Stock market remains cautious on weak global cues

During the week (Oct 13, 2014-Oct 17, 2014), the markets initially saw range-bound trading but witnessed a sharp fall just before it closed on Thursday on weak global cues. The BSE Sensex slipped 350 points on October 16 to close at 25,999. Even on Friday it opened weak and was trading in the negative.

It was around noon it made some recovery and managed to close with an addition of close to 109 points during the day and closed the week at 26,108. The BSE had only four trading sessions on account of the state assembly elections in Maharashtra on Wednesday.

Sector wise, banking index performed well Friday. IT index came under selling pressure. TCS stock opened sharply lower and closed nearly 9% lower on Friday at Rs 2444 as the street reacted to the company's outlook which indicated that it may not be able to beat FY14 growth rate of 16.2%. During the week, the DLF stock slipped sharply (-22.63%) on account of the Securities Exchange Board of India's order restraining its promoters and other senior executives from accessing the equity market.

Vinod Nair, Head-Fundamental Research, Geojit BNP Paribas Financial Services says, "We see higher volatility. The market's fall in the last few trading days was largely led by global risk."

Sanjeev Zarbade, Vice President- Private Client Group Research, Kotak Securities says, "Buying by foreign investors has also weakened in recent days which is having its downward impact on the rupee. Global markets during the week were roiled by weak economic data sparking concerns on the growth outlook."

FIIs continue to sell due to gap in liquidity telling that world is slowing and dollar interest will increase. "In spite of positive factor in India, market is not evaluating much awaited labour reform and pre-finalization of state election. Hence market continues to move lower as FII's are selling concerned about global factor which is impacting their liquidity," says Nair.

Among the A group companies, the top gainers during the week were Den Networks (38.93%); BF Utilities (26.40%); NCC (14.99%); Union Bank of India (14.90%) and BHEL (14.51). Meanwhile, the top losers were DLF Ltd. (-22.63%); Rasoya Proteins (-22.51%); Amtek Auto Ltd. (-17.27%); Suzlon Energy (-17.23%); and Natco Pharma (-16.85%). Of the total number of companies eligible for trading 4,166 on the BSE as on September 19, 2014; 120 remained unchanged, 1334 stocks went up and 1495 fell.

"The performance of the Indian equities remains contingent on resumption of FII flows. Reducing inflation, lower commodity prices and expected reforms push remain significant tailwinds for the markets," says Zarbade.