Any market rally will be met by selling. The mood is bleak
With the second consecutive week of fall on the bourses, the Sensex and the Nifty hit their lowest level since 27 June 2013. On all trading days the benchmark indices closed in the negative. This is the eight consecutive fall for both Sensex and Nifty till Friday.
The Sensex lost 584 points (2.96%) to close the week at 19,164 and the Nifty settled at 5,678, down 208 points (3.54%).
On Monday, the benchmark continued the fourth day of decline, ahead of Reserve Bank of India (RBI) announcing its policy review on Tuesday, where analysts felt that there will not be any revision in key interest rates. On Tuesday, the RBI, as expected kept rates unchanged and reiterated that the recent measures to tighten liquidity would be rolled back in a calibrated manner as stability is restored in the forex market. Although this move was expected, stocks continued to fall. Even on Wednesday, the market remained negative, ahead of an announcement from the US Federal Reserve about the future of its stimulus programme.
On Thursday, the market again ended in the red, even as the Federal Reserve, after a two-day policy meeting, maintained its bond-buying program at current levels. The market was hit hard on that day by a 62% crash in Financial Technologies Ltd (FT) and Multi Commodity Exchange Of India Ltd (MCX) that tanked 20% hitting its lower circuit at Rs512.05. FT-promoted National Spot Exchange Ltd (NSEL) announced a suspension of trading and merging of settlement cycles of all one-day forward contracts, except e-series following an order from the Department of Consumer Affairs (DCA). There were fears that NSEL will end up defaulting on its obligations.
Even the easing of the FDI rules by the government for multi-brand retail did not help the indices to gain any strength and ended in the negative for the eighth consecutive trading session on Friday.
BSE Information Technology (up 4%) and BSE Consumer Durables (up 3%) were the top sectoral gainers in the week while BSE Realty Index (down 15%) and BSE Power (down 10%) were the top losers.
The top gainers on the 30-share Sensex were Wipro (15%), TCS (4%), Infosys (3%) and Bharti Airtel (2%), while Coal India (10%), I T C (10%), ONGC (9%), Hindalco Inds (8%) and NTPC (8%) were the major losers.
This week the RBI clarified that foreign institutional investors (FII) who have issued participatory notes (P-notes) can only hedge their currency risk if they receive a specific mandate from their clients. This move is likely to further curb speculation, making sure all P-note related derivative trades are done for genuine customer needs.
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