Lower oil prices, rupee propel markets out of downtrend

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Mumbai : The Indian equity market came in for some rough weather due to global worries over high crude oil prices and US interest rates during the week just ended, but managed to catch the upside in the final session of trade.

However, the odds favoured a sixth week of decline, as the market swung widely with major losses of over 2 per cent in just one session -- thereby pushing stock prices and the Indian currency down south.

The past week saw NSE Nifty50 fall to a six months' low of 10,138 points led by outflows from debt and equity markets by foreign portfolio investors.

Currently, outflows have reached a worrying level. In just the nine trading sessions from October 1, foreign investors have sold stocks worth over Rs 17,000 crore. At this rate, the quantum might cross Rs 40,000 crore.

The worst month in over 10 years in this regard was January 2008 when the fund outflow crossed Rs 29,000 crore.

On a weekly basis, provisional figures from the stock exchanges showed that foreign institutional investors sold scrip worth Rs 8,335.12 crore, while the domestic institutional investors sold Rs 8,568.38 crore of stocks.

Notwithstanding the general downturn, the plunge in crude oil prices to around $80 per barrel saw a respite from the onslaught of negative sentiments. The downtrend in prices came after the US reported a sharp rise in its oil production.

Besides oil prices, attractive valuations and liquidity infusion by RBI lured domestic investors back to the Indian market.

In addition, the rupee's recovery came in part as a result of lower oil prices and the central government's decision to raise the import duty on selective telecom equipment smoothened investors' nerves.

The rupee closed at 73.56 on Friday, strengthening by 21 paise from its previous week's close of 73.77 per greenback.

Consequently, on a weekly basis, the S&P BSE Sensex closed at 34,733.58 points, up by 353.54 points or 1.02 per cent from its previous close.

Similarly, the wider Nifty50 of the National Stock Exchange made gains. It closed at 10,472.50 points, up 156.05 points or 1.51 per cent from the previous week's close.

The market breadth on both NSE and BSE were positive in three out of the five trading sessions of the week.

"The market witnessed extreme volatility this week due to liquidity constraints, rising oil prices and depreciation in Indian rupee," said Vinod Nair, Head Of Research at Geojit Financial Services.

"Negative sentiments over a slowing world economy due to the lingering trade war between the US and China and concerns over a Fed rate hike trajectory spooked global markets."

Deepak Jasani, Head of Retail Research at HDFC Securities, said: "The top sectoral gainers for the on the BSE were media, energy, auto and power indices, as also the Bank Nifty. The top losers were IT and metal indices."

The top weekly Sensex gainers were Yes Bank (up 19.64 per cent at Rs 246.70); Kotak Mahindra Bank(up 11.02 per cent at Rs 1,169.40); Reliance Industries(up 7.29 per cent at Rs 1,126.40); Adani Ports(up 7.08 per cent at Rs 323.45); and ONGC(up 6.98 per cent at Rs 157.20 per share).

The major losers were Tata Motors(down 15.31 per cent at Rs 183.40); Tata Motors(DVR)(down 13.88 per cent at 101.15 ); TCS(down 8.78 per cent at Rs 1,918.40); Vedanta(down 7.61 per cent at Rs 214.20); Infosys (down 5.93 per cent at Rs 679.05).

(Ravi Dutta Mishra and Rohit Vaid can be contacted at ravidutt.m@ians.in and rohit.v@ians.in)