Shrugging off rise in retail inflation and fall in industrial production, other national as well as global positive factors send both the key indices, the S&P BSE benchmark Sensex and CNX Nifty, up by three per cent to end at three-week high during the truncated week.
The BSE and NSE were closed on Friday, August 15, for 'Independence Day'. The market resumed on a firm note after SEBI cleared REIT norms.
Industry and experts welcomed REIT and Investment Trust guidelines and said it would help attract foreign as well as domestic investments to the tune of USD 15-20 billion (over Rs one lakh crore) through such trusts.
Encouraging Q1 earnings from some corporates as well as sustained FII buying also supported the market sentiment. The macro concerns somewhat felt moderated for market players as the government data of key Wholesale Price Index dipped to five month low to 5.19% in July, though higher retail inflation (CPI) figures and sluggish Industrial Production growth rate (IIP) remain causes of concern.
Retail inflation, measured on consumer price index (CPI), inched up to 7.96% in July as compared to 7.46% in June, while the growth rate of the Index of Industrial Production (IIP) slowed to 3.4% in June as against 5.0%(revised) in May, showing signs of sluggishness in the economy.
The BSE S&P Sensex resumed higher and traded between 26,135 and 25,437.05 before ending to three-week high of 26,103.23, showing a gain of 774.09 points or 3.06%.
In last two weeks, it had fallen by 797.61 points or 3.05%. The NSE 50-share Nifty also spurted by 223.15 points, or 2.95%, to conclude at three-week high of 7,791.70. On the global front, reduced geopolitical concerns also fuelled buying activity.
Expecting the situation in Ukraine and Middle East to stabilise on reports that the Russian war planes have finished military exercises near Ukraine's border and an agreement between Israel and Hamas on Wednesday to decide to extend the temporary truce in Gaza for five more days, moments before the existing ceasefire was to expire, also buoyed the sentiment.
A fall in global crude oil prices following easing of economical global worries also maintained the market outlook positive. Jignesh Chaudhary, Head of Research, Veracity Broking Services said, "The Indian equity markets were positive in the entire trading week in spite of poor economic data - the industrial production decreased and inflation increased.
"FII's have been the key drivers of the Indian equity market, they bought stocks worth Rs 7.18 billion ($117.6 million) on Wednesday which also helped the markets to grow."
"On Friday, all investors were eager to listen to the newly elected Prime Minister on the Independence Day to check the reforms which he will be announcing and also would show the track which government would be following.
It was clear from his speech that the government is business-friendly," he added. Overall, 22 scrips of the 30-share Sensex closed higher while others ended lower. Major gainers were Tata Motors (11.92%), HDFC (9.57%), M&M (7.70%), SSLT (7.37 %), Sun Pharma (7.21%), Gail India (4.45%), ONGC (4.01%), HDFC Bank (3.70 %), Infosys (3.55%), ICICI Bank (2.88%), L&T (2.69%), NTPC (2.68%), Cipla (2.63%), ITC (2.38%), RIL (2.19%), Maruti Suzuki (2.05%), Axis Bank (1.74%) and HUL (1.72 %).
However, BHEL dropped by 4.08%, followed by Hero MotoCorp (3.06%), Hindalco (3.02 %), Bharti Airtel (2.18 %), SBI (2.21%) and Dr Reddy's Lab (1.01%).
Among the S&P BSE sectoral indices, Auto rose by 5.17 %, HC (3.74%), Oil & Gas (3.17%), Metal (2.23%), FMCG (2.16 %), Bankex (2.06%) and CD (1.55%), while Realty fell by 1.64%.
The total turnover at BSE and NSE dropped to Rs 10,052.27 crore and Rs 57,665.96 crore, respectively due to truncated week from last weekend's level of Rs 13,623.67 core and Rs 74,367.90 crore, respectively.
Forex: The rupee appreciated for the second week in a row and closed up by 39 paise to end at two-week high of 60.76 against the US dollar during the shortened week under review following sustained dollar selling by exporters and some banks amid bullish local equities.
