Stocks remain under pressure, RBI policy review to trigger market next week

Bears dominated equity markets this week as both the Bombay Stock Exchange (BSE) Sensex and the National Stock Exchange (NSE) Nifty fell 1.4%. The Sensex opened the week at 27,008 on September 22, went up to 27,256 the next day, but stayed below this level on the remaining days of the week. It ended the week at 26,623, down 426 points from the previous week's close of 27,090.

Similarly, the Nifty opened the week at 8,084 points, touched a high of 8,159.90 on the same day, but remained below these levels throughout the week. On Friday, it closed at 7,968, down 152 points from the previous week's close.

Rakesh Goyal, senior vice president, Bonanza Portfolio, says, "The index started the week on a positive note. However, global cues, profit-booking and the Supreme Court's decision on coal blocks led to selling." The Supreme Court has declared all coal block allocations, except a few, since 1993 as arbitrary and illegal.

Among sector indices, the S&P BSE Realty index tanked the most. It fell 8.21% and was at 1,628.49 on September 26 as against the previous 's week close of 1,774. It was followed by the BSE Capital Goods index (4.60%), BSE Metals index (4.11%), BSE Power index (4%) and BSE Bankex (3.35%). FMCG was the only sector index that rose. It jumped 2.29% during the week to 7,652. Foreign institutional investors sold shares worth Rs 1,462 crore. Domestic institutional investors bought shares worth Rs 1,160 crore.

About the coming week, Goel says, "The prime minister's visit to the US, along with global cues, can boost sentiment by throwing light on the future of economic and other reforms." In the BSE 100 index, Tech Mahindra, Hindustan Unilever, Dr Reddys Laboratories, HCL Technologies, IndusInd Bank, Tata Motors, Titan Company, TCS and Bajaj Auto shares touched life-time highs during the week.

On Friday, after being under pressure for most of the day, the markets rose after S&P raised India's credit outlook from negative to stable.

Vinod Nair, head, fundamental research, Geojit BNP Paribas Financial Services, says, "This is a good time to buy equities as we continue to believe that the India story will improve over the next six-nine months. But we will be in a higher risk zone as global factors such as correction in commodity prices and risk of higher dollar cost of liquidity will play out in the medium term rather than the short term.

If the economy continues to improve, margins will expand for India Inc, led by lower crude oil and commodity prices. Valuations, too, continue to be compelling."

In the coming week, the Reserve Bank of India's monetary policy on September 30 will be a key trigger for stock markets.