A decisive break above 6,100 on the Nifty will attract more bulls

The market closed marginally higher on hopes of a rate cut in the Reserve Bank of India’s (RBI) in its policy meeting next week. Analysts are of the view that the central bank would reduce rates by 25 basis points. However, the gains were capped by corporates, which reported subdued earnings in the December quarter.

The Sensex settled 64 points (0.32%) higher at 20,104 and the Nifty closed the week at 6,075, a rise of 10 points (0.17%). We may now see the market moving sideways. However, a decisive break above 6,100 on the Nifty will attract more bulls.

The market closed in the green on Monday on buying in blue-chips and positive in Europe. The market gave up its early gains and settled near the lows of the day on selling pressure in realty, consumer durables and FMCG stocks. The benchmarks managed to close higher on Wednesday on a smart bounce back in late trade.

The market ended lower on Thursday on selling pressure in mid-cap and small-cap shares. Gains in the realty and auto sectors and good global cues helped the market close in the green on the last trading day of the week.

The BSE Capital Goods index closed 2% higher and the BSE Fast Moving Consumer Goods rose 1%. On the other hand, BSE Realty (down 5%) and BSE PSU (down 2%) were the top sectoral losers.

The top Sensex gainers were Larsen & Toubro (up 5%), ITC, Maruti Suzuki (up 4% each), Bharti Airtel and Dr Reddy’s Laboratories (up 3% each). The key losers were Tata Motors, GAIL India (down 8% each), Hindalco Industries (down 5%), Coal India (down 4%) and Hindustan Unilever (down 3%).

The Nifty was led by Kotak Mahindra Bank (up 6%), L&T (up 5%), ITC (up 4%), Maruti Suzuki and Bharti Airtel (up 3% each). The chief losers on the benchmark this week were Tata Motors, GAIL India (down 8% each), Ranbaxy Laboratories, Hindalco Industries (down 5% each) and Cairn India (down 4%).

Global ratings agency Moody’s on Monday said it has a ‘negative’ outlook on the country’s banking system due to concerns over asset quality and the high interest rates. The agency further said though the government is “likely to remain supportive”, options for the RBI to slash lending rates are limited due to high inflation and the “modest fiscal capacity”.

Among corporates, FMCG major Hindustan Lever, which reported disappointing Q3 results, was down for two days in a row this week as the company'’ board has approved a proposal to increase the royalty payment to 3.15% to its parent firm Unilever Plc. The amount, equivalent to 3.15% of total turnover, would be paid for various provisions related to trademark licenses and technology, among others.

In international news, media reports say the US Federal Reserve’s bond buying has pushed the Fed’s balance sheet to a record $3 trillion in the attempt to bring unemployment down to 7.8%. Policymakers have voiced concern that record-low interest rates are overheating markets for assets from farmland to junk bonds, which could heighten risks when they reverse their unprecedented bond purchases.