Indian equity benchmarks ended the volatile week of trade with marginal cut as traders remained worried on account of geopolitical tensions mainly due to Russia-Ukraine conflict and rising numbers of rising Covid-19 cases in China. Investors turned cautious with a report showing that India's merchandise trade deficit widened to $26.91 billion in October as exports crashed by 17 per cent year-on-year to $29.78 billion while imports rose by 6 per cent. The trade deficit was at $17.91 billion in October 2021.
Besides, a private report stated that asset management companies mobilised Rs 17,805 crore through 67 new fund offerings (NFOs) in the September 2022 quarter, a 64 per cent decline from the year-ago period, on expensive valuations and high volatility in equity markets. These signals led the BSE Sensex to decline 131.56 points, or 0.2 per cent, at 61,663.48 during the week ended November 18, while the Nifty slipped 42.05 points, or 0.2 per cent, to 18,307.65.
Shrikant Chouhan, Head of Equity Research (Retail) at Kotak Securities, said: “Equity market in India posted negative returns this week, with majority of indices posting decline. With Q2FY23 earnings season behind, the market focus now completely shifts towards domestic and global macro factors. October CPI inflation fell to 6.77 per cent due to favorable base effect. Domestic inflation is expected to moderate gradually.”
“In the US, comments from Federal Reserve speakers hinted at further interest rate hikes to come. Post witnessing some decline earlier this week, the US 10-year treasury yield moved higher on Thursday. While the crude oil prices corrected this week” Chouhan added.
As many as 22 stocks in the Nifty 50 index delivered a positive return to investors in the passing week. With a gain of (3.2 per cent), Kotak Mahindra Bank emerged as the top gainer in the index. It was followed by Hindalco Industries (up 2.1 per cent), Hero Moto Corp and Power Grid Corporation of India both were (up 2 per cent), and ICICI Bank (up 1.5 per cent). On the other hand, Coal India, Mahindra & Mahindra and ITC declined 9.4 per cent, 4.7 per cent and 4.3 per cent, respectively.
Market watcher Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said: “FPI buying has picked up smartly in November following the flat FPI activity in October. According to NSDL data the total FPI buying in November till 18th is Rs 30,384 crores. FPI buying in IT which started picking up in the second half of October has gathered momentum in November. FPIs have been buying in autos and telecom, too. FPI buying is unlikely to turn very aggressive, going forward. High valuations in India are a headwind. Valuations in markets like China, S Korea and Taiwan are very attractive now. So, more FPI money is likely to move to these markets.”
Sector-wise, the BSE Bankex index gained 0.9 per cent during the week gone by. BSE Teck index has also given 0.5 per cent return. While BSE Power declined the most, 3.4 per cent and BSE Auto indices declined 1.9 per cent during the week. BSE Fast Moving Consumer Goods, BSE Metal and BSE Healthcare indices also slipped more than 1 per cent.
Market strategist Deepak Jasani, Head of Retail Research at HDFC Securities, said: “Nifty snapped a 4 week gain on Nov 18 by posting 0.23 per cent weekly loss. It however recovered and cut its daily loss after making an intra-day low at 1455 Hrs. It closed 0.20 per cent or 36.3 points lower at 18307.7. Cyclical sectors came under selling pressure even as there was a feeling of fatigue among traders due to subdued volatility.”
Jasani further said “Broad market continued to underperform as A/D ratio remained much below 1:1. Cues from the US Fed members hinting at continued rate hikes on Thursday pricked sentiments globally. Nifty could now find support in the 18044-18103 band, while 18409 could act as a resistance in the near term.”
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