Mumbai, Nov. 13: Investors were in for a disappointment at the start of Samvat 2069 as frontline stocks dipped, sending the BSE Sensex down 52 points to close at 18618.87 in the special ‘Muhurat’ trading that heralds the beginning of the new trading year for the Gujarati community.
Even so, there was a buzz of optimism as the festive mood engulfed the BSE’s convention centre — once the nerve centre for frenzied trading in the days of the open outcry system. Market mavens said stocks had the potential to trend higher this year. But much would depend on the decisions of the Centre and the Reserve Bank of India (RBI) as the global economy is expected to pass through a challenging phase.
“I am personally optimistic about the coming year. I think the market will give better returns this year compared with last year. The market may touch an all time high provided we see the Reserve Bank of India (RBI) cutting interest rates and the government continues its action on the policy front. Banking, auto, FMCG and pharma sectors would do well. Small and midcaps will outperform the large caps,” averred Motilal Oswal, chairman & managing director of Motilal Oswal Financial Services.
The RBI had disappointed the markets after deciding to maintain its key policy rate — the repo — at 8 per cent after the second-quarter review of the monetary policy late last month. However, it did indicate that an interest rate reduction was possible in the last quarter of this fiscal.
With inflation remaining firm and rupee coming under renewed pressure against the dollar (which adds to imported inflation), many reckon that the RBI will stick to the status quo at the mid-quarter review of the monetary policy slated for next month.
Abhay N. Doshi of A.A. Doshi Share & Stock Brokers Ltd also felt that stocks would perform better this year. Doshi is betting that the central bank will cut interest rates early next year and has been asking investors to buy bank stocks.
Alok C. Churiwala of Churiwala Securities Pvt Ltd, a brokerage which expressed disappointment over the fact that the bellwether index had closed in negative territory after the Muhurat trading, said it was only a matter of time before stocks would start climbing again.
“The challenges before the US and Europe won’t disappear soon and there will be a time when the Indian economy will have to stand on its own, delink and take its way forward,” he added, putting the onus on the Centre to steer the economy out of the rut.
Churiwala’s optimism wasn’t dampened after the Sensex erased its early gains as investors preferred to book profits in the special 75-minute Diwali ‘Muhurat’ trading.
The Sensex had risen nearly 60 points to 18732.71 at the start of trading, but the gains quickly evaporated on profit selling and weak global market trends.
Out of the 30-share Sensex, 13 stocks, including Bharti Airtel, RIL and ONGC, recorded gains while 17 counters, including Tata Motors, HDFC, Infosys and the SBI, closed with losses.
Some investors tended to be cautious, mindful of the negative factors weighing on the Indian economy such as the contraction in industrial output, surge in inflation and the record trade deficit.
Industrial production had declined by 0.4 per cent in September against a growth of 2.5 per cent in the same month last year.
Elsewhere, the wide-based NSE index Nifty declined 16.75 points, or 0.29 per cent, to 5666.95, led by stocks of IT, realty and the banking sectors.
Brokers said a weak trend in overseas markets on reports of a dispute between international lenders threatening to further delay an aid payment to Greece also influenced the Indian market.
Indices had last closed with losses on Muhurat trading in 2007 when the Sensex had slipped 150 points and Nifty by 36 points.