 "Weekly Wrap: Markets snap 3-week winning spree")
The BSE Sensex gyrated in a range of around 550 points before ending at 27,828, lower by 129 points or 0.4 per cent and the Nifty settled at 8,433, down 25 points or 0.3 per cent. The May series derivatives expiry on Thursday was a major cause of the volatility as traders rolled over their positions in the F&O segment.
The broader markets, however, outperformed the benchmark indices. The BSE Mid-Cap index rose 96 points or 0.9 per cent to close at 10,716. The BSE Small-Cap index rose 72 points or 0.6 per cent to settle at 11,280.
Key events
The gross domestic product (GDP) grew at 7.3 per cent in 2014-15, slightly less than the advance estimate of 7.4 per cent. The central government reined in its fiscal deficit for 2014-15 at four per cent of GDP, against the 4.1 per cent pegged in the Budget Estimate (BE) and its Revised Estimate (RE).
Private weather forecaster Skymet has said that conditions are favourable for the onset of Southwest Monsoon in India. In other developments, the government named former finance secretary and economist Vijay Kelkar to head a panel to review the PPP policy and suggest a better risk-sharing mechanism between private developers and the government. Meanwhile, the Modi-led NDA government completed one year in office on May 26, 2015.
Expert views
“The new expiry (June) has seen a good start with expectation on rate cut on June 2. Based on RBI’s target of 6 per cent CPI (consumer price inflation) by January’16, the current data (4.9 per cent) does provide a room to lower interest rate. A rate cut and a positive outlook by the RBI will provide additional strength to the momentum,” Vinod Nair, head of fundamental research at Geojit BNP Paribas Financial Services.
“Overall, GDP data depict an economy that is recovering, but at a very gradual pace. We expect growth to pick up to 8 per cent y-o-y in FY16 from 7.3 per cent in FY15,” said Sonal Varma, Aman Mohunta and Neha Saraf of Nomura in a report.
Sectors and stocks
The rate-sensitive sectors ended mixed ahead of the monetary policy. The banking index gained 1.5 per cent, while the auto and realty indices ended lower by 0.5 per cent and 1.5 per cent respectively.
Banking stocks saw buying interest ahead of the policy meet, with Axis Bank, HDFC Bank and ICICI Bank gaining 1-3 per cent each; SBI, however, ended in the red. On the other hand, the auto index was dragged down by Tata Motors; the auto major nosedived by 6.4 per cent post its Q4 numbers. Hero MotoCorp, Maruti Suzuki and M&M, Metal and IT stocks also had a rough ride. In the metal space, Jindal Steel, Vedanta, Tata Steel, Hindalco and Hindustan Zinc lost 5-13 per cent each.
In the midcap space, the mid-cap banking stocks were on buyer’s radar in tandem with their largecap counterparts. Allahabad Bank, Union Bank, IndusInd Bank and Oriental Bank gained between 3 per cent and 8 per cent each.
In the smallcap universe, Novartis, Advanta, Ajanta Pharma, BEML, JK Cement and Thomas Cook surged 5-10 per cent each.
Week ahead
All eyes are glued on Governor Raghuram Rajan as he gears up to review the monetary policy on June 2. The markets expect the RBI to cut key rates on the back of benign inflation and weak industrial growth data.
The Nifty has been moving in a range of around 500 points, between 8,000 and 8,500, in the past few weeks and is currently trading at the higher end of the range. A rate cut on June 2 is likely to push the Nifty past its crucial resistance level of 8,500, while a status quo on ther part of Rajan could drag the Nifty closer to its crucial support level of 8,250.
The monsoons would also be an important factor. If the Skymet’s prediction of a normal monsoon comes true, this should aid the sentiment on Dalal Street.