Conditional upmove ahead: Weekly Market Report

Moneylife Digital Team 28 July 2012

Volatile sideways move unless Friday’s low holds

The market settled lower in the week as investors were disappointed with the government’s lack of initiative to bolster policy reforms to spur growth. Concerns about the deficient monsoon rains and negative cues from across the globe also dented market sentiment. Investors will now look forward to the Reserve Bank of India’s (RBI) review of its monetary policy, slated for 31st July, although there is a small possibility of a change in key rates in view of the high inflation rate.

The Sensex closed the week down 319 points (1.86%) at 16,839 and the Nifty settled 105 points (2.02%) lower at 5,100. The Nifty may now see a period of sideways volatility again and may head higher if Friday’s low holds.

Concerns about Greece failing to meet its bailout targets and the political uncertainty at the Centre were seen as the main causes of the market ending sharply lower on Monday. Lacklustre indicators from Europe resulted in the indices closing flat with a positive bias on Tuesday. Global cues saw the market closing marginally lower on Wednesday.

Stung by SEBI’s norms on F&O scrips, the market closed over 1% down on Thursday. Pressure on PSU lenders saw the market trim its gains in the second half of trade, but the market managed to end in the positive on Friday.

In the sectoral space, the BSE Fast Moving Consumer Goods index gained 1% while BSE Realty (down 7%) and BSE Capital Goods (down 6%) were the top losers.

The top gainers on the Sensex were Hindustan Unilever (up 4%), Sun Pharmaceuticals, Dr Reddy’s Laboratories and ITC (up 1% each). The key losers were State Bank of India, BHEL (down 9% each), Wipro (down 8%), Jindal Steel & Power (down 7%) and Larsen & Toubro (down 5%).

The Nifty toppers were HCL Technologies, Ambuja Cements (up 8% each), Hindustan Unilever (up 4%); Power Grid Corporation and ACC (up 3% each). Punjab National Bank (down 13%); SAIL (down 11%), Jaiprakash Associates, Reliance Infrastructure (down 10% each) and SBI (down 9%) settled at the bottom of the index.

Market regulator Securities and Exchange Board of India (SEBI) has hiked the benchmark liquidity level for any scrip to be eligible for trading in the derivatives segments, a move aimed at checking any manipulation by doing away with illiquid stocks. Now scrips with a minimum trading volume of Rs10 lakh and market wide position limit (MWPL) or market capitalisation of Rs300 crore would be eligible for entry into the Future and Options (F&O) segment, SEBI said in a circular.

On the global front, financial markets reacted positively to European Central Bank president Mario Draghi’s assurance that he would take appropriate steps to protect the Eurozone from falling apart. Meanwhile, it is reported that the ECB chief will hold talks with German Bundesbank president Jens Weidmann on lowering interest rates and increased bond buying, among other initiatives.

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