Markets end on a high amid repo rate cut

The surprise repo rate cut by the Reserve Bank of India resulted in the marketing finishing the week ending 16 January on a high, with the Nifty and S&P BSE Sensex gaining 2.77% and 2.42% respectively. In fact, such was the cheer for the rate cut, that the announcement resulted in the Nifty zooming rising 728 points on Thursday, regaining the 28,000 mark while CNX Nifty gained 217 on the day.

This, despite the fact that foreign institutional investors were net sellers of Rs 23.39 crore, while mutual funds were net buyer of Rs 408 crore on Thursday. However, for the week, FIIs were net buyers in the capital markets as they bought shares worth Rs 1,916 crore, while pumping a total of Rs 8,943 crore on the debt side.

In another positive for the market, trade deficit narrowed to a ten-month low in December, imports declined by 4.8% whereas the exports also fell by 3.8%, which came in post-market hours on Thursday. However, 15 January failed to lift up the sentiments. Taking cues from the global Sentiments, Sensex gained only 42 points and Nifty added 20 points on the last trading session closing the week at 28,121 and 8,513-level respectively.

During the week, the US indices were in the negative on the back of weak retail sales and disappointing quarterly numbers from some financial companies.

Among the sectoral indices, BSE Realty was the top performer of the week thanks to the rate cut by the RBI. The index added 119 points on 15 January to close at 1,611. The second best performer was S&P BSE Capital Goods with a net gain of 4.77% for the week. BSE Metal was the worst performing index as it lost 4.15% during the week.

Among stocks, FMCG giant Hindustan Unilever was the biggest gainer as it turned in a net gain of 9.14%. Bharat Heavy Electricals Limited and Housing Development Finance Corporation also gained 7.64% and 7.295 respectively. Among the biggest losers were Hindalco Industries and Sesa Sterlite, which registered a fall of 10.68% and 6.99% respectively.

Sanjeev Zarbade, vice president, private client group research, Kotak Securities believes that the market sentiment remains positive.”So far the Indian markets are concerned, the economic indicators are now begun to show some strength (IIP and inflation data). All indications are that the next fiscal economic growth should range between 5.5-6.5%. We remain positive on private sector banks, IT, Auto and select infrastructure and capital goods companies.”

“We expect the markets to remain upbeat in the upcoming trading sessions and remain bullish over medium term as the markets yet await some action from the RBI in its upcoming RBI monetary policy in first week of February. Overall, we expect the market to remain in the range of 8,200-8,500 in the near term.” says Hiren Dhakan, associate fund manager, Bonanza Portfolio.

Vivek Gupta, CMT, director research, CapitalVia Global Research, adds, “The movement of index in near term will depend on further reform initiatives to be taken by the government and also depend on Q3 results of large cap companies like ITC, HUL, Colgate, Ultratech Cements etc.”

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