Negative cues plunge Indian markets in weekly trade

 Negative global cues and disappointing retail inflation data led a benchmark index of Indian equities markets to its worst weekly fall in 2015.

The benchmark 30-scrip Sensitive Index (Sensex) of the S&P Bombay Stock Exchange (BSE) plunged 945.65 points or 3.21 percent during the weekly trade session ended March 13.  The Sensex ended March 13 trade at 28,503.30 points. For the weekly trade ended March 5, the BSE Sensex had closed at 29,448.95 points.

For the previous weekly trade ended March 5, the benchmark Sensex had gained 87.45 points or 0.29 percent at 29,448.95 points. The markets had closed the week ended Feb 28 at 29,361.50 points.  According to analysts the market sentiment turned sour due to last weeks data which showed a sharp increase in the US non-farm payroll data for January. This data can make the US Federal Reserve to raise interest rates sooner than previously expected. 

With higher interest rates, foreign portfolio investors (FPIs) are expected to be led away from emerging markets such as India.  "The markets mostly witnessed downtrend in the week as of weak global cues. In US, the markets were down due to strong jobs data. All other markets around the globe were also trading lower," said Alex Mathews, head, research, Geojit BNP Paribas Financial Services. 

"In the domestic front, the sell off was partly due to the fall in the rupee against the US Dollar. The rise in the Dollar was due the investors shifted to safe haven investment."   Reacting negatively to the likely US rate hike the barometer index plunged 604 points or 2.05 percent on Monday. It closed Tuesday's trade lower by 135 points or 0.47 percent. On Wednesday, the Sensex closed 51 points or 0.18 percent down. 

However, despite the negative global cue the FPIs stayed invested in the Indian markets. For the week ended March 13, the FPIs bought stocks worth Rs.3,234.7 crore or $518.24 million, according to data with the National Securities Depository limited (NSDl).

On Thursday the markets made some recovery after the Asian markets made gains on the back of easing of monetary policy in South Korea and Thailand. 

On Thursday, the barometer index broke a consecutive three-day losing streak by gaining 271.24 points or 0.95 percent as automobile, capital goods and consumer durables stocks made healthy gains. Then again on March 13 the market sentiments turned bearish as the data on retail inflation for February showed a marginal increase from the previous month. This belied expectations of a rate cut next month, pulling down interest-sensitive sectors like banking, capital goods and automobile in particular.

The Reserve Bank of India is scheduled to announce its first bi-monthly policy review for 2015 on April 7. The markets discounted India's factory output in January which gained momentum. It also overlooked the parliament's approval to the insurance law amendment bill in the Rajya Sabha, despite opposition protests. 

On Friday, the Sensex closed the day's trade at 28,503.302 points, down 427.11 points or 1.48 percent from the previous day's close at 28,930.41 points.  

"Domestic equities further weakened on concerns regarding passage of pending bills in the parliamen’'s upper house," said Rajesh Iyer, head, investment advisory services and family office, Kotak Wealth Management.

Analysts pointed-out that the markets will will keenly focus on the government's ability to pass the crucial land and coal bills in Rajya Sabha in the coming days.  "The FPIs in the coming week will keenly follow parliament's proceedings especially the government's ability to pass more bills," ZyFin Advisors chief executive Devendra Nevgi told IANS. 

The first session of the parliament in 2015 will end on March 20 and will reconvene after a break of one month. On the international front the US Fed meet on March 17 and 18 will be a major trigger for the Indian market. This meeting will provide the trajectory of the US economy, which will also reveal as to when the rate hike might take place. 

The data on the wholesale price index (WPI) and the fourth-nightly fuel price review by the three state-run oil marketing companies (OMCs) will be the major domestic triggers for the Indian markets in the coming week.