Weekly Wrap: Sensex, Nifty post moderate losses amid high volatility

Last Updated: Sat, Aug 24, 2013 10:19 hrs

​Despite suffering some heavy losses in the first three sessions on the back of a falling rupee and on speculation the U.S. Federal Reserve will start scaling down monetary stimulus from mid-September, the Indian stock market ended just moderately down last week (August 19 - 23, 2013), thanks largely to some hectic short-covering and bargain hunting in the final two sessions.

Assertive comments from the Reserve Bank of India governon Subba Rao and the finance minister P Chidambaram that there were no plans to introduce capital controls prompted investors to get back into the buying mode during the latter part of the week.

The BSE barometer, which plunged below the psychological 18,000 mark during the week, ended at 18,519, gaining about 79 points or 0.4%. The broader Nifty index of the National Stock Exchange closed at 5472, gaining 36 points or 0.66%.

The BSE Midcap index lost nearly 1.5% and the Smallcap barometer ended lower by 0.4%, despite some strong buying at several side counters on Thursday and Friday.

It was a weak start for the market last week, with the sliding rupee and weak global markets triggering a sell-off. While the Sensex ended the day with a loss of 291 points, the Nifty closed with a loss of 93 points.

On Tuesday, stocks declined again on weak global cues, but managed to cut down some losses towards the end of the day. The Sensex eased by about 61.50 points, while the Nifty ended down 13.30 points.

The market ended sharply lower on Wednesday after the rupee tumbled to a new low against the U.S. dollar, and global stocks drfited lower on concerns about Fed stimulus tapering. The Sensex lost as much as 340 points or 1.9% that day, while the Nifty closed with a loss of nearly 100 points or 1.8%.

An upbeat data on Chinese manufacturing activity and some impressive data out of Europe lifted sentiment and pushed up stock prices on Thursday, resulting in the Sensex and Nifty moving up by 407 points (2.3%) and 106 points (2%), respectively.

And bargain hunting and short-covering continued on Friday, with comments from the finance minister and the central bank governor lifting the spirits of investors. The Sensex ended up 307 points and the Nifty moved up by 63 points.

Shares of PSU power equipment maker BHEL jumpged more than 9.5%. ITC and Larsen & Toubro declined by 3.6% and 2.3%, respectively.

Bank stocks saw some buying on Thursday and Friday, but were struggling for support for much of the first part of the week. On Tuesday, the Reserve Bank of India relaxed its tight monetary policy, by deciding to keep in abeyance the rule to cut SLR bonds held in HTM book to 23% and allow banks to retain SLR bonds in HTM at 24.5% of net deposits. The central bank also announced that it would repurchase government bonds worth around Rs 8000 crore on Friday, to facilitate some fund infusion in the banking system.

Among bank majors, ICICI Bank and State Bank of India lost around 0.75% and HDFC Bank closed with a gain of a little over 3%.

Shares of power equipment major Bharat Heavy Electricals (Bhel) jumped 9.58%. Tata Power (6.5%) and GAIL India (2.2%) also surged higher.

Telecom stocks traded weak. Bharti Airtel ended lower by over 8%. The company annonced on Thursday that it was in advanced discussions to sell off its Sri Lankan operations to Abu Dhabi's Etisalat. Sun Pharmaceutical Industries, Cipla and Dr Reddy's Laboratories declined sharply.

Among automobile stocks, Mahindra & Mahindra, Maruti Suzuki, Tata Motors, Bajaj Auto and Hero Motocorp lost 3% - 4%. Among IT majors, Infosys and Wipro posted notable losses, while Tata Consultancy Services ended flat.

Index heavyweight Reliance Industries ended lower by around 0.7%. On Thursday, the company made an announcement about a new gas condensate discovery off the east coast of India in the Cauvery basin.

Riding on impressive manufacturing data from China, metal stocks moved higher last week. Jindal Steel & Power and Tata Steel vaulted 13% and 20%, respectively. Hindalco moved up by a little over 11% and Coal India surged up 4.5%.

Sesa Goa (up 17%) and Sterlite Industries (15.7%) following an announcement from the two companies that the merger of Sterlite Energy with Sesa Goa and the demerger of the aluminium business undertaking of Vedanta Aluminium into Sesa Goa pursuant to the Scheme of Amalgamation and Arrangement have become effective. As per the swap ratio, every equity shareholder of Sterlite holding 5 equity shares of the company will be entitled to be issued 3 shares of the Sesa Goa.

The Indian rupee which touched a new low of 65.56 against the U.S. dollar on Thursday, recovered some lost ground and was quoting around 63.70 to the dollar on Friday.

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