 "Global woes cast a shadow on markets; RBI policy eyed")
After registering two straight weeks of gain, markets witnessed a fall in a truncated week, with the benchmark BSE Sensex settling below the crucial 26,000 mark. The key indices were hammered on Tuesday with the Sensex and Nifty losing over two per cent each, as the Volkswagen emission scandal spooked European markets. A downfall in the rupee and slowdown in the China economy underlined the recent turmoil and triggered outflows by foreign investors.
Meanwhile, investors remained cautious as the Nifty rollover to October series was comparatively lower than the previous months. Also, the US Fed stance on interest rates citing concerns about global slowdown dented sentiment.
In the week to September 24, the Sensex plunged 355 points or 1.4 per cent to close at 25,863.50 and the Nifty dropped 113.40 points or 1.4 per cent to end at 7,868.50.
In the broader markets, BSE Mid-cap dropped 0.45 per cent while the BSE Small-cap Index gained 1.27 per cent outperforming the large counterparts.
Market outlook
"The markets ended the week lower by 1.25 per cent, despite the support from IT and pharmaceutical stocks, which ended the week on a positive note. Investors should expect a 25 bps rate cut next week in the Reserve Bank of India policy review and the same seems factored in at current levels. This week saw another scare from China with a default warning from one of China’s PSU with a PMI reading of 47 below the expectation of 47.5. Both of these news flows shook investor confidence in emerging markets further. Foreign institutional investors (FIIs) have been heavy sellers on both Tuesday and Wednesday to the extent of over Rs 1,000 crore," Ravi Shenoy, AVP-Midcaps Research, Motilal Oswal Securities.
"With the derivatives expiry behind us, we will have cues from monthly auto sales and PMI data as key drivers for the truncated week. Also, expectations for Q2 FY16 results will start getting published by various research houses and the same will start getting factored into stock prices," he added.
China's factory sector PMI unexpectedly shrank to a six-and-a-half year low at 47 in September, raising fears that the economic slowdown in China has deepened.
Meanwhile, European markets rattled after Volkswagen emission scandal posed a big threat to the Europe’s bigger economy, Germany amid new signs of a slowdown in China.
September F&O
The Nifty future has seen rollover of around 59 per cent from September to October series, rollover are comparatively low from averages which indicates that bulls and bears both have not taken their position aggressively as market stuck in a broader range and yet not given any decisive sign of movement on either side even after making a short term bottom near to 7,550 zones.
Stocks
On the sectoral front, six out of 12 indices closed in red with the BSE Metal index dropping five per cent and emerged as the top loser.
Auto stocks slipped across the bourses. Tata Motors tumbled 10 per cent after Tata Steel announced that the company, as part of its portfolio restructuring, sold 3.7 crore ordinary shares of Tata Motors to Tata Sons at a price of Rs 330 per share.
Meanwhile, Motherson Sumi cracked nine per cent after German carmaker Volkswagen, its client, admitted it had falsified emissions tests of diesel-powered vehicles in the United States.
However, Maruti Suzuki gained five per cent after the sales of its vehicles equipped with auto gear shift (AGS) have crossed 50,000 units.
Drug maker Lupin rose seven per cent after reports suggested that the company has increased the price of its generic diabetes drug Fortamet by three times for 500 mg and 1,000 mg variants in the US market.
IT shares gained across the bourses on the back of dwindling rupee. Infosys, TCS and Wipro climbed between and one per cent and four per cent. Infosys secured a three-year contract to develop and maintain all global web-based properties of not for profit enterprise TOMS Shoes for an undisclosed sum.
Metal shares slumped after weak factory data from China, the world's largest consumer, raised worries about export demand. Vedanta, Hindalco and Tata Steel lost between three per cent and seven per cent.
Major telecom operators Bharti Airtel and Idea Cellular opposed the compensation to mobile users for call drops as proposed by the Telecom Regulatory Authority of India (Trai). Bharti Airtel and Idea Cellular lost seven per cent and four per cent, respectively.
BHEL lost 1.6 per cent after the rating agency CRISIL downgraded its outlook on the long-term bank facilities to 'negative' from 'stable', citing that the company's project execution and profitability will remain vulnerable to structural issues causing distress to the power sector.
Week ahead
Investors will keenly await for RBI’s fourth bi-monthly monetary policy review for the year 2015-16 slated on Tuesday, September 29, 2015. Macroeconomic data, global trends, FII stance, movement of rupee and crude oil are likely to dictate the trend on the bourses.
Indian stock markets will remain closed on Friday, 2 October 2015, on account of Gandhi Jayanti. Auto stocks will remain in focus as companies start announcing monthly sales volume data for September 2015 from Thursday, October 1, 2015.
In the US, the influential non-farm payrolls data for the month of September will be unveiled on October 2 (Friday).
