The Sensex and the Nifty reached levels of 21,000 and 6,200 respectively but declined marginally by 0.95% and 0.71% respectively in the last week ahead of the RBI monetary policy that is scheduled this week. The RBI is likely to hike the repo rate by 25 basis points (bps) to 7.75% due to inflationary concerns in the economy. RBI had earlier hiked the repo rate by 25 bps in the mid-quarter monetary policy review in September 2013 to 7.5% due to persistent high inflation in the economy. However RBI is also likely to roll back the liquidity measures of making the MSF (Marginal Standing Facility) the operational rate and that is positive for markets as interest rates at the short end of the curve are likely to come off.
The non-farm payroll job additions in the US economy were reported at 1,48,000 in September 2013 lower than the market expectations of 1,80,000 job additions. The total non-farm payroll job additions were revised to 1,93,000 for August 2013 from 1,69,000 earlier. The Unemployment rate edged lower to 7.2% in September 2013 compared to 7.3% in the month of August 2013. The Dow Jones Industrial Average and the NASDAQ rose 1.1% and 0.74% respectively on a week on week basis. The S&P 500 closed at a record high of 1759.77 and the Dow Jones Industrial Average closed 1% short to the record high of 15677 last week with NASDAQ at 13 years high close to 4000.
The Euro appreciated 0.88% against the USD to reach USD 1.380 per Euro and the Japanese Yen rose 0.31% to Yen 97.42 per USD. The USD index fell to 79.21 last week against 79.61 that was seen in the week previous to last. Crude oil prices declined 2.73% to USD 107 /bbl and gold prices rose 2.66% to USD 1351 /Oz on a week on week basis. Gold prices rose due to speculation that withdrawal of the stimulus would be delayed due to growth concerns in the US and weak non-farm payroll data that was reported in the last week.
The equity derivatives market saw fall in open interest in Nifty Index futures by 14.31% while implied volatility of Nifty index call options increased and Nifty index put options decreased week on week. FIIs were net buyers to the tune of Rs.5163 crores in the equity market in the last week. Domestic Institutional Investors were net sellers to the tune of Rs.3348 crores in the equity market in the last week.
Industry and Stock Specific trends
The sectoral indices declined marginally last week with only the S&P BSE Bankex index closing significantly positive with a 1.55% gain on a week on week basis. S&P BSE Auto, IT and Oil and Gas indices declined 1.14%, 1.2% and 1.39% respectively in the last week. The S&P BSE PSU index closed flat with a 0.4% gain on a week on week basis.
State Bank of India stock rose 3.17% to Rs.1721 on the news that the Government of India has approved capital infusion of Rs.2000 crores to the bank. The total approved capital infusion for 20 PSU banks amounts to Rs.14,000 crores with Rs.1800 crore each in Central Bank of India and IDBI Bank, Rs.1200 crores in Indian Overseas Bank, Rs.1000 crores in Bank of India, Rs.550 crores in Bank of Baroda and Rs.500 crores in Punjab National Bank.
ICICI Bank stock rose 1.25% in the last week to Rs.1022 as the Bank reported a 12.84% increase in net profit to Rs.2697 crores with a 2.18% rise in total income to Rs.19016 crores on a year on year basis for Q2FY14.
Hero Motocorp stock fell 2.94% last week to Rs.2035 as the net profit rose 9.26% to Rs.481 crores with a 10.49% increase in revenues to Rs.5842 crores on a year on year basis for Q2FY14.
Larsen and Toubro (L&T) stock rose 8.61% to Rs.948 as the net profit rose 7% to Rs.978 crores with a 10% growth in revenues to Rs.14,648 crores on a year on year basis for Q2FY14.
ITC stock fell 3.95% to Rs.340 as the company reported a 21.46% growth in the net profit to Rs.2231 crores with a 9.42% growth in revenues to Rs.8109 crores on a year on year basis for Q2FY14.
Table 1. Weekly Market Movement
Table 2. Weekly Gainers and Losers