Indian stocks end higher on week after interest rates held
11:24, 10 December 2021
Indian stock indices ended hardly changed from their previous close but were higher week-on-week amid a cautious undertone due to the spread of Omicron, the coronavirus variant.
The bellwether Bombay Stock Exchange’s SENSEX was almost unchanged from its previous close at 58,786.67 points but 2.3% higher from its level a week ago. The most-traded National Stock Exchange’s NIFTY 50 index was nearly unchanged at 17,511.3 points, 1.9% above its level a week ago.
Four of the ten most-watched sectoral indices ended in the negative with the fall not exceeding 0.2% of the financial services index. The remaining six ended in positive territory with the NIFTY Media Index gaining 2.4% today.
Expert analysis
Commenting, Joseph Thomas, head of research at Emkay Wealth management, said: “The equity markets witnessed unprecedented volatility during the course of the week that has just gone by, mainly driven by factors beyond the borders – like the developments around the US tapering and liquidity normalization, and the emergence of the new challenge in form of the new variant of the virus, bringing back some controls on movement across borders in many countries, and also within borders in some others.
“While these factors resulted in some selling, new buying too emerged swiftly in the form of people wanting to capitalize on the better levels available. The domestic equities have witnessed regular inflows from the retail investors in the form of SIPs [systematic investment plans], while the FPIs [foreign portfolio investors] continued to be sellers reflecting the general mood among overseas investors for emerging markets. These global factors, especially the US inflation numbers and the developments around central bank policy meetings are likely to influence the course of the markets.”
The discovery in South Africa and spread of the Omicron variant of the coronavirus to India earlier this month weighed heavily on the underlying sentiment across markets. More than two dozen cases have been reported in India since the start of December. Investors drew some comfort from the Indian government’s continuing vaccination drive. According to data provided by the government, 800 million people in the nation have already received at least one of the two-dose coronavirus vaccine out of the 1.4 billion population.
US data to lead
Head of research at Geojit Financial Services, Vinod Nair, commented: “Indian benchmark indices traded with cuts to close flat following weak sentiments in the global market as the market awaits the release of Indian and US November inflation numbers. Losses in financial and IT sectors pressurised indices lower while positive realty, auto and metal stocks helped in erasing losses along with strong support from mid and small caps. Asian and European indices were trading weak ahead of the US inflation data release as the market expects inflation levels to remain elevated.”
Market sentiment was comforted by India’s central bank’s decision to hold record level interest rates and its announcement that it will maintain a stance that supports accelerating economic growth.
The developments ensured the indices took turns in giving up gains and rising intermittently amid bouts of profit-selling and bottom-picking.
“A mixed trend was witnessed on the sectoral front while the market breadth was inclined on the advancing side. Markets will first react to macroeconomic data in early trade on Monday. On the global front, the upcoming Fed meet will remain in focus along with the updates on the new variant. Amid all, we reiterate our view to maintain a positive yet cautious approach and focus more on stock selection. Nifty needs to hold the 17300-17400 zone for further recovery,” said Ajit Ajit Mishra, VP for research at Religare Broking.
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