A 5-minute wrap of the key happenings in the market this week.
Hello and welcome to The Market Podcast with me Nazim Khan, Assistant Editor at Moneycontrol and here's a 5-minute wrap-up that tells you what transpired in the markets this week and what to expect in the next.
With me is Santosh Nair, Editor Moneycontrol.
Santosh, thanks for joining.
SN: My pleasure Nazim
NK: Santosh, how was market action this week?
SN: The major indices just about closed higher week on week despite a surprise rate cut by the RBI on Thursday. The Nifty is struggling to sustain above 11,000 and the Sensex is struggling to sustain above 37,000
A brutal sell off on the last trading day of the week wiped off much of the gains. The scene in mid and small shares is far worse
NK: Ideally a cut in interest rates should have delighted the stock market bulls. So why is the market struggling?
SN: A few things here. Bond markets are worried that the government will borrow more money than it has said. So that could push up interest rates. The trade dispute between US and China does not seem to be getting resolved any time soon. That is hurting the mood in global equity markets, and we are feeling the effects in India as well. You are seeing a vicious cycle in small and mid cap stocks, where a sustained downturn is leading to more selling as investors cut their losses. And there are indications of inflows into mutual funds slowing down.
Inflows into domestic equity mutual funds declined for the third straight month in January to Rs 6,158 crore in January. Inflows into systematic investment plans, however were steady at around Rs 8000 crore.
NK: What are the key things to watch out for next week?
SN: Index of Industrial Production for December, retail and consumer inflation for January. Besides, markets around the world will keep an eye on Trump's comments
NK: What were the important business developments this week?
SN: Moody’s cut telecom major Airtel’s rating to junk grade as the company’s revenues and cash flows are hurting from the brutal tariff war in the sector.
The rules for relating to FDI in e-commerce came into force this week. But it looks like the big boys of the game have found a work around. So they are observing the law in letter but not in spirit.
Mutual funds approached SEBI to allow them to alter the terms of Essel Group debenture trust deeds. If allowed, this will give the promoters time to bring in a strategic investor. Mutual funds feel this is a better option than having to offload pledged shares which have already depreciated in value
Mutual fund schemes have more than Rs 16,000 crore worth of debt securities of shaky groups like Essel, DHFL (Dewan Housing Finance Corporation) and the IL&FS (Infrastructure Lending & Financial Services) group, according to a study by India Infoline.
Tata Motors posted a record loss of Rs 27000 crore for the December quarter, due to problems in the JLR business. The huge loss is because of a one-time non-cash write-off of 3.1 billion pounds towards asset impairment.
In global news, the Bank of England has cut its growth forecast and warned that the UK economy is set for worst year since financial crisis
NK: What are you reading?
SN: I am Reading two books parallely. One is ‘Hit Refresh’ , Microsoft CEO Satya Nadella’s memoirs. Nadella has spoken about how he help the company regain its mojo by bringing about a radical change in its culture.
The other book I am reading is Predictably Irrational by Israeli ex-army man Dan Ariely. It is a book on behavioural science and shows through examples how we often make the wrong choice because of hard to change biases.I read an interesting article in the New York Times, which says that increasingly many publishers are relying on artificial intelligence to write stories.