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Weekly wrap: Global cues, rate cut hopes push Nifty, Sensex

14:20

Sensex and Nifty rallied 399 points and 121 respectively treading 1.3 percent ahead of last week’s closing levels. Markets in general remained mixed as BSE small-cap slipped 0.5 percent while mid-cap index was up 1.1 percent.

This week too public sector banks were at the forefront of gains in sectoral indices; CNX PSU Bank index which tracks PSU banking stocks jumped 5 percent. Sectoral stock indices representing realty, software, auto and power sectors gained between 1.4-3.6 percent. FMCG and Infrastructure spaces slipped 1.3 percent this week.

Top Nifty stocks that helped the index close with healthy gains this week were: BHEL , PNB , Hindalco , DLF , M&M ,  Tata Power and  SBI which ran up between 5-13 percent. While, Bharti Airtel , NMDC , Cairn , ITC , Power Grid ,  Sesa Sterlite and  JSPL logged losses between 1.5-4.7 percent, limiting the upside for the index. Among mid-cap and small stocks space: MAN Infra , JBF Ind ,  JK Tyre and  Jet Airways shot up 23-40 percent.

A major boost was OPEC’s decision to leave their production targets intact in their latest meeting. Organization of the Petroleum Exporting Countries’ (OPEC’s) reluctance to change production targets despite a supply glut and slippery oil prices sent stocks of Oil marketing companies (OMCs) such as Indian Oil , BPCL ,  HPCL between 4-9% higher; paint and tyre companies such as  Asian paints and  Apollo Tyres also surged as they operationally benefit from lower crude prices. Brent Crude fell to its multi-year lows of $ 73 on Friday.

The IMF estimates that every $ 10 drop in the price of oil boosts world’s growth by 0.2%. The drop in oil prices can be expected to boost global growth by around 0.8% or so in 2015.

The week also saw a smooth but sluggish November series futures & options expiry on Thursday. Nifty rolled over to December series 72% vs 64% in last expiry. Higher rolls were witnessed in auto & infra spaces.

Commenting on the expiry, Amar Ambani, Head of Research, IIFL, said, “The rollovers were strong on Index and market-wide front for December series. While the underlying sentiment still remains positive, 8550 level on spot remains a crucial hurdle for Nifty. Traders and investors should be extremely stock-specific. Among the sectors, pharma and banking are likely to trade firm in the near term.”

Another global boost was People’s Bank of China decision to cut interest rates by 0.4 percent on Friday post market hours.

Expectations of a revival in demand for commodities in China as a result of this turned the spotlight domestically on metal stocks. CNX Metal index ended 1.6 percent higher; Hindalco zoomed 8.5 percent.

Health Ministry’s diktat banning sale of loose cigarette, and also raised the minimum age for sale of tobacco products tripped the bulls briefly with ITC’s 7 percent correction on Tuesday. The stock retreated 1.7 percent from its closing levels last week.

What’s Next

A swathe of macro-economic data slated to be released next week will be watched closely. After auto sales, current account deficit and trade data on Monday, investors will hold their breaths for credit policy on Tuesday.

8750 is the level to watch on Nifty which could pose strong resistance to the index, say technical experts on CNBC-TV18. Some correction in anticipated in banking stocks if there is no rate cut on Tuesday.

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