Sensex weighed down by global sentiment, rebound expected (Weekly Review)

A dip in the global sentiment led by geo-political tensions and the Reserves Bank of India's decision to keep key interest rates unchanged weighed heavy on the Indian equities market in the week just ended.

The markets lost 0.59 percent in the week ended Aug 8 from its previous weekly close on Aug 1.

Markets' analysts said weakness in the global markets due to geopolitical tensions led to the fall.

"The US authorising targeted airstrikes on Iraq was the latest trigger. There already was growing unease over the crisis in Ukraine. Indian markets were not insulated from the sell-off in global markets as it signed off the week in the negative zone," said Sanjeev Zarbade, vice president, private client group research, Kotak Securities.

"Capital goods, metals and realty stocks sold off. Going ahead, geopolitical tensions would continue to be in limelight, we believe. Investors are advised to utilize the opportunity to buy into quality stocks with strong management pedigree."

The losses come after the RBI, in its third bi-monthly monetary policy review this fiscal, kept key rates unchanged.

The 30-share sensitive index (Sensex) of the Bombay Stock Exchange (BSE) fell 151.7 points over previous Friday's close and ended trade at 25,329.14 points. The index had ended at 25,480.84 points on Aug 1.

According to market watchers, the situation is expected to improve in the short term and gains are likely to be made.

"Markets have bottomed-out today and there is a bounce-back expected in the next session. All the positive factors remain high, there is a Modi wave, inflation is expected to be low and SLR cut is a positive move... all these will lead to a bounce-back in the market," Kishor P. Ostwal, chairman and managing director, CNI Research, told IANS.

In the week under review, foreign institutional investors (FIIs) turned net buyers Friday to the tune of $60.58 million, or Rs.372.01 crore.

Domestic institutional investors (DIIs) which includes banks, development finance institutions (DFIs), insurance and mutual funds bought net stocks worth Rs.456.02 crore on Friday.

Week-wise, The S&P BSE sensitive index had plunged 259.87 points or 1.02 percent Friday (Aug 8) as metal, capital goods and bank stocks fell.

The markets had closed 76 points or 0.30 percent down in Thursday's as information technology (IT) and technology, entertainment and media (TECK) stocks fell.

The markets plunged 242 points or 0.94 percent Wednesday on negative global cues and caution in banking stocks.

However, it made gains of about 185 points or 0.72 percent Tuesday after RBI, as expected, left key interest rates unchanged in its third bi-monthly monetary policy review for the 2014-15 fiscal.

For Monday, the Sensex closed 242 points upon hopes of interest rates cut in the third bi-monthly monetary review.

Major Sensex gainers on Friday were: Bharti Airtel, up 2.09 percent at Rs.373.70; DrReddys, up 0.89 percent at Rs.2,780.55; ITC, up 0.72 percent at Rs.348.45; Cipla, up 0.32 percent at Rs.436.50; and Tata Consultancy Service (TCS), up 0.23 percent at Rs.2,476.

The losers were: Sesa Sterlite, down 5.71 percent at Rs.268.50; Tata Power, down 3.79 percent at Rs.91.45; BHEL, down 3.74 percent at Rs.221.60; Tata Steel, down 3.22 percent at 537.55; and Gail India, down 2.85 percent at Rs.406.90.