Weekly wrap: Nifty falls 1% on Fed woes; expiry eyed
With the Fed once again flip-flopping on QE taper, bulls fled for cover in anticipation of the liquidity squeeze to follow. Benchmark indices extended their weekly losing streak for the third time in a row, after failing to build on the 450-point rally at the start of the week.
November 23, 2013 / 12:37 IST
Moneycontrol Bureau
Benchmark indices extended their weekly losing streak for the third time in a row, after failing to build on the 450-point rally at the start of the week. With the Fed once again flip-flopping on QE taper, bulls fled for cover in anticipation of the liquidity squeeze to follow. Shares began the week on an upbeat note, with the Sensex leaping 491 points, on hopes of increased fund flows into Asia because of the proposed reforms in China. However, share prices struggled to sustain those gains in the absence of follow up buying from foreign institutional investors. After with the minutes of the October meeting of the Fed Open Market Committee (FOMC) hinting at earlier-than-expected cut in monetary stimulus, panic set in. Profit booking by foreign funds and unwinding of long positions by market operators shaved 673 points off the Sensex between in the last three sessions of the week, and the Nifty closed below the psychological 6000-level. Fir the week, the Nifty shed 60.7 points or 1 percent to closed at 5,995.45 and the Sensex declined 182.03 points or 0.9 percent to 20,217.39. Investors dumped banking, power, healthcare, auto and fast moving consumer goods shares. For a change, capital goods shares were in favour with investors as the risk-reward ratio appears favourable despite the gloomy outlook on the sector. Market watchers expect the Nifty to remain range bound between 5950 and 6300 for the next few weeks. The immediate trigger for the market would be the futures and options (F&O) expiry on Thursday and the second quarter GDP reading next week. Beyond that, election results in Madhya Pradesh, Rajasthan, Jharkhand and Delhi, the RBI policy review and the FOMC meeting mid-December will be important sentiment drivers. "In the short to medium term, the market is going to be extremely volatile with a distinct negative bias. In the long-term, however, I am very positive and India is overdue for a reasonably long-term sustained bull market move," KR Bharat of Advent Advisors said. Meanwhile, Chris Wood of CLSA says Greed & Fear will add one more percentage point to the small India overweight. This is primarily because of the potential catalyst provided by the forthcoming state elections, he adds. Wood feels if an investment cycle does resume in India in the next 1-2 years then India probably becomes the best equity investment story in Asia again, just as it was between 2002-2009. Sesa Sterlite was the biggest loser among largecaps in the Sensex, falling nearly 9 percent followed by Bajaj Auto, Cipla, Sun Pharma, Hero Motocorp, Tata Motors and ICICI Bank with 3-7 percent decline. Tata Steel gained the most this week, rising 4.6 percent. Other gainers were JSPL, ONGC, Cairn India, Hindalco Industries, GAIL and L&T, up 2.5-4 percent. Meanwhile, foreign institutional investors bought more than Rs 1,900 crore worth of equity shares during the week, though they sold little over Rs 40 crore in last two sessions of the week.The rupee gained 24 paise to close the week at 62.87 against the US dollar after moving in a tight range of 62-63. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
