 an ounce, while silver for July delivery eased further to end at USD 15.825 an ounce from 15.984 an ounce.
Standard gold (99.5 purity) resumed marginally higher at Rs26,625 and hovered between a high of Rs26,775 and a low of Rs26,615 before ending at Rs26,690 from the preceding weekend’s level of Rs26,580, showing a gain of Rs110, or 0.41 per cent per 10 grams.
Pure gold (99.9 purity) also commenced a tad higher at Rs26,775 and traded between Rs26,925 and Rs26,765 before concluding at Rs26,840 compared to Rs26,730, revealing a rise of Rs110, or 0.41 per cent per 10 grams.
Silver ready (.999 fineness) opened better at Rs37,680 but later plunged to a low of Rs37,280 before finishing at Rs37,490 against last Saturday’s closing level of Rs37,600, registering a fall of Rs110, or 0.29 per cent per kilo.
