Week that was: Market in the hands of FIIs; will track crude, RBI signals

NEW DELHI: The US Fed’s lowering of forecast for possible rate hikes during the year sparked off a rally across asset classes, and equity was no exception.

In tune with global markets, NSE barometer Nifty50 climbed 94.15 points, or 1.25 per cent, during the week, to eventually reclaim the 7,600 mark. BSE benchmark Sensex rose 234 points, or 0.94 per cent, during the week and ended the week not far from the 25,000 mark.

The 30-pack index ended the week at 24,952.74.

The week brought positive news from all fronts. At home, consumer and wholesale inflation data for February eased further, raising hope of a rate cut by the Reserve Bank of India (RBI) sooner than later. Rate cut hopes strengthened after the US Fed dropped hints that there may not be more than two rate hikes this year against its earlier forecast of four.
Banking stocks rallied. The BSE bankex climbed 3.5 per cent for the week. It was followed by BSE oil & gas index, BSE IT index and BSE PSU index, which gained 3.2 per cent, 3.2 per cent and 1.8 per cent, respectively, during the week.

Brent crude prices touched the $42 a barrel mark during the week. While the rise in crude prices was seen as a positive for emerging market (EM) equities in the short term, it may hurt countries such as India with high current account deficit (CAD) in the long run.

In the near term, the market mood will depend on global market trends, investment by foreign portfolio investors (FPIs) and crude price movement, Rohit Gadia, Founder and CEO at CapitalVia Global Research, said, adding that: “We expect RBI to cut interest rates by 25 basis points at its policy review on April 5, after data on Monday showed inflation easing more than expected in February.”

Among the Nifty50 stocks, Ambuja Cements (up 10.6 per cent), BHEL (up 9.3 per cent), ACC (up 9 per cent and ICICI Bank (up 7.6 per cent) led the gainers inthe 50-pack index. Tech Mahindra and GAIL advanced 7.5 per cent and 7.3 per cent, respectively.

On the downside, Lupin, Coal India, Sun Pharma and HDFC Bank declined 16.3 per cent, 6.6 per cent, 6 per cent and 2.7 per cent, respectively. Others such as Asian Paints and Zee Entertainment fell 2.6 per cent and 2 per cent, respectively, for the week.

Data available with depository NSDL showed FPIs bought equities to the tune of Rs 2,867.75 crore in the four sessions till Thursday. Friday’s data was not available at the time of writing of this report.

The coming week with be a truncated one. Only the first three sessions of the week will see trading on Dalal Street. The market will be closed on Thursday on account of Holi and on Friday for Good Friday. Globally, no major data is scheduled for release during the week, except for PMI readings in the euro zone and the US and GDP numbers in Japan, which will be out on Friday.

“We can look forward to the next week with certain degree of optimism. This move has been building up pretty steadily. The market had rallied up to 7,600 earlier, taken its time, resisted going down, came back and tested the sellers there, absorbed all the selling that happened and then closed above it for the week,” said CK Narayan, Founder, Chart Advise.

“Of course, we need to see follow through price action on Monday when the market opens. If the Nifty50 opens above 7,600-7,615 levels, then it would be off to the races and we can probably trade aggressively,” Narayan said.