The Indian equity indices began September on an encouraging note but could not sustain the gains and ended flat with CNX Nifty up 0.13% and S & P BSE Sensex down 0.03%. It was a volatile month for the market with sentiments swaying between positive and negative territory. In the first half of the month, indices got a boost from India’s better-than-expected GDP and CAD numbers. Positive economic indicators from the US and its central bank’s decision to keep interest rates near zero for a "considerable time” provided support. Sustained buying by foreign institutional investors (FIIs) coupled with rating agency Standard & Poor's raising the outlook for India's "BBB-minus" rating back to "stable" from "negative” was also a big plus. FIIs were buyers of equities for the eighth consecutive month. They were Net buyers of equities worth Rs 5,449 cr in September compared with buying of Rs 6,437 cr in the previous month.
Gains were, however, capped owing to a few discouraging domestic and international developments. Local indices fell sharply after the Supreme Court’s coal block verdict in which it cancelled 214 coal block allocations, except for four government-run blocks that operate on a non-joint venture basis. The court also ordered companies already producing coal to compensate the government at the rate of Rs 295 per tonne for the coal extracted. Disappointing domestic industrial growth along with China’s industrial output numbers also weighed on the local indices. Market sentiments waned further due to worries about US-led airstrikes in Syria, poor economic data from the Eurozone and volatility in the global equity markets. Intermittent weakness in the rupee and profit booking further arrested market gains.
S&P BSE sectoral indices reported mixed performance in September. S&P BSE Realty index was the top loser for the third consecutive month, down 8.46% albeit losses were slightly less than the previous month when the index fell 8.75%. The Realty index declined due to weak demand. S&P BSE Metal fell 6.88% as the metal pack was severely impacted by the Supreme Court’s order on coal blocks. S&P Oil & Gas lost 4.08% after the government deferred the increase in natural gas prices to November due to upcoming Assembly elections. Among the gainers, S&P BSE Healthcare was the biggest sectoral gainer, up 7.45% amidst defensive buying by investors. S&P BSE IT rose 5.97% as the export oriented sector was helped by the depreciation of the rupee against the dollar.
Corporates will start announcing their Q2FY15 results in October, which are likely to drive the market movement. FII inflows, policy actions taken by the government to address bottlenecks in core sectors, domestic macroeconomic data and global cues will also steer the market. CRISIL Research expects the CNX Nifty to end the month at 7,850-8,050 (Sensex at 26,250-26,900).
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