Street’s 2-day gain fails to recover dismal weekly loss

Benchmark equity indices gained 2% in the last two sessions but did little to reduce deep losses…

Benchmark equity indices gained 2% in the last two sessions but did little to reduce deep losses encountered earlier this week, leading Indian equities to post their biggest weekly loss in almost a month. Benchmark indices lost more than 3% on Tuesday as selling by foreign portfolio investors (FPIs) intensified.

Global investors were net sellers in cash segment for the fourth successive day. Provisional data from stock exchanges reflected sale of nearly $48 million, taking the tally to -$400 million in the first seven sessions of 2015.

The Sensex lost almost 1.6% or 430 points from last week’s close to end at 27458.38. The Nifty declined 1.33% or 111 points to settle at 8284.5. The fall was in sync with the weak sentiment in global equities arising out of multi-year fall in crude oil prices and speculation of Greece’s exit from the euro zone.

Broader markets were better performers in relation to benchmark indices. The mid cap and small cap indices each ended the week with nearly 1%-fall. Shares of metals, banking, capital goods, and power companies featured among the top losers this week.

Bharat Heavy Electricals (BHEL) lost 7.55% during the week followed by Sesa Sterlite (-6.6%), ICICI Bank (-5.65%), HDFC (-5.1%), and Tata Power (-4.26%).

Indian Q3 earnings season, which began with Infosys’ results, received positive boost after the Bangalore-based IT-major maintained its full-year dollar-revenue guidance of 7-9%. Infosys also reported volume growth of 4.2% for the quarter, one of the best in three years, and its net profit grew 4.9% sequentially to Rs 3,250 crore.

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The stock jumped more than 5% on Friday, helping the stock recover all its losses and end the week as the third best performer (+3%). Hindustan Unilever (HUL) was the top performer this week with nearly 15% up-move followed by Maruti Suzuki (MSIL) with 3.16% gains, Tata Motors (+1.98%), and Mahindra & Mahindra (1.04%)

“The fall was short-lived and the markets sharply bounced on Thursday and Friday driven by stability in crude oil prices. Infosys earnings also lent support to the uptrend,” said Shrikant Chouhan, Head- Technical Research, Kotak Securities.

Chouhan said traders are advised to remain cautious in long trades between 8300 – 8400, despite the recovery witnessed in the market. A quick sell off at 8190 may lead Nifty to 8100 in the near-term.

In global markets, the trend remained weak with most major Asian and EM indices ending down 0.5-2% from the close previous week. Major European indices declined 2-3% for the week and major US indices were marginally in the green for the week, at the time of going to print.

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