The Sensex and the Nifty declined 2.65% and 2.98% respectively in the last week primarily led by the Bank stocks due to effect of the repo rate hike to 7.5% by the RBI and no possibility of an interest rate cut in the immediate future on inflationary concerns. The Bank stocks declined due to the possibility of an increase in the non-performing assets on account of the rate hike.
The US stock market indices declined on a weekly basis on concerns related to the US debt ceiling as the US Government would have to shut down most of its operations if a budget bill is not passed to maintain the necessary funding till 1st October 2013 with the final deadline for the debt ceiling being 17th October 2013. The US economic data was mixed with Jobless Claims at 3,05,000 in the week previous to last, compared to the revised estimates of 3,10,000 in the second week of September 2013, Purchasing Managers Index (PMI) came in at 52.8 for September 2013 against 53.9 for August 2013 and New Home Sales was at 4,21,000 for August 2013 against 3,90,000 for the month of July 2013. The Dow Jones Industrial Average declined 1.25% and the NASDAQ rose 0.19% on a week on week basis.
The USD Index declined 0.2% to 80.27 from 80.43 and the Japanese Yen strengthened by 1.13% to Yen 98.24 per USD. The Euro closed flat on a week on week basis at USD 1.352 per Euro.
Crude oil prices declined 0.54% to USD 109.22 /bbl and gold prices rose 0.91% to USD 1325 /Oz on a week on week basis. The decline in oil prices continues with ease in concerns over political issues in Syria following the United Nation’s Security Council resolution to ban the use of chemical weapons by the Assad regime and gold prices are showing support on concerns of the US Government debt and pick up in physical demand from China.
The equity derivatives market saw rise in open interest in Nifty Index futures by 20.18% while implied volatility of Nifty index options increased week on week. FIIs were net buyers to the tune of Rs.2185 crores in the equity market in the last week. Domestic Institutional Investors were net sellers to the tune of Rs.2190 crores in the equity market in the last week.
Industry and Stock Specific trends
The sectoral indices fell last week with only the S&P BSE IT index closing positive with a 0.3% gain on a week on week basis. S&P BSE Bankex, PSU, Auto and Oil and Gas indices decreased 7.25%, 2.49%, 0.37% and 4.44% respectively in the last week.
The S&P BSE Bankex declined significantly on concerns of a possibility of rise in non-performing assets of the Banks due to rate hike by the RBI in the last to last week. The S&P BSE Oil and Gas index declined on account of the increasing losses and no announcement from the Oil Minister regarding increase in energy prices.
Sun Pharmaceuticals rose to a 52 week high of Rs.597 and closed the week at Rs.590 on hopes that the company would benefit from the shortage by its competitor Janssen (unit of Johnson and Johnson) for the cancer drug Doxil in the US.
GMR Infrastructure stock rose 11.80% last week to close at Rs.22 on back of the reduction in its debt by Rs.4400 crore that is about 10% of its gross debt. The company had a debt of Rs.35,800 crore as on March 2013 and is expected to reduce its debt equity ratio from 3.3 to 3 by March 2014.
The Baltic Dry Index (BDI) a measure of the freight charges for shipping in the international trade arena touched a 21 month high to reach 2127 but closed the week at 2046. Shipping Corporation of India, Mercator lines, Essar Shipping, ABG Shipyard, Bharati Shipyard and Varun Shipping are some of the stocks in the shipping sector that are showing a recovery on the bourses due to the positive trigger.
Table 1. Weekly Market Movement
Table 2. Weekly Gainers and Losers