 "Markets usher in New Year with third week of gains")
Both the Sensex and Nifty reclaimed their psychological levels of 26,000 and 7,900, respectively. For the week ended January 1, 2016, the Sensex ended 322 points, or 1.2 per cent, higher at 26,191 while the Nifty settled at 7,963, up 102 points or 1.3 per cent.
The benchmark gauge advanced on the first trading session of the New Year after capping the first annual fall in almost four years.
According to Jimeet Modi, chief executive officer, SAMCO Securities, bulls will dominate the year 2016. “Structurally the India story is still intact, but because of global liquidity outflows the markets delivered muted returns. The resilience of the rupee will hopefully bring back foreign liquidity, driving stock prices higher. India has the most reliable and stable diversified economic expansion in the making.”
Speaking about technical outlook, he said, “The Nifty has been rising continuously after hitting a strong support level at 7,550. There is strong resistance at 8,000 and some profit booking is expected at this level. However, a breakout above 8,000 will be a strong signal for the resumption of the uptrend in the medium term.”
“The market will await cues from the international markets for direction once they reopen after the Christmas holidays. The market will start building hopes on the budget and the reform agenda of the government for the year 2016.”
Economic events
Globally, the world financial markets were closed for the later part of the week on account of the New Year holiday.
China's factory output shrank for a fifth straight month in December. However, the silver lining is that the country’s non-manufacturing activity grew strongly in December.
Back home, the combined output of eight crucial infrastructure sectors declined 1.3 per cent in November, pulled down by a steep fall in steel output on consistently declining global crude oil prices and weak consumer and industrial demand.
Key stocks
The week was kind to pharmaceutical stocks with approvals from the US Food and Drug Administration (FDA) to manufacture various drugs.
Lupin soared 2.21 per cent after the drug maker announced it had received final approval from the FDA for its Fyavolv tablet, a generic version of Warner Chilcott's Femhrt.
Dr Reddy’s clocked 3.1 per cent gains during the week after it announced the relaunch of its Esomeprazole magnesium delayed-release capsules, a therapeutic equivalent generic version of Nexium, in the US.
However, Cadila Healthcare plummeted 15 per cent during the week after it received warning letters from the FDA about the quality of two of its drug manufacturing plants at Moraiya and Ahmedabad.
Aviation soared durig the week after jet fuel prices were cut by 10 per cent to their lowest in nearly five years on falling international crude oil prices. Jet Airways (25 per cent), SpiceJet (19 per cent) and Indigo (15 per cent) flew high.
Individually, Reliance Industries clocked 1.4 per cent gains for the week after the company’s telecom arm, Reliance Jio, announced the soft launch of 4G wireless services for its employees.
Another buzzing stock during the week was GAIL (India) after Qatar decided to reduce the long-term gas price to $7 a unit. This will bring down the overall gas cost for India. The stock registered 2 per cent gains.
Week ahead
Macroeconomic data, the trend in global markets, investment activity by institutional investors, the movement of the rupee, and crude oil prices will dictate trendd on the bourses in the near term.
In the week ahead, Markit Economics will unveil its monthly survey of India’s manufacturing and services sectors.