Weekly Review: Market recovers modestly on late buying, Sensex up 21 points

Mumbai: Markets ended in the green after initial losses on fag-end buying mainly in IT, Refinery, PSU, Capital Goods and Banking counters as investor sentiment got a boost from government estimate of 5.5 percent economic growth this year amid strong global cues.

Strong recovery seen in US and European markets as well as in Asian markets was the main reason behind the market sentiment.

The Finance Minister tabling on Friday the Mid-year Economic Analysis 2014-15 in Parliament which stated that GDP was expected to rise to 5.5 percent in the current financial year as against 4.7 percent in the previous fiscal, also helped the markets, said Hiren Dhakan, Associate Fund Manager, Bonanza Portfolio.

Sensex opened lower at 27,136.28 and fell further to 26,469.42 on initial heavy selling pressure in view of heavy foreign capital inflows and sharp decline in industrial production in October and zero level inflation in November, completing three days of losses.

However, it recovered later on to 27,497.12 before ending the week at 27,371.84, disclosing a gain of 21.16 points or 0.08 percent.

While, the CNX 50-share Nifty eased by 3.75 points or 0.05 percent to end at 8,220.35.
Meanwhile, foreign portfolio investors sold shares worth Rs 4,704.85 crore yesterday, including provisional data on December 19.

"Markets saw major movements during the current week. Clearly, signs of slowdown in global economic growth was the major concern that led to sell-off in the early part of the week," said Sanjeev Zarbade, Vice President, Private Client Group Research, Kotak Securities.

However, markets bounced back post dovish comments from the US Fed, he added.

Traders said rupee nearing 63-level also weighed heavily on investors.

"However, contraction in CPI and WPI inflation boosted the hope that the Reserve Bank would start lowering interest rates early next year, which aided some recovery," said Jayant Manglik, President, Retail Distribution, Religare Securities.

Stability in Russian currency was also a boost to global markets which in turn helped local bourses, traders said.

Indian markets bounced back strongly helped by the US markets which ended sharply up after dovish comments from the Fed.

16 scrips out of 30-share sensex ended higher while 14 others finished lower. Major gainers were BHEL 4.80 percent, HDFC 4.19 percent, ONGC 3.67 percent, Infosys 3.24 percent, Coal India 3.07 percent, Gail 2.79 percent, Hindalco 2.74 percent, TCS 2.17 percent, Wipro 1.87 percent and Axis Bank 1.36 percent while ITC dropped by 6.61 percent, Dr Reddy 5.42 percent, HUL 5.41 percent, Sun Pharma 3.89 percent, SSLT 3.39 percent, SBIN 2.27 percent, M&M 2.74 percent and Bajaj Auto 2.27 percent.

Among the sectoral indices, Power rose by 2.65 IT by 2.56 percent, Teck 2.00 percent, PSU 1.32 percent and CG 1.07 percent while Realty dropped by 5.78 percent, FMCG 5.02 percent, HC 3.66 percent and Auto 1.68 percent.

Small-cap and Mid-cap indices also dropped by 1.32 percent and 1.07 percent respectively due to heavy selling from retail investors.

The total turnover at BSE and NSE was Rs 17,034 crs and 87,041.48 crs respectively during the week as against the last weekend's level of 15,528.21 and 87,203.08 crs.

The rupee continued to fall against the American currency for the second consecutive week and touched 13-mth intra-day low of 63.89 per dollar on persistent dollar demand from oil companies and sustained foreign capital outflows.

The rupee declined even after Finance Minister Arun Jaitley said in Parliament that there was "no serious crisis" for the domestic currency as it was stabilising after a few days of "volatility".

"I don't see any serious crisis on the real value of rupee," he asserted.

The rupee opened lower at 62.50 per USD and plunged to 13-mth low of 63.89 this week before ending At 63.30 per dollar, showing a loss of 101 paise or 1.62 percent amid chaos in global financial markets caused by volatility in Russian currency rouble. It has dropped by 153 paise or 2.44 percent in two straight weeks.

It moved in a wide range of 62.4500 per dollar and 63.89 per dollar during the week.
Forex dealers said strength in dollar which hit multi- year high in overseas markets, also weighed on the rupee.

Foreign portfolio investors sold shares worth USD 636.59 million during first four days of the week, as per Sebi data.

Pramit Brahmbhatt, Veracity Group CEO, said: "The rupee lost... Taking cues from the dollar demand from oil companies which dented the rupee movement and also the dollar index was trading multi-year high...."

Dealers in foreign exchange said the Reserve Bank may have intervened in the markets but it seemed dollars selling through state-ran banks did not pay off.

Weakness in financial markets abroad following continued downslide in global crude oil (Brent) prices below USD 60 a barrel amid fall in Chinese manufacturing data also put pressure on the local currency.
The US Federal Reserve in its two-day monetary policy meet that concluded this week said it was on course to raise interest rates though not right away.

In the forward market, premia dropped further on sustained receivings by exporters.

The benchmark six-month forward dollar premium payable in May tumbled to 196-198 paise from last weekend's close of 203.5-205.5 paise.

Far-forward contracts maturing in November 2015 also slumped to 401-403 paise from 407-409 paise.

The RBI fixed the reference rate for the US dollar at 63.0670 and the euro at 77.4589 from 62.4422 and 77.3846 from last weekend respectively.

The rupee also fell further to 98.91 against the pound sterling from 97.87 last weekend and also moved down further to 77.64 per euro from 77.56.

It too declined further to 53.04 per 100 Japanese yen from 52.69.