The forex market was closed on Friday, August 15, on account of Independence Day.
At the Interbank Foreign Exchange (Forex) market, the local unit commenced the week better at 61.09 a dollar from last weekend's close of 61.15 and dropped to a low of 61.30 on Wednesday on fresh dollar demand from importers, amid uptick in retail inflation and slowing industrial production growth.
Later, it bounced back to settle the week at its highest level of 60.76, showing a rise of 39 paise, or 0.64%. On Thursday, it gained 45 paise -- its best single day gain in three months -- amid fall in wholesale inflation to five-month low in July.
The benchmark S&P BSE Sensex snapped its two-week losses and closed the week sharply higher by 774.09 points, or 3.06%, while FIIs bought shares worth Rs 1,595.72 crore during last week, including provisional data of August 13 and 14.
Meanwhile, the country's industrial production (IIP) slowed to 3.4% in June as against 5% in May, while retail inflation, as measured by consumer price index (CPI) rose to 7.96% in July from 7.46% in June, as per government data announced on Tuesday.
Meanwhile, inflation as measured by Wholesale Price Index (WPI) dropped to five-month low of 5.19% in July, as per government announcement on Thursday.
Pramit Brahmbhatt, Veracity Group CEO said, "Rupee appreciated for the week after falling for two consecutive weeks taking cues from strong local equities.
Indices gained almost three per cent during the week. "To end the week, Rupee appreciated by over 0.6%. The immediate support for the USD/INR pair is at 60.50, once breached comfortably we can see the pair trading at 60.00 levels. The trading range for the Spot USD/INR pair for Monday is expected to be within 60.40 to 61.40."
The benchmark six-month forward dollar premium payable in January dropped sharply at 227-231 paise from 243-245 paise last week and far-forward contracts maturing in July 2015 also tumbled to 473-475 paise from 488-490 paise.
The RBI fixed the reference rate for the USD at 61.0583 and the euro at 81.5552 from previous weekend's close of 61.5575 and 82.4125. The rupee shot up further against the pound sterling to 101.34 from 102.79 preceding weekend and also remained firm to 81.27 per euro from 81.88. It, however, recovered smartly to 59.34 per 100 Japanese yen from 59.97 last weekend.
Oils and oilseeds: Edible and non-edible oils dropped at the truncated oils and oilseeds market during the week under review.
Groundnut oil dropped further on selling by stockists as well as reduced demand from stockists and retailers on the back of ample arrivals from producing belts.
Refined palmolein continued its weakening trend due to absence of retail buying amidst bearish Malaysian cues. Globally, palm oil futures dropped to USD 666 a metric tonne on the Malaysia Derivatives.
Castorseeds bold and castor oil commercial slipped owing to lower demand from shippers and soap manufacturing units.
Linseed oil ruled stable due to lack of any major buying from paint and allied industries. Markets remained closed on Friday, August 15, on account of 'Independence Day'.
In the edible oils segment, groundnut oil resumed lower at Rs 775, later moved up to Rs 785, before drifting to settle at Rs 770 from last weekend's level of Rs 780, showing a loss of Rs 10 per 10 kg.
Refined palmolein opened lower at Rs 553 and dropped further to settle at Rs 530 from its previous level of Rs 555 per 10 kg, showing a fall of Rs 25.
Turning to non-edible section, castorseeds bold resumed low at Rs 4,175, later gained to Rs 4,200, before drifting to close at Rs 4,175 from its preceding weekend's level of Rs 4,200, showing a modest fall of Rs 25 per 100 kg.
Castor oil commercial also commenced lower at Rs 865, later moved up to Rs 870, before easing to finish at Rs 865 from its last weekend's level of Rs 870, revealing a marginally loss of Rs 5 per 10 kg. Linseed oil remained stable throughout the week and closed at its previous weekend's level of Rs 760 per 10 kg.