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Equity market dodges oil bullet, surges on trade talks (Market Review)

Saturday - January 12, 2019 7:10 pm , Category : BUSINESS
Mumbai, Jan 12 (IANS) Despite a rise in global crude oil prices and heavy outflow of foreign funds, the Indian equity market logged gains during the week ended on Friday, partly owing to an ease in liquidity and hopes of the US-China trade war being resolved.

According to market observers, initially, stock-specific buying on the back of expectation of healthy third quarter earning results led the market higher, but results from private banks and the IT sector disappointed.
Accordingly, the volatile week saw the Sensex gain 314.74 points or 0.88 per cent, and Nifty50 scale-up only 67.6 points or 0.63 per cent.
"Market started-off on a positive note on the back of easing liquidity situation, appreciation in INR and selective buying in FMCG, IT & Private banks on expectation of strong earnings," Geojit Financial Services Head of Research Vinod Nair said.
"However, investors turned cautious as private banks reported higher NPAs and margin disappointment from the IT sector. While a potential settlement of the trade dispute helped oil prices to re-test $60 in the last couple of days, leading to depreciation in the rupee."
Index-wise, the S&P BSE Sensex gained 314.74 points, or 0.88 per cent, to close at 36,009.84, whereas the 50-share Nifty of the NSE gained by 67.6 points, or 0.63 per cent, to settle at 10,794.95.
Globally, investors were upbeat as a resolution in the US-China trade tension seemed near. However, the talks which concluded this week failed to completely convince market participants.
"Investors are waiting for further guidance from the US-China trade negotiations. Meanwhile, China's economy is slowing and facing increasingly powerful headwinds. Crude oil prices rose sharply amid easing concerns about energy demand," SMC Investments & Advisors CMD D.K. Aggarwal told IANS.
Sunsequently, the rise in crude oil prices depreciated the India currency, which eneded the week lower against the US dollar. It weakened by 77 paise to 70.49 against the dollar from its previous week's close of 69.72.
"The rupee touched a strong point of 69.24 last week and started weakening thereafter in response to a 20 per cent expensive crude from lows of $50 to a barrel," Sajal Gupta, Edelweiss Securities' Head of Forex and Rates.
"The rupee has got concerns from rising crude and the risk of fiscal slippages in a poll bound nation... any breach above 70.60 levels can take it to 71.50 levels."
Besides, the Indian markets were dented by an outflow of foreign funds, as FIIs were net sellers to the tune of over Rs 500 crore as against domestic institutional investors, who bought over Rs 1,100 crore worth of stocks, provisional data on BSE showed.
"The market breadth was negative in four out of the five trading sessions of the week. The top sectoral gainers for the week were the FMCG, Pharma and IT indices. The top losers were the Metal, Media and Energy indices," Deepak Jasani of HDFC Securities said.
The top gainers on the BSE and the NSE were Axis Bank which gained 7.53 per cent and Tata Motors which was up 5.59 per cent. ITC inched up over 5 per cent while Tata Motors (DVR) and ICICI Bank gained in the range of 3 to 5 per cent.
In contrast, export-oriented Hero MotoCorp lost 3.08 per cent followed by Yes Bank, Tata Steel, Bajaj Finance and IndusInd Bank declining in the range of 2 to 3 per cent.
(Ravi Dutta Mishra can be reached at ravidutta.m@ians.in and Rohit Vaid at rohit.v@ians.in)

--IANS ravi-rv/vm