The volatile trading pattern is likely to be extended in the holiday shortened next week too
R. Chandrasekaran
CHENNAI: The fiscal cliff worries have had its effect globally and India stock market was no exception to this. The week started off with a subdued note with no clear cues from either domestic or international. However, the stocks reversed the trend on Tuesday and Wednesday on domestic catalyst, but failed to hold on to it in the last two days of the week as the fiscal cliff worries returned to haunt investors’ sentiments.
The volatile trading pattern is likely to be extended in the holiday shortened next week too as there are no signs of the policy makers reaching a consensus on the vexatious fiscal cliff in the US. The derivatives contract expires on Thursday and this will add to volatility.
Among the major news to hit the Indian markets during the week were foreign direct investments inflows surged 67% in October, foreign exchange reserves jumped $484.2 million, RBI leaves interest rates unchanged, Lower House of Parliament passes Banking Amendment bill, Participatory notes investments increased in the last eight months and the government lowered the growth forecast. However, the government believes that it is on track as far as the deficit is concerned. The victory of Bharatiya Janata Party in Gujarat and the Congress in Himachal Pradesh assembly elections were on the expected lines and had no material impact on the market sentiments.
On Monday, the benchmark index, India’s Bombay Stock Exchange Sensex, slipped 72.83 points in the absence of both global and domestic catalysts. Investors were also cautious about the Monetary Policy review of the Reserve Bank of India (RBI) in the following day. Strangely, markets reacted positively to the RBI decision to keep rates unchanged on Tuesday.
The passing of Banking Amendment Bill in the Lok Sabha cheered investors on Wednesday to lift the BSE’s Sensex by 111.25 points. The benchmark index witnessed a gain of 231.58 points in two day sessions after favorable news from the domestic circuit. However, the markets failed to hold on to gains in the last two days of the week’s trading as the fiscal cliff worries deepened following the rejection of the Republican’s Plan B proposal. The two days gains were nearly wiped out by a single day loss of 211.92 points on Friday.
While the Sensex shed 75.25 points or 0.39 percent to end the week at 19,242 points, National Stock Exchange’s (NSE) Nifty slipped 31.9 points or 0.54% to close the week at 5,847.7 points.
In the sectoral performance, BSE’s Metal advanced 4.4 percent, whereas BSE’s Health Care and Auto indices rose by 0.97 percent and 0.81 percent, respectively, during the week. On the losing side, BSE’s Capital Goods, Consumer Durables and Oil & Gas dropped 1.95 percent, 1.8 percent and 1.23 percent respectively.
Metal is the significant gainer on the Sensex with three out of the top five gainers in the week. Steel Authority of India, Tata Steel and JSW Steel recorded a gain of 8.89 percent, 8.49 percent and 7.88 percent respectively. Aditya Vikram Birla-controlled Hindalco also advanced 7.6 percent, whereas National Aluminum settled with a gain of 6.77 percent in the week.
Though there was much activity in the banking and financial stocks following the passing of a bill in the Lok Sabha, it was a mixed one. Federal Bank was the cynosure of investors among the private sector banks registering a gain of 6.84 percent. But the public sector’s Bank of Baroda surged 7.63 percent. Yet, in terms of Rupee gain, Federal Bank stood apart from others.
However, Oriental Bank of Commerce, Dena Bank, and Syndicate Bank lost 5.27 percent, 4.39 percent and 2.55 percent respectively in the public sector banking space. Similarly, Axis Bank, Kotak Mahindra Bank and HDFC Bank shed 2.44 percent, 2.38 percent, and 1.8 percent, respectively, among the private sector banking stocks.
Among the major losers, Jaiprakash Power plummeted 13.47 percent followed by IRB Infrastructure by 9.92 percent, and Reliance Power by 8.3 percent, respectively, in the A group shares of BSE.
Overall, more than 30 stocks witnessed above the 20 percent gain led by Polar Industries by 90.88 percent, whereas 25 stocks recorded more than 20 percent loss led by M and B Switchgears by 89.51 percent, MSR India by 81.62 percent, and AGC Networks by 53.2 percent.
The FIIs have invested $752.73 million in Indian equity markets for the week until December 20. On the other hand, the Indian mutual funds were the net sellers with Rs.6.31 billion until Wednesday.
The stock markets will continue to look for positive catalyst from the US financial cliff talks to boost investors’ sentiments in the coming week. In any case, volatility will rule the markets at least till the derivatives contract expires on Thursday.