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Monetary policy review to drive key equity indices

by admin | May 25, 2021 | Banking, Economy, Markets, News

By Rohit Vaid,

Mumbai : The central bank’s upcoming monetary policy review, combined with the direction of foreign fund flows are expected to drive investors’ sentiments in the equity markets in the coming week.

Market observers opined that other factors such as the rupee’s movement against the US dollar, global crude oil prices and further economic reforms will impact investors’ risk-taking appetite.

“RBI is scheduled to meet on December 6, 2017, and is expected to leave interest rates unchanged as inflation is inching up due to firming crude oil prices, increased financial market volatility and fiscal issues,” D.K. Aggarwal, Chairman and Managing Director of SMC Investments & Advisors, told IANS.

“Nifty is expected to trade in the range of 10,000-10,300 points levels, whereas Bank Nifty is expected to trade between 24,900-25,600 points levels.”

On technical levels, Deepak Jasani, Head – Retail Research, HDFC Securities, predicted a continued “short-term downtrend” for the Nifty after four consecutive sessions of correction.

“Nifty could now head towards the next supports of 10,050-10,094 points early next week,” Jasani said.

“Further downsides are likely if these supports fail to hold. Any pullback rallies could find resistance at 10,230 points.”

In its last review, the RBI had kept the key lending rate unchanged.

According to Devendra Nevgi, Founder and Principal Partner, Delta Global Partners, apart from the RBI’s rate decision, investors will also look to the language and cues on the future inflation scenario.

“Though the consensus is that RBI may not cut the repo rates, the language needs more attention if RBI turns more hawkish on sustained inflation and how the members’ votes split,” Nevgi told IANS.

Macro-data — Nikkei Services PMI — along with passenger vehicle sales will also determine the trajectory of the key indices on Monday, December 4.

Besides the macro-economic data points, volatility in the rupee’s movement against the US dollar and the direction of foreign fund flows could make investors nervous.

On the currency front, the rupee on Friday strengthened by 23 paise to close at 64.47 against the US dollar.

“Next week, the US dollar may react positively to the news that US Senate has approved the tax bill,” Anindya Banerjee, Deputy Vice President for Currency and Interest Rates with Kotak Securities, told IANS.

“As a result, USD/INR may inch higher towards 64.70-80 levels on spot with 64.30-35 acting as strong support. A range of 64.30 to 64.80 is expected over the near term.”

In terms of investments, provisional figures from the stock exchanges showed that foreign institutional investors (FIIs) offloaded stocks worth Rs 2,772.56 crore during the week ended November 27-30.

Last week, continuous outflows of funds, along with growing concerns over the country’s widening fiscal deficit as well as rising crude oil prices pulled the two key equity indices — S&P BSE Sensex and NSE Nifty 50 — lower.

Consequently, the barometer 30-scrip Sensex of the Bombay Stock Exchange (BSE) plunged 846.3 points, or 2.51 per cent to 32,832.94 points.

Similarly, the broader Nifty 50 of the National Stock Exchange declined by 267.9 points, or 2.58 per cent, to close at 10,121.80 points.

(Rohit Vaid can be contacted at rohit.v@ians.in)

—IANS

Geo-political tensions, foreign fund outflows drag equity markets lower

by admin | May 25, 2021 | Economy, Markets, News

Mumbai : Rising geo-political tension in East Asia along with foreign fund outflows and upcoming derivatives expiry dragged the key Indian equity indices — the NSE Nifty50 and the BSE Sensex — to close deep in the red on Tuesday.

The two key indices closed at their lowest levels in a week’s time as heavy selling pressure in banking, consumer durables and capital goods stocks weighed on markets’ sentiments and spanned four consecutive sessions of gains.

Consequently, the wider 51-scrip Nifty of the National Stock Exchange (NSE) closed at 9,796.05 points — down 116.75 points or 1.18 per cent.

Similarly, the 30-scrip Sensitive Index (Sensex) of the BSE closed in the red. It opened at 31,724.84 points, closed at 31,388.39 points — down 362.43 points or 1.14 per cent from Monday’s close at 31,750.82 points.

The Sensex touched a high of 31,739.80 points and a low of 31,360.81 points during the intra-day trade.

Investors’ risk-taking appetite got eroded amid geo-political tensions in the Korean peninsula.

“Markets corrected sharply on Tuesday after a weak opening. The main indices lost over one per cent as weak European and Asian markets weighed on the market sentiments,” Deepak Jasani, Head of Retail Research, HDFC Securities, told IANS.

“The Sensex and Nifty hit one-week lows and all the major sectoral indices on the BSE closed in the red. Major Asian markets have ended on a negative note, barring the Shanghai index. European indices like FTSE 100, DAX and CAC 40 also traded lower.”

According to market observers, Anand James, Chief Market Strategist, Geojit Financial Services, concerns of heavy floods in the financial capital and the selling by FIIs in equities over the past one month “ensured that risk appetite was down to a trickle, especially as Asian markets were in a sea of red following North Korea threats”.

“The speeding process of NPA resolution may provide some respite to the market ahead of the F&O expiry, after it managed to hold the crucial 60 DMA level,” James said.

On the currency front, the Indian rupee weakened by 11 paise to 64.02 to a US dollar from its previous close at 63.91.

In investments, provisional data with the exchanges showed that foreign institutional investors (FIIs) sold scrip worth Rs 1,459.64 crore, while domestic institutional investors (DIIs) purchased stocks worth Rs 1,391.33 crore.

“The selling pressure was broad-based with all the sectoral indices in the red,” said Dhruv Desai, Director and Chief Operating Officer of Tradebulls.

“Banking, IT, Pharma and FMCG stocks led the sell off. Coal India, HDFC, Sun Pharma and Hindalco were down over 2 per cent.”

Sector-wise, all the 19 sub-indices of the BSE ended in the red, led by the S&P BSE banking index, which plunged by 290.54 points, followed by the S&P BSE consumer durables index, down 258.72 points and the capital goods index which edged-lower by 187.72 points.

The lone Sensex gainer on Tuesday was: Wipro, up 0.02 per cent at Rs 290.95.

On the other hand, major Sensex losers were: NTPC, down 2.80 per cent at Rs 168.50; Tata Motors (DVR), down 2.57 per cent at Rs 219.85; Sun Pharma, down 2.35 per cent at Rs 481.15; HDFC, down 2.20 per cent at Rs 1,727.85; and Reliance Industries, down 2.17 per cent at Rs 1,531.75.

—IANS