The barometer index of the Indian equities market, the benchmark 30-scrip Sensitive Index (Sensex) of the S&P Bombay Stock Exchange (BSE) plunged 945.65 points or 3.21 percent during the weekly trade session ended March 13.
The Sensex ended March 13 trade at 28,503.30 points. For the weekly trade ended March 5, the BSE Sensex had closed at 29,448.95 points.
The Indian markets were closed March 6, Friday on account of Holi.
For the previous weekly trade ended March 5, the benchmark Sensex had gained 87.45 points or 0.29 percent at 29,448.95 points. The markets had closed the week ended Feb 28 at 29,361.50 points.
According to analysts the market sentiment turned sour due to last weeks data which showed a sharp increase in the US non-farm payroll data for January. The Indian markets were anxious as rapid increases in non-farm payroll data might lead to an increase in inflation.
This can make the US Federal Reserve raise interest rates sooner than previously expected. With higher interest rates, foreign institutional investors will be led away from emerging markets such as India.
This lead the markets to lose some steam. The barometer index on Monday plunged 604 points or 2.05 percent. It closed Tuesday’s trade lower by 135 points or 0.47 percent. On Wednesday, the Sensex closed 51 points or 0.18 percent down.
On Thursday the markets made some recovery after the Asian markets made gains on the back of easing of monetary policy in South Korea and Thailand.
On Thursday, the barometer index broke a consecutive three-day losing streak by gaining 271.24 points or 0.95 percent as automobile, capital goods and consumer durables stocks made healthy gains.
Then again on March 13 the market sentiments turned bearish as the data on retail inflation data for February showed a marginal increase from the previous month. This belied expectations of a rate cut next month, pulling down interest-sensitive sectors like banking, capital goods and automobile in particular.
The Reserve Bank of India is scheduled to announce its first bi-monthly policy review for 2015 on April 7.
The consumer price index for February 2015 stood at 5.37 percent from 5.19 percent for January 2015. The markets discounted India’s factory output in January which gained momentum rising 2.6 percent from a growth of 1.7 percent during December 2014.
The markets also overlooked the parliament’s approval to the insurance law amendment bill in the Rajya Sabha, despite opposition protests.
The bill hikes the foreign equity cap in domestic insurance companies from 26 percent to 49 percent.
“The markets mostly witnessed downtrend in the week as of weak global cues. In US, the markets were down due to strong jobs data. All other markets around the globe were also trading lower,” said Alex Mathews, head, research, Geojit BNP Paribas Financial Services.
“In the domestic front, the sell off was partly due to the fall in the rupee against the US Dollar. The rise in the Dollar was due the investors shifted to safe haven investment.”
Analysts pointed-out that the next important trigger for India in the coming week will depend on the outcome of the budget session. The first session of the parliament in 2015 will end on March 20, post which there is a one month break.
“Domestic equities further weakened on concerns regarding passage of pending bills in the parliament’s upper house,” said Rajesh Iyer, head, investment advisory services and family office, Kotak Wealth Management.
“Weak earnings growth in the previous quarter and a budget that focused on longer term structural issues meant that there were no immediate triggers to take the equity market higher.”
On Friday, the Sensex closed the day’s trade at 28,503.302 points, down 427.11 points or 1.48 percent from the previous day’s close at 28,930.41 points.
The major Sensex gainers on Friday were: Bharti Airtel, up 0.72 percent at Rs.400.35; ONGC, up 0.56 percent at Rs.313.85 and NTPC, up 0.03 percent at Rs.159.55.
The losers were: BHEL, down 3.41 percent at Rs.254.60; Larsen and Toubro (LT), down 3.11 percent at Rs.1,693.55; Wipro, down 2.64 percent at Rs.637.50; Bajaj Auto, down 2.64 percent at Rs.2,022.90; and Axis Bank, down 2.51 percent at Rs.570.10.
In the coming week the markets will also focus on the India’s trade deficit data for February which was released on Friday evening after the markets closed.
The trade deficit for February fell by 15.8 percent at $6.84 billion, from $8.13 billion in the corresponding month of 2014 on account of lower crude oil prices.
Other important triggers may be the wholesale price index (WPI) data and the fourth-nightly fuel price review by the three state-run oil marketing companies (OMCs).