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Rising for a second straight week, benchmark indices clinched their biggest weekly gain in nearly four months since June 19 after the US Fed hinted that it won’t raise interest rates soon. Further, rebound in global commodity prices during the week has also aided the sentiment.
For the week end October 9, the BSE Sensex reclaimed its psychological level of 27,000 and rose 3.27 per cent or 858 points to end at 27,080. The Sensex had gained 3.3 per cent in the week ended June 19. The CNX Nifty reclaimed 8,000-mark to settle at 8,190, up by 239 points or three per cent.
The broader markets, however, underperformed their larger peers. The BSE Mid-cap Index finished 1.1 per cent up at 10,938, while the BSE Small-cap Index settled 2.7 per cent up at 11,349. Meanwhile, market players’ sentiment was also bolstered as a plethora of commercial banks offered a reduction in their base rate in the wake of a more-than-expected 50 basis points (bps) cut in the repo rate announced by the Reserve Bank of India (RBI) on September 29.
MARKET OUTLOOK
According to Ravi Shenoy, assistant vice-president, Mid-Cap Research, Motilal Oswal Securities, “Indian indices ended the week with positive gains of three per cent plus as a ‘risk-on rally’ globally also powered Indian equities. Crude prices as well as metal prices have rallied this week, as investors take bottoming out bets. Metal and other commodity producers in India rallied, as did lenders with exposures to this segment. Housing Finance was another space which witnessed traction on expectation of RBI’s new norms for affordable housing which got notified towards the end of the week.”
KEY EVENTS
The lower-than-expected US jobs data for September, which was released earlier this week, has put the US Fed on pause until the end of this year.
The US Fed’s decision made the dollar lose its grip against world currencies. The Indian rupee finished the week at 64.73, strengthening for the second consecutive week.
SECTORS AND STOCKS
The surge in global commodity prices supported the rally in metal stocks. The BSE Metal index jumped nearly nine per cent for the week. Vedanta logged gains of 24 per cent after it said the average gross operated production and working interest production were up six per cent and four per cent, respectively, in Q2 September 2015 over Q2 September 2014.
Tata Steel zoomed 18 per cent after it announced that it will commission a three million-tonne steel plant in Kalinganagar by December. Also, Tata Steel said its subsidiary in the UK and the trustee of the British Steel Pension Scheme had concluded the triennial actuarial valuation of the scheme.
Hindalco was in line as well with 18 per cent gains. From the auto pack, Tata Motors zoomed over 19 per cent after the company announced that the US sales of Jaguar Land Rover rose 61 per cent to 6,850 units in September over the year-ago period. Maruti Suzuki was the biggest loser for the week, as it skid 6.7 per cent after a foreign investment bank reportedly downgraded the stock to underperform from buy, citing an expensive valuation.
THE WEEK AHEAD
The immediate trigger for the market is the beginning of the September quarter corporate earnings season. Infosys will announce its September quarter earnings on Monday. TCS will follow suit on Tuesday with Hindustan Unilever and Zee Entertainment Enterprises set to declare their results on Wednesday. RIL will announce its result on Friday.
The government is also scheduled to unveil the Consumer Price Index and Wholesale Price Index data for the month of September next week. Industrial production data for August will also be announced next week.
