The Sensex and the Nifty closed last week in red as both the indices closed approximately 3.6% lower. The sensex closed at 27,351 and the nifty closed at 8,224 on Friday.
The Indian stock markets are likely to open Monday morning on a shaky note as falling oil prices has led to US stock markets fall on Friday. Nymex crude was trading at $ 58 on Friday, which was not expected by the markets. Oil prices are breaking all fundamentals and it’s a good sign for India in 2015. It will not be easy for OPEC countries to pull back oil prices to the previous highs all of a sudden, which means that the bear market for Oil is here to stay for some more time, although there might be short pull backs as we have witnessed in bear markets of the past. The above scenario makes banking stocks an attractive investment option since economic recovery will lead to prosperity in banking stocks. Right now bank stocks are falling and this is a good opportunity for investors to pick up fundamentally strong banks like axis bank as they fall further. The 10 year Government of India bond yield has fallen to 7.85% on account of fall in inflation as a result of low oil prices.
The Indian markets were totally subdued last week with the Sensex and the Nifty remaining range bound and ending up a tad lower at 28,458 and 8,538 respectively. With no immediate triggers expected, December is likely to like this because heavy investors will be taking a break from the markets to enjoy the year end and those who are already in profits would be looking to protect the margins rather than exposing more at this juncture. The FIIs have also started investing funds our side India where valuations are low in pursuit of higher returns. Participants were also disappointed by the RBI’s stance on interest rates – however, the RBI governor also indicated that he will consider reducing the interest rates earlier than expected. If his words can be relied, we may expect a reduction in interest rates in the early part of 2015 which would further boost up the market sentiments.
Once again, it was a record breaking week for Indian stock markets as the bulls pushed stock prices to new highs. The sensex closed at 28,694 (up 399 points) and the Nifty closed at 8.588 (up 121 points) during the week ended. The indices moved sideways in the earlier part of the week and on Friday, as the OPEC decided to keep crude oil production unchanged to compete the shale gas producers, there was a sharp decline in crude oil prices that resulted in increase of stock prices. In other words, a greater part of upward movement we see in the markets are NOT due to change in growth prospects or fundamentals but is more due to the impact of drop in oil prices.
Last week witnessed the Sensex and the Nifty scaling to 28,335 and 8,477 backed by positive global cues and merger of ING Vysya with Kotak Mahindra bank. The merger also sent banking stocks higher on last Friday. The focus of the investors will be on the upcoming RBI policy meet on December 2nd and the developments in the parliament session. Fast policy execution and positive announcements will be required for the Indian markets to sustain the current momentum. The third quarter GDP data which is expected by the end of this week will provide further clues as to what could be the decision of the RBI governor in the upcoming policy meet.
Going ahead, the expiry of November derivative contracts could bring more volatility into the markets. The open interest on the national stock exchange is now above Rs 240,000 crores and the put all ratio is above 1. This indicates that this time the derivatives expiry may bring more volatility into the markets. Should there be a short squeeze, the markets will gain further.
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