 "Market posts biggest weekly fall in a month; midcaps, smallcaps underperform")
The market posted its biggest weekly fall in a month in a US Federal Reserve’s policy-focused week that saw Fed hiking interest rates by 25 basis points (bps) and back home foreign investors selling equities worth over Rs 1,350 crore through the week.
During the week ended December 16, the S&P BSE Sensex lost 258 points, or 1%, to settle at 26489.56, while the broader Nifty50 slipped 122 points, or 1.5%, to close at 8139.45.
Broader market underperformed the headline indices. BSE Midcap index declined 2.38% and BSE Smallcap was down 1.67%.
Meanwhile, foreign investors sold over Rs 1280 crore worth of equities in four days to Thursday, data available with National Securities Depository suggested. On Friday, they sold equities worth Rs 90 crore, provisional data available with the BSE showed.
“Participation from the foreign investors will reduce in the coming weeks, due to upcoming holiday season and that in turn will further minimise the chance of any major directional move in the index. We reiterate our view to hold stock specific trading approach and maintain a balanced portfolio,” said Jayant Manglik, President, Retail Distribution, Religare Securities.
“The 7,950 mark on the Nifty is pivotal and until a break below this level, probability of moving higher cannot be ruled out. Key support from medium-term perspective is at 8,100 and resistance is placed at 8,400 level” said Rohit Gadia, Founder & CEO, CapitalVia Global Research.
Among stocks, Bharti Airtel plunged 6.36% for the week. Coal India plummeted 6.18%, ICICI Bank and Hero MotoCorp tanked 4.75% and 4.67% respectively. Asian Paints and ITC slumped 4,33% and 3.92%, respectively.
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Gainers included TCS (4.03%), Axis Bank (3.61%) Reliance Industries (3.03%) and Tata Motors (1.82%).
Fed hikes rates for first time in a year
In a unanimous decision, the Federal Open Market Committee (FOMC) raised the target federal funds rate by 25 basis points to between 0.50% and 0.75% and signalled a faster pace of increases in 2017 and 2018, heightening fears that higher interest rates in US would trigger foreign investment outflows from emerging markets including India towards the US.
"The market is taking time to shake off the aggressive outlook of the Fed. India is likely to underperform in the near term as the strengthening dollar and the rising oil price will add pressure to an already disrupted market," said Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services.
Inflation comes in at record low in November
The wholesale price index (WPI)-based inflation fell to a five-month low of 3.15% in November from 3.39% in the previous month, while the Consumer Price Index (CPI)-based inflation fell to 3.63% in November — a record low in the new series — from 4.2% in October as the rate of rise in food prices were dampened by the cash crunch following the demonetisation of high-value currency notes from November 8 onwards.
MARKET NEXT WEEK: The next week will start with yearly deposit growth data along with foreign reserves data, followed by bank loan growth. Globally, the data like US existing home sales and crude oil inventories will remain in focus.
“After the long back-to-back global as well as local events, finally market has hardly anything left for coming week to take cues from. However, we expect demonetization to keep playing its role in the equity market for the short-term and any good or bad news related to it could drive the market in respective direction,” said Abnish Kumar Sudhanshu, Director & Research Head, Amrapali Aadya Trading & Investments.
“Additionally, EGMs of most of the Tata holding companies are scheduled for the next week mainly to decide the fate of Cyrus Mistry. Further, we would advise investors to keep an eye on currency movement post the Fed decision. We expect IT counter to remain in focus for some time on account of weakness in rupees as well as increasing govt. focus on the digital India,” Sudhanshu added.