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Markets closed flat on Friday after a range-bound session to perform in-line with most Asian peers amid rising geopolitical tensions after a strike on Malaysia Airlines flight MH17 in eastern Ukraine near the Russian border on Thursday that killed nearly 300 passengers on-board.
Besides the situation in Ukraine and the rising tensions between the West and Russia, Israel announced the start of a Gaza ground campaign on Thursday after 10 days of aerial and naval bombardments failed to stop Palestinian rocket attacks. This also kept sentiment under check.
Benchmark indices – S&P BSE Sensex and the CNX Nifty – ended 0.3% higher at 25,641 and 7,664 levels, respectively. For the week, the Sensex clocked in over 600-point gain. Broader markets also ended marginally weak with the S&P BSE Mid-cap index and the S&P Small-cap index ending 0.4% and 0.1% lower.
OTHER MARKETS
In other Asian markets, Nikkei, KLSE Composite and Hang Seng ended lower between 0.01 – 0.9% on Friday. European shares, however, saw more selling after falling heavily on Thursday, while German government bond yields remained near record lows, driven by uncertainty. Russia markets took the heaviest hit.
Dollar-traded stocks in Moscow were down another 2.5% to take their losses for the week to more than 8%. The rouble, however, was up almost half a% though it was heading for its heaviest weekly loss in more than a year. Japanese yen and US government bonds – investors' traditional go-to safe-haven assets – both gave up some ground.
GOLD, CRUDE OIL
Gold prices dropped on Friday on fears of higher US rates and as investors took profits after a 1.5% jump on the downing of a passenger plane in eastern Ukraine. Gold, seen as a hedge against risk in times of geopolitical and financial uncertainty, posted its biggest daily gain in a month on Thursday after the loss of the Malaysian airliner MH17, as Kiev and Moscow blamed each other for the tragedy.
The developments sent oil prices higher with US benchmark West Texas Intermediate for delivery in August gaining 53 cents at $103.72 in intra-day trade, while Brent crude for September advanced 65 cents to $108.54.
OTHER NEWS
India's economic growth is expected to improve during the current fiscal from 4.7% in 2013-14, helped by a revival in industrial growth, improved fiscal health and external economic situation, Parliament was informed today.
Factors such as revival of industrial growth, improved external economic situation characterised by a stable current account, benign outlook on oil prices, improved fiscal health and modest revival in global economy can be expected to contribute to the GDP growth in 2014-15, finance minister Arun Jaitley said.
SECTORS AND STOCKS
The S&P BSE IT index was the top sectoral gainer up nearly 1.5% followed by Bankex and Capital Goods - all surging between 0.4-1% each.
The top loser, S&P BSE Power index slumped over 1% followed by Realty and Consumer Durables indices that lost nearly 1%. Other sectors such as Oil & Gas, Healthcare, Metal, FMCG and Auto also ended in the negative.
Among individual stocks, Hero Motocorp was the top Sensex gainer. It ended nearly 3% higher. TCS gained over 2.5% after reporting a better-than-expected consolidated net profit of Rs 5,058 crore for the quarter ended June 2014 (Q1) announced post market hours on Thursday.
“TCS’s valuation is at 30-40% premium to peers. While robust growth delivery/visibility and strong margin resilience justify higher valuation, we believe that room for further absolute or relative rerating is limited unless company surprises on growth in H2 FY15. Recent rally in the stock limits scope for any significant incremental upside in the medium term. We therefore downgrade our rating on TCS from Buy to Accumulate,” said Amar Ambani, head of research at IIFL.
Meanwhile, Wipro, HCL Technologies and Tech Mahindra from the frontline IT stocks ended up between 1-3% each.
In the banking pack, Axis Bank surged over 2%, ICICI Bank edged up nearly by 2% while HDFC Bank gained marginally. SBI ended lower by over 1.5%. Kotak Mahindra Bank ended higher over 2%, extending its 7% rally in past three trading sessions on BSE, after the bank said its asset quality of improved in June quarter on sequential basis.
Power stocks witnessed profit taking after recent gains. Tata Power ended slumped nearly 3% while NTPC edged nearly 0.5% lower
Advani Hotels and Resorts (India), Muthoot Finance, Seamec and Rallis India were some of the other buzzing stocks of the day.
THE ROAD AHEAD
At the global level, market participants will be keeping a close watch on developments in West Asia and its impact on oil prices. On the domestic front, however, corporate results for the quarter ended June 2014 will be key events to track besides progress on monsoon.
On Monday, HDFC Bank, Hind Zinc, Idea, Hitachi Home, Somany ceramics, Tata Metaliks and Hindustan Media are likely to announce their earnings.
“The week saw benchmark indices rise by about 3% as concerns on crude price eased. Monsoon also progressed during the week, easing worries on inflation. Quarterly results, especially from IT majors, were above estimates and improved sentiments," points out Dipen Shah, Head- Private Client Group Research, Kotak Securities.
"With the major event of budget out of the way, the markets will likely continue to focus on issues like monsoons, global economy and quarterly results in the short term. Off-budget action on budget initiatives will sustain the confidence of the markets over the medium term. Markets will also look forward to the rate action from RBI in its next policy. We expect RBI to keep rates unchanged, until inflationary pressures ease significantly,” he adds.
With Agency inputs
