Weekly Wrap: Modi Stimulus, Oil Relief Fail To Lift Stocks As Weak Global Cues Weigh
Indian equity benchmarks ended lower despite gains from declining oil prices and government stimulus measures as rout in the global markets deepened.
The S&P BSE Sensex fell 0.61 percent to 35,742 and the NSE Nifty 50 Index dropped 0.48 percent to 10,754.
The Sensex and Nifty rose for the first three days as the Reserve Bank of India announced that it will buy more government bonds to ease liquidity crunch and a day after the Modi government said it'll increase the amount it has committed to recapitalise public-sector banks in the current financial year amid falling crude oil prices.
However, a rout in global market overshadowed positive domestic developments after the Federal Reserve raised borrowing costs for the fourth time this year amid renewed U.S.-China trade tensions after President Xi Jinping said China would stick to its policy agenda despite pressure from the U.S.
“In the last one month, India outperformed world markets tracking fall in crude price but sooner or later Indian markets had to catch up with what was happening in U.S.,” Dilip Bhat, joint managing director at Prabhudas Lilladher, told BloombergQuint in an interview.
This correction can cause a temporary aberration and markets will be volatile as we approach the general election, Bhat said.
Big Stock Moves Of The Week
Bharat Petroleum, Hindustan Petroleum rose 10 percent and 8.5 percent respectively after Brent crude fell 12 percent to $52.79 per barrel.
Zee Entertainment was the top Nifty loser, falling 8.51 percent, to Rs 447.80 after Bank of America Merrill Lynch downgraded the stock to “sell” for target price of Rs 375.
BofAML in a note said:
- Liquidity concerns to surface if company doesn’t find a strategic investor by April 2019.
- Company has already acknowledged structural issues like lack of technological expertise.
- Near-term pressure on broadcast ad/subscription due to non-extension of Dec. 29 deadline to select a-la carte channels.
- Investors are concerned with cash invested in overseas funds like Poseidon and Actinium.
- Expect Jio to disrupt media landscape in next 12-18 months.
IL&FS Transportation Networks jumped 24 percent to Rs 13.35 after it put its road assets on sale as part of its debt-resolution plan.
NDTV advanced 9.36 percent to Rs 39.15 after NDTV Convergence announced a Rs 300 crore deal with Taboola, the world’s largest content discovery platform.
Seven of 11 sectoral gauges compiled by National Stock Exchange ended higher led by Nifty PSU Bank Index’s 1.8 percent gain after the government said it will increase the amount of funds it has committed to recapitalise public-sector banks in the current financial year amid falling crude oil prices.
On the flipside, Nifty IT Index slumped over 4 percent after the rupee fell against the dollar.
The rupee rose 2.4 percent to 70.17 after Brent crude declined almost to $50 per barrel, making it the best-performing currency among emerging market peers.
Big Talking Points This Week
- Euro Stoxx 50 set to enter bear market amid global stock rout.
- RBI increases bond purchases to inject liquidity.
- GST Council may cut tax rate on cement, air conditioners, digital cameras.
- Government commits additional funds for bank recapitalisation.
- Court refuses interim relief for Kotak Bank on RBI deadline to cut promoter stake.
- Will Modi also do for investors what Manmohan did?