Indian equities ended the first full trading week of October close to where they began the month. But that is only when you look at the starting and end points of the Sensex. What the markets did was go on a rollercoaster ride in between these two points.
When you compare with the closing levels of September, the Sensex is down just 7.96 points. Yet both indices had swung sharply in between: the Sensex plunged as much as 887 points below the September closing level on October 8, and the Nifty was down 389 points— a brutal sell-off after the Reserve Bank of India raised rates. It was only thanks to the recovery on Friday that helped bring the BSE benchmark back on level ground.
Now, let us explore the weekly trend. Compared to the close of last week (Oct 1, since Oct 2 was a market holiday), the Sensex gained 562 points, and the Nifty added 98 points.
Despite the Oct 8 downturn, it was a modest weekly improvement. RBI’s policy move seems to be the principal domestic shock element, but from what the numbers say, it has not impacted that much on a weekly basis. Yes, it was the first repo-rate hike in nearly four years, and the change in stance did reveal that policymakers were more concerned about inflation risks than about near-term easing.
The Thursday slump also dented the Oct 5-6 momentum, which saw Tuesday end the Sensex 588 points and the Nifty 156 points above September closing levels.
Then came Friday. And so did 879 points for the Sensex and 289 for the Nifty, led by the IT sector. Tata Consultancy Services (TCS) led the charge, following its better-than-street September-quarter results.
The BSE IT index rose 2.91 per cent, while TCS gained 4.23 per cent.
Investors looked past US H1B visa and green-card restrictions plaguing several of these technology firms, after they stated that the immediate impact on their workforce strategies was limited.
But what this recovery truly did was end an eight-week losing streak, arguably the longest in 25 years. The indices are closer to 8.5 per cent below their levels eight weeks ago. Brent crude is near $103 dollars a barrel, and the RBI’s tighter policy stance hints at a risk of inflation.
And on top of it, today, the apex bank pulled out another measure that might ease one pressure point: From Monday, RBI would sell dollars to meet the full daily dollar requirements of Indian Oil Corporation, Hindustan Petroleum and Bharat Petroleum, until further notice.
Now, will this plan to move the dollar demand of the three state-run oil companies away from the broader market and the broader recovery help the rupee, reserves, or equities? That is something we will get to know in the coming days. For now, the markets are back on level, and the RBI is planning to keep the rupee stabilised as well.
