Markets end flat amid volatility; Fed stance, reforms cheer

The broader markets underperformed the benchmark indices- BSE Mid-Cap and Small-Cap indices fell over 1%

The markets ended the week on a flat note, with a positive bias, tracking strong global cues. Mid-week, the markets cheered the US Federal Reserve’s indication that it wouldn’t raise interest rates in the near future.

The 30-share Sensex rose 21 points, or 0.08 per cent, to end at 27,372, while the 50-share Nifty rose one point, or 0.01 per cent, to close at 8,225. The markets recorded losses in three of the week’s five trading sessions. The broader markets underperformed the benchmark indices — the BSE mid-cap and small-cap indices fell about one per cent each.

During the week, the Russian central bank announced a sharp rise in its key interest rate — from 10.5 per cent to 17 per cent — which heightened concerns about the global economy. The US Federal Reserve, however, expressed confidence in the US economy and promised a “patient” approach to raising interest rates. This boosted markets across the globe.

Oil bounced higher on Friday, as selling pressure from a six-month price rout eased for the second time this week, owing to short-covering.

On the macroeconomic front in India, Wholesale Price Index-based inflation dropped to zero in November from 1.7 per cent in October, while the Index of Industrial Production for October showed output in this sector contracted 4.2 per cent, the most in three years.

In November,trade deficit widened to an 18-month high of $16.86 billion. The rupee touched a 13-month low, breaching the 63-a-dollar mark, amid concern on slowing foreign fund inflows.

Weekly wrap

On Monday, the markets ended marginally lower amid choppy trade, with information technology stocks leading the decline. This followed Tata Consultancy Services (TCS) weak revenue forecast for the third quarter. Gains in the stocks of select financial companies capped the downside.

Tuesday saw a huge slide, with the benchmark indices ending at seven-week lows, following a sharp decline in the rupee, widening of the country’s trade deficit and global growth concerns, which led to a sell-off across the board. On Wednesday, the markets extended their losses, with the Nifty closing below the crucial support level of 8,050 on concerns the slowdown in global growth could reduce foreign inflows into emerging markets.

However, on Thursday, the benchmark indices snapped the five-day losing streak, following the US Federal Reserve’s statement on interest rates. The fact that the Cabinet approved a constitutional amendment Bill for a goods and services tax aided the sentiment.

The indices extended their gains for the second straight session on Friday, amid firm global cues and encouraging first quarter earnings and revenue growth estimates by global information technology major Accenture.

Major gainers & losers

During the week, Bharat Heavy Electricals Ltd was the top gainer, rising five per cent to Rs 259. HDFC gained about four per cent.

The ONGC stock rose about four per cent. At a meeting on Friday, the company’s board notified three recent discoveries — in the deepwater Krishna Godavari Basin, in the Mumbai offshore basin, and in the Cauvery basin.

Information technology majors such as Infosys, TCS and Wipro gained one-two per cent after the rupee fell past the 63-a-dollar mark.

ICICI Bank and HDFC Bank rose one-two per cent. ITC was the top loser, falling about seven per cent. Other notable losers were Sesa Sterlite, Sun Pharma, Cipla, HUL and Dr Reddy’s Lab, with losses of 3-5.5 per cent. In the week ahead, the markets are likely to remain volatile, ahead of the expiry of the December futures & options contracts on Wednesday. Market participants will also track data on jobless claims in the US. The markets will be shut on Thursday for Christmas.