Weekly review: Indian equities snap 2-week losing run; Sensex grows

MUMBAI: The Indian equities markets key indices snapped a two-week losing streak with the benchmark Sensex gaining 1,367 points in the week ended June 24 as a rebound in global equities amid a steady fall in crude oil prices bolstered investors' sentiments.

After two consecutive weeks of the rout, the markets started the week on a positive note.

The Sensex gained 237.42 points while the Nifty 50 rose 56.65 points on Monday, the first trading day of the week.

The overall trend remained positive during the week. The 30 stock S&P BSE Sensex ended the week at 52,727.98 points, registering a weekly gain of 1,367.56 points or 2.66 per cent.

The broader Nifty 50 of the National Stock Exchange ended the week at 15,699.25 points, registering a weekly gain of 405.8 points or 2.65 per cent.

The markets recovered after selloffs in the previous two weeks. The Sensex had slumped by 2,943.02 points or 5.41 per cent during the week ended June 17 while the Nifty 50 of the National Stock Exchange crashed by 908.3 points or 5.6 per cent.

This was the biggest weekly loss in the country's benchmark indices since May 2020. Positive cues from the global peers amid a steady decline in crude oil and other commodities prices bolstered investors' sentiments in the Indian equities during the week.

"Benchmark Sensex and Nifty joined the global rally and logged impressive gains following the recent rout, as falling commodity prices and a steady fall in crude prices bolstered sentiment," said Amol Athawale, Deputy Vice President - Technical Research, Kotak Securities Ltd.

"Also, valuations have become attractive after the recent selloff, which prompted investors to buy beaten-down stocks of metal, oil & gas, banking and power sectors. Technically, on weekly charts the Nifty has formed a long bullish candle which is broadly positive," Athawale said.

On the Nifty 50 projections for the coming weeks, Athawale said, "for the bulls, 15700-15750 would act as a key resistance level, while on the flip side 15500 and 15400 could be strong support zones for the short-term traders.

Above 15750, the index could move up to 15850-15925. On the other side, a fresh round of selling is possible only after 15400 and below the same, it could retest the level of 15250-15150."

The equity markets are likely to remain volatile in the coming weeks. Tightening of monetary policies and rising inflationary pressure and mounting concerns over global economic recession will weigh on the investors' sentiments.

India's headline inflation is expected to remain higher than the Reserve Bank of India (RBI) upper tolerance level of 6 per cent till December 2022, RBI Governor Shaktikanta Das has said.

"As far as challenges are concerned, inflation is definitely the biggest challenge confronting most countries. Almost all market economies are confronted with mounting inflation, which is a problem that worries governments and central banks worldwide," RBI Governor said.

High inflationary pressure has formed major central banks globally to tighten monetary policy. Earlier this month, the US Federal Reserve hiked the interest rate by 75 basis points of 0.75 per cent to 1.5 per cent.

This is the highest increase in interest rate by the Fed since 1994.

The Fed action came after the US CPI inflation surged to 8.6 per cent year-on-year in May, the highest level in 40 years.

The Reserve Bank of India (RBI) has hiked the policy repo rate by 90 basis points or 0.90 per cent since May.

On June 8, the RBI Monetary Policy Committee (MPC) voted unanimously to increase the policy repo rate by 50 basis points to 4.90 per cent. In its off-cycle monetary policy review in the first week of May, the RBI had hiked the policy repo rate by 40 basis points. "As high inflation remains the main concern, globally policymakers have begun to show urgency and respond with interest rate hikes and supply-side measures," said Hemant Kanawala, Head Equities, Kotak Mahindra Life Insurance Company.

"While the aggressive rate hikes have increased the risks of the growth slowdown in the short-term, the anticipated demand slowdown will also aid towards cooling of inflation in the medium-term. Commodity prices have begun to reflect the same. Owing to this, as new inflation and growth dynamics unfold, markets are expected to remain in a consolidation phase," Kanawala said.