Amid high volatility, the Indian stock market edged higher last week, with key indices Sensex and the Nifty50 eking out modest gains. Besides uncertainty about near term outlook for the economy and mostly mixed global cues, the expiry of November series derivatives contracts contributed to wild swings in the market.
The mood was cautious for most part of the week with concerns about near term liquidity and a likely drop in pace of economic growth following the government's demonetisation move weighing on the market. The rupee's decline hurt as well, although its weakness triggered some hectic buying in the IT space on the final session and lifted the market to a strong close.
The BSE benchmark Sensex ended the week with a gain of 166.10 points or 0.63% at 26,316.34. The Nifty50 of the National Stock Exchange ended up 40.20 points or 0.49% at 8114.30. Mirroring fairly strong buying in midcap and smallcap stocks in some of the sessions, the BSE Midcap and Smallcap indices closed higher by 0.91% and 1.33%, respectively.
The rupee's weakness against the U.S. dollar triggered some buying in a few IT majors, but then, that was the only positive for the Indian stock market on Monday as concerns about near term liquidity in the economy following the recent demonetisation move by the government and a lack of any positive catlysts from both domestic and international fronts prompted traders to exit counters. The Sensex ended 385.10 points down and the Nifty50 declined 145 points that day, hitting their near 6-month lows in the process.
The market ended notably higher on Tuesday, with the Sensex snapping a six-day losing streak, as traders indulged in some hectic short-covering and bargain hunting ahead of near month derivatives expiry. A firm trend in global markets and higher crude oil prices amid hopes of a freeze in production helped as well. The Sensex advanced 195.64 points, while the Nifty50 gained 73.20 points.
On Wednesday, the market ended on a positive note, extending gains to a second successive day, as traders covered some short positions ahead of near month derivatives expiry. The Sensex and the Nifty50 gained 91.03 points and 31 points, respectively.
The market turned weak on Thursday, with investors pressing sales at several counters, amid a falling rupee, fears about likely U.S. interest rate hikes in the foreseeable future and on persisting worries about a likely drop in economic growth following the recent demonetisation move by the government.
The rupee's slide to a record low against the U.S. dollar triggered some buying in the IT space. A few stocks from metal sector edged higher, due largely on short-covering. There were some gains for a few stocks from FMCG and powere sectors too. But otherwise, the market was under pressure right through the session. The Sensex declined 191.64 points and the Nifty50 shed 67.80 points on that session.
Despite a lack of triggers from holiday-shortened U.S. markets and a somewhat mixed and subdued trend across markets in Asia and Europe, the Indian stock market signed off on a high note on Friday, with traders thronging information technology counters following the rupee's weakness against the greenback.
The rupee, which tumbled to a record low of 68.86 against the U.S. dollar on Thursday, regained some ground today, rising to 68.45 a dollar, but it still triggered the appetite for IT stocks. The Sensex ended the final session of the week with a gain of 456.17 points and the Nifty50 firmed up by 148.80 points.
IT major Infosys ended stronger by 6.25%. The company said on Wednesday that it has signed a definitive agreement to a Limited Partner investment of Rs 31.6 crore from its Innovation Fund in Stellaris Venture Partners, an India-based early stage venture fund. Tata Consultancy Services gained 8.4% and Wipro climbed nearly 6.5%. Several other IT stocks, including HCL Technologies, Tech Mahindra, Hexaware Technologies, MindTree and NIIT Technologies saw some hectic buying during the week and posted smart gains.
Asian Paints, Hindustan Unilever and Tata Steel gained 3.5% - 6%. Adani Ports, NTPC, Bajaj Auto and ONGC advanced 1% - 2%.
Reliance Industries gained 0.7%. Power Grid Corporation declined 2.2% and Coal India declined nearly 1%. ITC, HDFC and Larsen & Toubro ended almost unchanged while Bharti Airtel ended modetly lower.
Among automobile stocks, Mahindra & Mahindra ended 4.7% down and Tata Motors declined 3.7%, while Maruti Suzuki shed about 1.7%. Bajaj Auto ended 1.3% up and Hero Motocorp gained 3.5%.
Among bank stocks, State Bank of India declined 5.3%, while ICICI Bank and HDFC Bank lost around 1.8%, while Axis Bank ended marginally down.
In the healthcare space, Sun Pharmaceutical Industries gained 3.5%. The company announced the execution of definitive agreements by its wholly owned subsidiary, for the acquisition of 85.1% of JSC Biosintez, a Russian pharmaceutical company engaged in manufacture and marketing of pharmaceutical products in Russia and CIS region.
Lupin ended 6.5% up with USFDA's approval for the company's Abacavir Sulfate and Lamivudine Tablets triggering strong buying at the counter. Cipla gained about 2.5%.