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The stock market remained weak with the Nifty closing 2.2 percent lower at 7,610 last week. Investors were on tenterhooks over the passage of the Goods and Services Tax (GST) bill in parliament. Global markets were watchful of the crucial U.S. Federal Reserve meet that will decide the course of a rate hike cycle. Chinese trade data exhibited weakness for the fifth consecutive month, adding to nervousness.
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The Nifty corrected sharply by about 2 percent for the week to close below the crucial 7,800 mark on heightened prospects of a U.S interest rate hike in the coming days. Sentiment was also hit after the rupee fell to its lowest level in more than two years as it headed towards 67 against the dollar. FIIs sold equities worth $382 million over the past five trading sessions while DIIs bought stocks worth $385 million.
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A man looks at a screen across a road displaying the Sensex on the facade of the Bombay Stock Exchange (BSE) building in Mumbai, India, June 29, 2015. REUTERS/Danish Siddiqui/Files
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A man looks at a screen across a road displaying the Sensex on the facade of the Bombay Stock Exchange (BSE) building in Mumbai, India, June 29, 2015. REUTERS/Danish Siddiqui/Files
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The election result in Bihar would influence investors in the coming week. Voters have given a clear mandate to the “Mahagathbandhan” partnership of the Janata Dal (United), Rashtriya Janata Dal and Congress against Prime Minister Narendra Modi’s National Democratic Alliance. Market expectations of Modi’s alliance winning in Bihar were tapering over the last few days and exit polls also pointed towards a tightly fought election — but a rout had not been expected. A gap down opening on Monday is foretold.
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The Nifty saw losses every trading day during the week to close 2.8 percent lower at 8,065. Derivative contract expiry, disappointing September quarter earnings, worries that the BJP-led alliance may not do well in the Bihar election and indications of rate hike by the U.S. Fed in December contributed to market jitters.
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The 2014 general election was termed a “wave election”, a political phenomenon in which a particular party is able to mobilise voters on important issues and win a substantial number of seats. The Narendra Modi-led BJP rode the wave and won on a promise to replicate the Gujarat model of good governance and development for the entire country.
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Indian shares marked their fourth consecutive week of gains with the Nifty adding 0.70 percent at 8,295, a notch below the crucial 8,300 levels. Encouraging corporate results and support from global indices helped markets stay higher.
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A spirited rally late on Friday saw the Nifty close 0.5 percent higher at 8,238. The index otherwise traded in a narrow range of 8,100-8,200 throughout the week. A mix of disappointing corporate results on one hand and stimulus hopes in China and Japan on the other offset each other.
(Any opinions expressed here are those of the author and not of Thomson Reuters)
The Nifty closed the week up nearly 3 percent at a seven-week high of 8,189, comfortably above the psychologically important support level of 8,000. The rally was supported by global markets that turned bullish on expectations of U.S. interest rates remaining low for longer than previously thought, amid weaker-than-expected U.S. economic data and a surprise rally by commodities. Closer home, sound bites from New Delhi seem to suggest the government wants to be seen as being proactive to mend the economy.