Sensex snaps 3-wk losing streak

The RBI,in its first quarter monetary policy review,kept the key lending (repo) rate as well as cash reserve ratio (CRR) unchanged,while brought down the Statutory Liquidity Ratio (SLR) -the amount of deposits banks park in government bonds- by one per cent to 23 pc,effective from August 11.

The BSE sensitive index opened higher at 16,919.14 and shot up further to 17,291.99 before ending the week at 17,197.93,a gain of 358.74 points,or 2.13 per cent. It had lost by 681.93 points or 3.89 per cent in the last three weeks.

The NSE 50-share Nifty also shot up by 115.85 points or 2.27 per cent to 5,215.70. It had also fell by 217.10 points or 4.08 per cent during the last three weeks.

Buying was so strong that all indices closed with sharp gains between 0.08 per cent and 4.97 per cent with power,capital goods,realty,refinery,IT,FMCG and PSU counters taking the lead.

Buying was also seen in second-line stocks,an indication of return of retail investors,with the BSE-Midcap and BSE-Smallcap indices outperforming the Sensex with a rise of 3.14 per cent and 2.96 per cent,respectively.

IT stocks were mostly higher on weak rupee. The rupee again breached the 56-mark against the US dollar to hit a fresh one-week low. A weak rupee boosts revenues of IT firms in rupee terms.

Foreign Institutional Investors (FIIs) made substantial purchases of shares during the week as per the SEBI’s data.From the 30-share Sensex pack,24 stocks finished with gains while remaining six declined.

Major gainers: NTPC shot up by 8.66 per cent,followed by BHEL (7.88 per cent),Cipla (7.17 per cent),L&T (4.72 per cent),Sunpharma (4.71 per cent),Tata Motors (3.81 per cent),Wipro (3.81 per cent),HDFC (3.77 per cent),GAIL (3.50 per cent),SBI (3.31 per cent) and Reliance Ind (3.12 per cent). However,Bharti Airtel dropped by 3.44 per cent followed by Coal India (2.76 per cent) and Hero Motocorp (2.39 per cent).

Among the major indices,the BSE-Power shot up by 4.97 per cent followed by the BSE-Capital Goods (4.70 per cent),the BSE-Realty (4.38 per cent),the BSE-Healthcare (4.28 per cent),the BSE-Oil&Gas (2.47 per cent),the BSE-IT (2.44 percent),the BSE-FMCG (2.08 per cent) and the BSE- PSU (2.00 per cent).

The total turnover at BSE and NSE dropped to Rs 9,365.61 crore and Rs 45,317.41 crore,respectively,from the last weekend’s level of Rs 9,961.41 crore and Rs 49,129.43 crore.

Forex: The Indian rupee lost by 41 paise for the third week in a row to close at 55.75 against the Greenback due to sustained dollar demand from importers despite firming trend in equity local markets.

At the Interbank Foreign Exchange (Forex) market,the domestic unit resumed the week higher at 55.28 from last weekend’s close of 55.34 and touched a high of 55.20 on some dollar selling by exporters and firm local stocks.

However,later it turned negative on sustained dollar from importers and some banks and dropped further to an one- week low of 56.19 before concluding the week at 55.75,showing a fall of 0.74 per cent.

Sustained dollar demand from banks and importers,mainly oil refiners affected the rupee value against the dollar,a forex dealer said.

The RBI in its first quarter monetary policy review kept the key lending (repo) rate as well as cash reserve ratio (CRR) unchanged while brought down the Statutory Liquidity Ratio (SLR) — the amount of deposits banks park in government bonds — by one per cent to 23 pct,effective from August 11.

Meanwhile,the BSE benchmark Sensex ended sharply higher at 358.74 points,or 2.13 per cent,during the week.

Pramit Brahmbhatt,CEO,Alpari Financial Services (India) Pvt Ltd said,”The INR started the week on a flat note but continued to weaken till the last day wherein the price pared weakness in the second half of the session and ended on a weak note. The last week has been a week of disappointment for the Indian as well as the global markets.”

“It started with RBI which maintained a status-quo on its major policy rates but cut the SLR by 100bps to 23 per cent infusing liquidity of around Rs.60000 crore in market,he added.

“The Indian markets shrugged off the stagflationary fears induced by the RBI and ended on a positive note focusing more on the global events.

“The markets also ignored the IMD’s declaration of drought like situation in northern and western India by regaining most of the lost ground. The coming week marks the Vice Presidential election and also the beginning of the monsoon session of Parliament,he further commented.

The FOMC and the ECB disappointed the global markets triggering a fresh wave of risk off in global markets but the confidence of global investors in ECB and its measures to tackle the debt contagion sparked risk on trades sending the dollar index lower towards its weeks low.

The FOMC has a valid point to defer its easing program as the US economy has been witnessing modest growth and is also set for its Presidential election too but the ECB ran short off street expectations and it almost took a day for the market to gauge the ECB’s strength and willingness to save the single currency.

“The drought condition and lack of strong policy measures by the government shall exert some downward pressure on INR or at least should cap the gains accumulated due to positive developments in global markets. However,any sort of disappointment in global market then the INR shall be the first to weaken among the emerging economies on weak domestic fundamentals,” Brahmbhatt said.

The RBI fixed the reference rate for US dollar and euro at Rs 56.0845 and Rs 68.3605 from Rs 55.4130 and 68.1010 last weekend,respectively.

The benchmark six-month forward dollar payable in January settle at 182-1/2-184-1/2 paise and far-forward contract maturing in July ended at 329-1/2-331 paise.

The rupee recovered against Pound Sterling to end the week at 86.82 from preceding weekend’s close of 86.94 while remained weak against the euro to 68.42 from 68.01.

It also declined further against the Japanese yen to 71.23 per 100 yen from last weekend’s level of 70.80.