A healthy quarter, auto sales, RBI monetary policy buoy Indian equities

Although profit booking dragged them down, some late buying pulled them back up

The key Indian equity indices extended gains for the fifth consecutive week and scaled new record highs on the back of healthy quarterly earnings as well as auto results, coupled with positive global cues.

Although profit booking dragged the indices from their heights, some late buying observed on Friday pulled the indices from their lows to close with marginal gains.

On a weekly basis, the Sensex rose by a mere 15.53 points or 0.05 per cent to close at 32,325.41 points, while the Nifty closed at 10,066.40 points -- up 99.25 points or 1 per cent.

On August 1, the Nifty50 closed at a fresh high of 10,114.65 points, firmly above the 10,100-point mark, while the BSE Sensex scaled a fresh closing high of 32,382.46 points

The NSE Nifty50 scaled a fresh intra-day high of 10,137.85 points and the BSE Sensex of 32,686.48 points on August 2.

"Carrying on from the previous week, markets began the week on a positive note as it touched new life high of 10,138. However, selling pressure brought the Nifty lower to touch a low of 9,988," Deepak Jasani, Head - Retail Research, HDFC Securities, told IANS.

"A recovery soon followed with the Nifty ending the week with gains of 0.52 per cent. It was the fifth consecutive week of gains for the Nifty."

According to Dhruv Desai, Director and Chief Operating Officer of Tradebulls, the week ended Friday was the season of quarter earnings and RBI monetary policy -- a week packed with lots of data and important announcement by the government.

"The central bank has cut the repo rate but it remains to be seen whether the industry and government will be happy. There have been calls for more aggressive cut from the central bank as the industrial activity has remained weak," Desai told IANS.

The Reserve Bank of India (RBI) in its third bi-monthly monetary policy review of 2017-18 on Wednesday lowered the repurchase rate to 6 per cent from 6.25 per cent, and the reverse repurchase rate to 5.75 per cent from 6 per cent.

"The services sector contracted in July and fell to its lowest level in nearly four years following implementation of the Goods and Services Tax (GST), showed a monthly survey released during the week," said Desai.

"Good results from Bata India, Titan, Indian Oil Corporation helped the stocks to gain new life time levels. Pharma sector on the other hand coming with lot of USFDA (US Food and Drug Administration) observation has rattled many stocks to all time low's despite the recent gains in July."

Data released during the week revealed that the Nikkei India Composite Purchasing Manager's Index Output Index fell to 46 in July, the steepest drop since March 2009, a report showed Thursday. Activity in the key services sector plunged to 45.9 from from 53.1, the lowest since September 2013.

Besides, the Indian rupee rose to a new two-year high level of Rs 63.70 to a US dollar on Wednesday, on the back of RBI's lending rate-cut decision and healthy inflows of foreign funds in capital markets.

The rupee strengthened by 57 paise to close the week at 63.58-59 to a US dollar from its previous week's close at 64.15-16.

"Surprise savings account interest rate cut decision by country's largest PSU bank attracted investors to the banking stocks on expectation of improvement in margins," said Vinod Nair, Head of Research, Geojit Financial Services.

Nair pointed out that a good set of monthly auto sales numbers attracted investors' interest.

"Oil and gas sector outperformed the benchmark indices due to government continued focus on reform process for removing subsidies and merger of PSU oil companies. Further, inclusion of PSU OMCs in new PSU ETF (Bharat-22) launched by government to boost disinvestment also added positive sentiment to the sector," he added.

Provisional figures from the stock exchanges showed that foreign institutional investors sold stocks worth Rs 2,498.78 crore, while domestic institutional investors bought scrips worth Rs 3,553.89 crore during the July 31-August 4 period.

Figures from the National Securities Depository (NSDL) revealed that foreign portfolio investors (FPIs) divested equities worth Rs 1,525.69 crore, or $238.04 million, during the week ended August 4.

The top weekly Sensex gainer was Hero MotoCorp (up 9 per cent at Rs 3,958.65)and the top losers Dr. Reddy's Lab (down 8.85 per cent at Rs 2,244.10).