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The markets suffered their worst weekly setback of 2015, weighed down by weak monsoon forecasts and concerns over further interest rate easing by the Reserve Bank of India (RBI).
The benchmark Sensex on the BSE exchange ended the week 3.8 per cent lower, the most since December 2014, after four losing sessions. The National Stock Exchange's Nifty fell by a similar amount. The Sensex ended down 45 points or 0.2 per cent at 26,768.5, the lowest level in almost a month. The Nifty also fell 0.2 per cent, to 8,114.7 on Friday.
The market posted declines on all trading sessions since Tuesday, when the central bank cut its prime lending rate by 25 basis points but said further easing would depend on the monsoon’s impact on domestic inflation. Also, a weaker than expected monsoon forecast has spooked investors.
“Earnings expectations are already high — too high in our opinion – because of optimism about growth, while concerns about the monsoon could further dent rural demand. The consensus has cut 2015 (calendar) earnings estimates by 2.6 per cent in the past two months. This is not good news for India Inc,” said a report by HSBC dated Friday. The brokerage has maintained an underweight stance on the market.
According to provisional data from stock exchanges, foreign investors net-sold shares worth Rs 550 crore on Friday. In comparison, their domestic counterparts bought shares worth nearly Rs 900 crore.
“The markets ended the week with a near four per cent loss. Sentiment is weak due to the concerns over the monsoon and Greece. Quarterly results have also not provided any cheer,” said Dipen Shah, head, private client group research, Kotak Securities.
The decision by Greece to delay loan repayment to the International Monetary Fund raised worry across world markets and impacted flows into the Indian market.
“The (RBI) rate cut was front-loaded…thus, signalling a pause in rate cuts until clarity emerges on the monsoon,”said Ravi Shenoy, assistant vice-president, midcap research, Motilal Oswal Securities.
The broader market performed well on Friday, compared to the benchmark indices. The BSE Midcap and Smallcap indices ended with gains, although marginal. The market breadth was positive, too, with more than one gaining stock for every losing stock on the BSE.
Among large-caps, ICICI Bank and Tata Motors were the worst-performing, declining over two per cent each. On the positive side, Coal India and GAIL gained 4.4 per cent and 3.4 per cent, respectively.
