Domestic key benchmark indices fell 2 per cent for the week ended January 15, 2016 and closed at 19 month low on Friday on account of sell-off in global markets, selling pressure by foreign institutional investors, weak corporate earnings, soft rupee, disappointing macro-economic data and downfall in crude oil prices.
The barometer index, S&P BSE Sensex plunged 479.29 points to 24,455.04 during the week, while NSE Nifty 50 index shed 163.60 points to settle the week at 7,437.80.
Around 43 stock ended the week in red in the 50-share index with shares of Idea Cellular plunging the most —15.5 per cent, followed by Punjab National Bank (down 12.7 per cent), State Bank of India (down 12.30 per cent), Bharat Heavy Electricals Ltd (down 11.50 per cent) and Bank of Baroda (down 10.5 per cent).
Gaurav Jain, director, Hem Securities, said, “Continued huge selling pressure across the commodities worldwide especially crude oil slumping to multi-year lows, sharp sell-off in global equities in line with Chinese markets, subdued start of quarterly earnings of India Inc, disappointing macro-economic numbers and depreciating rupee against dollar posted sharp losses of more than 2 per cent for the domestic benchmarks in the week gone by.”
On the other hand, index heavyweights Reliance Industries (RIL) and Infosys gained 7.3 per cent and 4.70 per cent during the week under review.
During Jan 8-15, the BSE Smallcap index and BSE Midcap index plummeted 7.46 per cent and 5.90 per cent, respectively.
Foreign institutional investors sold shares worth Rs 2991.13 crore (net) in the past five trading sessions. Rupee fell 1.14 per cent to 67.43 on January 15 from 66.66 on January 8 last week.
Infosys third quarter results gave markets a positive surprise midweek, but failed to arrest the carnage, which assumed panic proportion on Friday, with only IT index ending positive. The BSE IT index gained nearly 1 per cent for the week ended January 15.
Data released earlier in the week had showed that CPI rose while WPI’s deflation slowed down, suggesting that inflation worries persist, diminishing hopes that RBI could consider easing rates further down, when it meets on February 2. IIP figures were at the lowest in 4 years, but the markets did not react too negatively given the seasonality and base effects.
Chinese equities’ fall continued amid Yuan’s depreciation, resembling similar events in August. Meanwhile, oil dipped below $30 a barrel, dragging US equities down, while Merkel’s criticism of ECB keeping rates lower, raised concerns of the impact that rising interest rates in developed economies will have on the investment climate in emerging economies.
For the week ahead, trend in global markets, global macro-economic numbers especially China, quarterly earnings of index heavyweights namely Kotak Bank, Wipro, HCL Technologies, Reliance Industries etc., trend in commodity prices globally and rupee-dollar movement will dictate trend on the bourses.
Sanjeev Zarbade, vice-president, private client group research, Kotak Securities, said, “Going ahead, we believe the volatility in the markets would continue. China and Crude oil would continue to drive markets. We advise investors to look beyond this volatility and take a medium term view. Make volatility your friend by investing on dips.”