A close above 5,400 on the Nifty essential for upmove

Concerns about economic reforms being impacted after the Congress party lost in the state assembly elections and the unending Eurozone debt crisis kept the market in check this week. While the Reserve Bank of India cut the CRR by 75 basis points after the market closed on Friday, investors speculate that the finance minister may announce a ‘populist’ budget next week in a bid to garner support.

Political concerns kept the market lower on Monday while dismal global cues and a rout for the Congress party in the state polls saw the market closing sharply lower on Tuesday. The market traded lower on Wednesday but smart gains towards the end of the session enabled the market recover from the day’s lows, albeit it was a flat close with a negative bias. Refreshed after a day’s holiday, the market notched splendid gains on Friday on a better-than-expected response to the Greek bond swap deal.

The Sensex closed 134 points lower (-0.76%) at 17,503 and the Nifty finished the week at 5,334, down 26 points (-0.48%). On Friday, the Nifty breached the resistance of 5,245 and 5,285 in early trade itself. However, the benchmark should close above 5,400 over the next few days to maintain those gains.

The top sectoral gainers were BSE Consumer Durables (up 2%) and BSE Auto (up 1%) while BSE Metal (down 4%) and BSE Oil & Gas (down 3%) were the major losers in the week.

Tata Motors (up 4%), ITC (up 2%), Maruti Suzuki, ICICI Bank and Coal India (up 1% each) were the key gainers on the Sensex. The losers were led by Hindalco Industries (down 9%), Sterlite Industries (down 8%), BHEL, GAIL India (down 6% each) and Reliance Industries (down 5%).

The Nifty toppers were Reliance Power (up 7%), HCL Technologies, Tata Motors (up 5% each), Jaiprakash Associates and Axis Bank (up 4% each). Hindalco Ind (down 9%), Sterlite Ind (down 8%), SAIL (down 7%), BHEL and GAIL India (down 6% each) settled at the bottom of the index.

The RBI on Friday slashed the CRR rate by 0.75 percentage points, a step that will infuse Rs48,000 crore into the economy. The reduction in the CRR, which comes into effect from Saturday, is aimed at reducing the liquidity deficit (which) is expected to increase significantly during the second week of March on account of to advance tax outflows and the usual frontloading of cash balances by banks with the RBI.

India’s exports recorded the slowest pace of growth in three months at 4.3% year-on-year at $24.6 billion in February. In sharp contrast, imports grew at a faster rate of 20.6% to $39.8 billion in the month under review, translating into a trade deficit of $15.2 billion. Expressing concerns over the ballooning trade deficit, commerce secretary Rahul Khullar said that since October last exports are decelerating faster than imports.

In a stellar stock market debut, the country’s largest commodity exchange Multi Commodity Exchange (MCX) on Friday listed with a 34% premium over its initial public offer (IPO) price of Rs1,032 and finally settled 26% higher at Rs1,297.05 a share on the Bombay Stock Exchange (BSE).

On the NSE, the stock ended at Rs1,294, up 25.39%. The company had offered to list its shares on the BSE only, but NSE proactively decided to add MCX shares to its list of securities admitted for trade.

On the international front, Greece has managed to pushed through the bond swap offer, a requirement for its 130 billion ($172 billion) bailout deal with bondholders representing 83.5% of the value of its bonds taking part. The government will now activate Collective Action Clauses on those who held out, raising participation to 95.7%.

Meanwhile, US employment grew for a third month in February as employers added 227,000 jobs to their payrolls, the Labor Department said. However, the unemployment rate was steady at a three-year low of 8.3%.