The US Federal Reserve (Fed) in its Federal Open Market Committee (FOMC) minutes data has signalled a withdrawal of stimulus in the coming months but has indicated that the federal funds rate would stay near zero for the longer term citing concerns on economic growth. The Jobless Claims were reported at 3,23,000 for the previous week compared to a revised 3,44,000 for the week previous to last. The Dow Jones Industrial Average rose 0.65% and NASDAQ rose 0.2% on a week on week basis.
The Dow and the S&P 500 are trading at record high levels on the prospects of an improvement in the US economy and on the back of low interest rates maintained by the Fed. The start of the holiday shopping season in the US in the last week of November will be keenly watched by markets as it indicates consumer sentiments. Strong sales could lead to what is known as the Santa Claus rally as markets position for a strong start in the new year. A rally from record highs in US stocks could lead global markets higher and the Sensex and Nifty would benefit from that rally.
The Sensex and the Nifty declined 0.89% and 1% respectively in the last week after concerns from the withdrawal of the stimulus dragged indices lower. The emerging markets could witness an outflow of funds after the withdrawal of stimulus by the US economy increases the liquidity concerns for foreign investors across the globe.
The Reserve Bank of India (RBI) indicated that it will monitor the asset quality of banks and help improve the poor debt recovery process in the country. The focus on asset quality comes as a priority as bad debts of Indian banks have nearly doubled since 2009 to 4.2% of total loans and debt restructuring is also at a record high at the end of September 2013.
The Hang Seng and the Shanghai Composite index registered a 2.88% and 2.81% gain respectively on back of the policies that were announced by the Chinese government to move towards a free economy.
Crude oil prices rose 2.27% to USD 111 /bbl and gold prices declined 3.42% to USD 1288 /Oz on a week on week basis.
The equity derivatives market saw fall in open interest in Nifty Index futures by 23.07% while implied volatility of Nifty index options decreased week on week. FIIs were net buyers to the tune of Rs.3524 crores in the equity market last week. Domestic Institutional Investors were net sellers to the tune of Rs.2569 crores in the equity market last week.
Industry and Stock Specific trends
The sectoral indices declined last week with S&P BSE Bankex, Auto, IT, PSU and Oil and Gas indices closing negative on a week on week basis. S&P BSE Bankex, Auto, IT, PSU and Oil and Gas indices declined 4.24%, 3.11%, 2.24%, 1.96% and 2.03% respectively in the last week.
ONGC stock rose 2.94% to Rs.278 last week after the announcement that its subsidiary ONGC Videsh Ltd. signed a MoU with Petrovietnam to promote joint cooperation in the hydrocarbon sector in Vietnam.
Tata Steel stock rose 4.45% to Rs.392 on a week on week basis.
Tata Motors stock declined 3.29% to Rs.374 last week as its UK subsidiary Jaguar Land Rover (JLR) said it will enhance its research and product development on future vehicle infotainment technologies with a collaboration with Intel Corporation.
Bajaj Auto stock declined 6.85% to Rs.1890 on a week on week basis.
BHEL stock rose 0.96% to Rs.137 as the company announced that it has received an order of Rs.1300 crores from NTPC for supply and installation of the main plant package for a power project of 500 megawatts in Uttar Pradesh.
Table 1. Weekly Market Movement
Table 2. Weekly Gainers and Losers