Indian equities end up on global cues, rate cut hope (Weekly Review)

The bulls, it appeared, were back on the saddle at Indian equities markets, helping two key indices to register a spike of nearly 2.5 percent during the trading week ended Friday, buoyed by status quo in US interest rates and signs of easier monetary policy back home.

The sensitive index (Sensex) of the Bombay Stock Exchange closed Friday at 26,218 points, up 608.70 points or 2.38 percent over the previous week's close at 25,610.21 points. The Nifty of the National Stock Exchange (NSE) gained 192.60 points or 2.47 percent at 7,981.90 points.

Both indices also closed at the highest level since Aug 31.

The Sensex and the Nifty also registered a rise in three of the four trading days of the week -- thursday being a holiday -- as the investor sentiments turned positive on some encouraging macro data, such as a further fall in inflation and the US Fed's decision to hold interest rates.

A rate hike there could have potentially trigger fleet of capital from emerging markets.

"The Indian markets remained in the positive zone this week on mixed global cues. The outcome of the Fed made investors to take long positions. The next major trigger for Indian markets is the Reserve Bank's policy meet on Sep 29," said Alex Mathews, research head with Geojit BNP Paribas.

Ajit Khandelwal of BNP Securities gave another perspective: "I won't be surprised if the RBI cuts rates by 50 basis points, since the rate cuts so far have failed to generate much of an impact. The success of the rate cut depends on being passed on to the industry."

Among the 12 sector-specific indices of the BSE, that for banking rose the m,ost diring the week, up over 5 percent, followed by the power and realty indices, up nearly 3.75 percent each, and the healthcare index, up a little over 3 percent.

But consumer durables was down 3.3 percent, capital goods fell nearly 2.4 percent and auto fell around 0.45 percent, data with the ewxchange showed.

Among the 30 stocks that go into the Sensex basket, Sun Pharma, Axis Bank, NTPC, Wipro and State Bank of India were the main gainers, while Tata Motors, Larsen and Toubro and Tata Steel lost ground.

The gains during the week came despite foreign funds emerging as net sellers on Indian bourses. Their net investment was in the negative on equities, worth $257 million, as per data with the National Securities Depository Ltd.

Analysts said even as fears over the US rate hike can surface again, the focus will shift to other areas.

"The projection in the near future is that bourses will remain range bound, although volatility will continue. Factors like Bihar elections, the goods and services bill and corporate results will play pivotal roles in the share market," said Khandelwal.

Added Vinod Nair, head of fundamental research with Geojit BNP Paribas: "In the near-term, emerging markets are likely to outperform, since foreign funds are likely to come back. India is likely to benefit substantially from this."