Weekly roundup: Stock markets weaken on global cues

The week ended December 12 remained depressing for equity investors as the key benchmark indices-BSE Sensex and NSE Nifty-tanked 675.80 points and 314.20 points respectively, to 27,350 and 8,224 against 19,350.30 and 8,538.30 on December 5. Market experts believe weak Asian markets and fears from the Euro region kept the markets under pressure during the whole week.

Among the sector indices, BSE Oil and Gas index retreated the most: 7.26% to 9,800 on December 12 against 10,567 on December 5. It was followed by BSE Capital Goods index (7.23%), BSE Realty index (7.20%), BSE Metal index (5.91%) and BSE Power index (5.71%). However, BSE Healthcare is the only sectoral index which ended the week on positive note with marginal gain of 0.11%.

Dipen Shah, head, private client group research, Kotak Securities, says, "Markets closed the week with losses of about 3-4% on the benchmarks. There was weakness across sectors that was brought about by the global concerns. Markets are concerned about a global slowdown, as reflected in demand from major oil producing organisations."

Vinod Nair, head, fundamental research, Geojit BNP Paribas Financial Services, believes that stocks sensitive to crude prices and global growth have taken a beating, including oil and gas and metals, weighing the concerns over global growth outlook. "Though unlikely, any positive news from the ongoing winter session can be possible trigger, else the market is largely taking cues from international events," he adds.

Vivek Gupta, director, research, CapitalVia Global Research, says, "In the overseas markets, European stocks edged lower before the European Central Bank revealed take-up of its lending auction, which could provide clues on the central bank's policy decisions. Stocks in the US suffered their worst declines in about two months this week, as a renewed slump in oil prices slammed energy companies while investors fretted that a stunning drop in oil prices signals a more worrisome global-economic slowdown."

During the week crude oil prices plunged nearly 10% to $59.45 per barrel on December 12 against $65.84 per barrel on December 5.

In the BSE 500 index, Kirloskar Oil Engines, SKS Microfinance, Bharti Infratel, Repco Home Finance, Page Industries, DCB Bank, Jagran Prakashan, Jet Airways, Ajanta Pharma and Wockhardt touched their 52-week high this week. The BSE Small-Cap and Mid-Cap indices also dipped 3.54% and 3.71%, respectively.

During the week, China's Shanghai Stock Exchange Composite Index, Japan's Nikkei 225, Germany's CAC and US Dow Jones index slid 0.5%, 4%, 4.3% and 2%, respectively till December 11.

Foreign institutional investors remained bullish on the Indian market as their net investment stood at Rs 4,238 crore in the equity and Rs 3,800 crore in the debt segment during the week.

For the week ended December 12, rupee plunged nearly 1% to 62.44 against 61.85 on December 5.

Debopam Chaudhuri, chief economist, ZyFin Research, says that 2014 remains a volatile year for the rupee exchange rate, despite some significant recovery in India's current account deficit.

"With an expected rise in US interest rate regime, there is a high probability of a significant decline in demand for rupee from FIIs in the short run, leading to further depreciation. In this context, the RBI's decision to not cut rates may help reduce the volatility in exchange rate until India regains its position as a lucrative investment destination," he adds.

The factory output (Index of Industrial Production) for October fell to 4.2% compared to the corresponding month last month and consumer price inflation for November declined to 4.38% year-on-year against 5.52% in October.

Market experts believe fiscal reforms in and outside the budget will act determine the market's movement over the next few weeks. Economic growth as well as interest rate movements will be determined by what measures are taken by the Government to put the economy on a high growth path. Developments in China and EU hold the key for the global markets, including India.

For the coming week, Jayant Manglik, president, retail distribution, Religare Securities, says, "We shall be seeing participants reacting on the macro-economic numbers in early trade on Monday and that would set the tone for the rest of the day."