In early morning trade, it appeared that Dalal street was in a mood to have an early weekend, which made for lacklustre Friday trading session. Both the broader market indices and sectoral indices stayed in a range bound mode for a large part of the day. But by the end of the trading day, most stocks ended in the red territory.
Nifty 50 closed at 11,512 down 58 points or 0.51 per cent while BSE’s Sensex 30 ended trade at 38,822.57 with a drop of 167 points or 0.43 per cent.
The upbeat news which dominated the mood on the Street was expected to push up the markets, as it had done for most days of the week. But the news emanating from the international market was not of a level that could impact the Indian markets in any major way. The announcement that trade talks between the United States and China would resume on October 10 was already well known and had been subsumed in the rates.
The fact that talks had been happening for a long time without reaching a positive outcome made investors book profit, especially in metal stocks which came under pressure.
The other issue which dominated the buzz on the Street was the announcement of aggressive price cuts by some auto companies. Maruti announced a reduction of rupees one lakh on one of their models while two-wheeler makers said they would provide generous festive discounts.
Coupled with this, a few private sector banks announced schemes for cash-backs ahead of the festive season. Analysts were convinced that the aggressive stand taken by the banks and NBFCs would be able to push consumption stocks higher, taking care of the excessive inventory which had plagued the auto companies for the last three quarters.
Festive season sales numbers are likely to dominate the mood on the Street for the next two or three weeks. If the numbers are better than the estimates given by brokerages, mid-cap stocks in the consumption space would help markets remain in a positive mode. A good festive season would ensure that the third quarter (October to December) numbers in January would be elevating. Perhaps the government, more than anybody else, would be hoping that this turns out to be the case.
(Nagpal is an analyst at Market Wizards Securities Private Ltd)
