Oil prices, dovish Fed push equity indices higher; Sensex gains over 3%

Ravi Dutta Mishra and Rohit Vaid

Mumbai, Dec 1 (IANS) Expected improvement in India's macro-economic condition due to lower crude oil prices along with healthy inflows of foreign funds on the back of a dovish US Federal Reserve and the government's plans to recapitalise state-run banks aided the key Indian equity indices to advance over 3 per cent during the last week.

According to market analysts, investors' sentiments were buoyed following a persistent fall in crude oil prices and the US Federal Reserve's indication of a slowing of rate tightening cycle enabling an overall improvement in the country's macros.

"Domestic market rallied on the back of steep fall in crude prices, which resulted into sharp recovery in the rupee and Federal Reserve's dovish comments indicating fewer rate hikes boosted investors' sentiment," said SMC Investments and Advisors' Chairman and Managing Director D.K. Aggarwal.

Last week, the S&P BSE Sensex gained 1,213.28 points, or 3.46 per cent, to close at 34,981.02, while the 50-share NSE Nifty advanced 350 points, or 3.32 per cent, to settle at 10,526.75.

"We have seen a rebound in the market with a positive closing on everyday due to improvement in domestic fundamentals owing to steep fall in oil prices to bearish territory and stronger rupee," said Vinod Nair, Head Of Research at Geojit Financial Services.

"Further, recapitalisation announcement of Rs 42,000 crore to public sector banks (PSBs) likely to provide respite to current liquidity issues, boosted the sentiment."

The oil market has seen heavy volatility in the run-up to OPEC (Organization of the Petroleum Exporting Countries) meeting in early December. This has led the US benchmark WTI (West Texas Intermediate) to slide below $50 a barrel for the first time in over a year as expectations build up on OPEC to cut supplies.

Crude oil prices have lost over one-third of its value since early October which comes amid expectations of slowing demand and rising US inventories as Brent Crude traded below $60 a barrel after touching an $86-a-barrel mark in early October.

"Markets were also supported by NBFCs and auto sector as RBI relaxed norms for NBFCs to securitise their loan book," said Rahul Sharma, Senior Research Analyst, Equity99.

In the past week, the local currency gained Rs 1.08 from its previous week's close of Rs 70.67. The rupee closed at 69.59 a dollar on Friday.

Apart from low oil prices, a strong rupee indicated a greater inflows of foreign funds into the country's equity and debt markets.

The provisional figures from the stock exchanges showed that foreign institutional investors bought scrips worth Rs 2,326.37 crore in the week ended November 30. The domestic institutional investors bought Rs 2,515.66 crore worth of stocks in the past week.

"After pulling out funds for three consecutive months -- August, September and October -- from the Indian stock markets, foreign players turned buyers in the month of November," Aggarwal said.

In addition, the market took cues from an ease in global trade tension ahead of G20 meet this weekend, where the US and China are expected to resolve trade issues.

"Markets rallied sharply this week from a low of 10,489 points. In the process, the Nifty broke out of the 10,440-10,775 trading range. The top sectoral gainers for the week were IT, Bank Nifty, Media and FMCG indices. The top losers were Metal, Pharma and Infra indices," said Deepak Jasani, Retail Research Head, HDFC Securities.

The top weekly Sensex gainers were TCS, up 8.56 per cent at Rs 1,970.60; IndusInd Bank, up 6.70 per cent at Rs 1,631.55; HDFC, up 5.83 per cent at Rs 1,983.70; Wipro, up 5.66 per cent at Rs 324.85; and Bajaj Auto, up 5.50 per cent at Rs 2,736.80 per share.

The major losers were Yes Bank, down 13.24 per cent at Rs 169.65; Sun Pharma, down 6.37 per cent at Rs 492.30; Tata Motors(DVR), down 4.86 per cent at Rs 93.95; Coal India, down 4.85 per cent at Rs 244.30; and Bharti Airtel, down 4.39 per cent at Rs 313.55 per share.

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

--IANS

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