The Sensex and the Nifty declined 0.33% and 0.08% respectively on account of global cues. The markets rose initially on expectations that RBI will keep the key interest rates unchanged in the monetary policy that is scheduled this week. Markets declined on the last day of the week on the back of weak global cues with commodity driven currencies weakening post the devaluation of the Peso by the Argentinian Central Bank. The RBI is expected to keep the key policy rates unchanged on account of inflation beginning to show a declining trend. The RBI also announced Open market operations to increase liquidity in the monetary system.
The Purchasing Managers Index (PMI) for China was reported at 49.6 in the month of January 2014 as against a reading of 50.5 in the month of December 2013. The index fell to its lowest level in the last six months and raised concerns of growth in the economy. The GDP growth rate for China in the year 2013 was reported at 7.7% the lowest since the year of 1999. China is trying to stem a shadow banking crisis and is facing liquidity issues that are being addressed by the central bank.
Emerging market currencies depreciated against the USD last week on account of some countries facing deteriorating economic conditions. The Argentinian Peso lost 15% against the USD and the central bank had to intervene to stem the fall. The Argentinian government has introduced restrictions in the recent past on the exchange of currency to stem the fall that is seen as negative by foreign investors. The Turkish Lira fell to record lows against the USD on account of political issues and worries of financing a widening current account deficit adding to the currency volatility globally.
The Bank of Japan pledged to maintain economic stimulus after a two-day monetary policy review that was held last week. The BOJ said it will keep plans to increase the monetary base annually by 60 trillion to 70 trillion yen and maintained its inflation target for 2015. Japanese markets remained subdued during the week as the Japanese Yen appreciated 1.94% to 102.31 Yen per USD.
Crude oil prices rose 0.23% to USD 107.5 /bbl and gold prices rose 1.68% to USD 1270 /Oz on a week on week basis.
The equity derivatives market saw fall in open interest in Nifty Index futures by 11.75% while implied volatility of Nifty index options increased week on week. FIIs were net buyers to the tune of Rs.8.23 billion in the equity market in the last week. Domestic Institutional Investors were net sellers to the tune of Rs.6.91 billion in the equity market in the last week.
Industry and Stock Specific trends
The sectoral indices declined last week with only the S&P BSE IT and S&P BSE Bankex index closing positive with a gain of 1.42% and 0.6% respectively on a week on week basis. S&P BSE Auto, Oil and Gas and PSU declined 0.62%, 1.37% and 1.57% respectively in the last week.
Ranbaxy Laboratories stock declined 19.85% in the last week to Rs.336 as the US FDA banned exports from the company’s Punjab based Toansa plant that makes active pharmaceutical ingredients.
Wipro stock rose 3.55% to Rs.572 as it hit a 52 week high of Rs.582 in the last week following Q3FY14 results that came in better than expected on a year on year and quarter on quarter basis.
Table 1. Weekly Market Movement
Table 2. Weekly Gainers and Losers