Weekly market wrap: Sensex begins New Year on strong note; rallies 1,490 points

The first week of the New Year stood in favour of the bulls despite uncertainty over the new COVID-19 variant, Omicron. The benchmark BSE Sensex advanced 1,490.83 points, or 2.64 per cent, to 59,744.65 for the week ended January 7. Likewise, the 50-share Nifty index gained 458.65 points, or 2.64 per cent, to 17,812.70 during the same period.

As many as 39 stocks in the Nifty index settled the week in the green. With a rally of over 10 per cent, Grasim Industries and ONGC advanced the most. It was followed by Bajaj Finance (up 9.78 per cent), Eicher Motors (up 8.97 per cent), Bajaj Finserv (up 8.23 per cent) and Axis Bank (up 7.67 per cent).  

On the other hand, Tech Mahindra, Dr Reddy’s Laboratories, Infosys, Divi’s Laboratories and Cipla declined each over 3 per cent.

According to market watchers, some buying by institutional investors lifted the market. Vishal Wagh, head research, Bonanza Portfolio said, “Buying by both foreign and domestic institutional investors supported the market. It might be the first indicator that there is a huge demand on the lower side.”

Sectorwise, the BSE Bankex advanced the most 6.53 per cent in the past five trading sessions. It was followed by Oil & Gas (up 5.32 per cent), Telecom (up 3.71 per cent) and Metal (up 3.16 per cent). On the other hand, BSE IT and BSE Healthcare indices declined 1.55 per cent and 2.18 per cent, respectively.

On the outperformance of the banking sector, Vinod Nair, head of research, Geojit Financial Services said, “The sector outshone other sectoral indices as few private lenders reported double-digit business growth during the third quarter.”

Foreign institutional investors bought shares worth over Rs 4,500 crore during the first-four trading session of the week. On the other hand, domestic institutional investors purchased shares of more than Rs 3,400 crore.

Rahul Shah, co-head of research, Equitymaster said, “Markets have shrugged off worries around Omicron and the Fed taper to post strong gains in the first trading week of the year. But with valuations stretched and worries around fresh Omicron surge slowing India’s growth increasing again. It will be interesting to see whether the party continues. In our view, caution should be the buzzword as of now and any significant fresh exposure to stocks should be avoided.”

The forthcoming week will be driven by the trends in the initial earnings outcome with the IT sector in focus. It is also a busy week in terms of the release of macroeconomic data points like inflation data for December and manufacturing and industrial production data for November. IT major Infosys, Tata Consultancy Services and Wipro will announce their Q3 results on January 12.

On the same day, Consumer Price Index (CPI) is also scheduled to release. The annual inflation rate in India edged up to 4.91 per cent in November of 2021 from 4.48 per cent in October. On January 14, traders will be looking forward to the Wholesale Price Index (WPI) data for December. The annual wholesale price inflation rate in India rose to 14.23 per cent in November 2021 from 12.54 per cent in the previous month.

Vinod Nair, head of research, Geojit Financial Services said, “Although rising omicron cases and hawkish stance by the US Fed is keeping the market volatile, hopes of favourable earnings season and FIIs switching to net buyers is pumping in optimism into the market.”

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