Elections and growth slowdown harry investors

Weighed down by muted global cues, both Nifty50 and Sensex managed to close above their crucial support levels. The Nifty50 closed above 11000 while Sensex held on to 36,650.

On a weekly basis, Nifty50 closed with gains of 1.5 percent while the Sensex rallied over 600 points or 1.6 percent for the week ended 8 March.

The Indian rupee strengthened against the US dollar on March 8. It was trading below Rs 70/USD in intraday trade, before closing at Rs 70.16.

FII inflows supported a rise in the rupee and cool off in oil price will further act as a tailwind for Indian markets in the coming week. For the month of March, FIIs have been net buyers in India markets for over Rs 2000 crore, according to provisional data available till 7 March.

However, moderation in GDP growth by ECB and weak export data from China affected the global sentiment and fuelled fears of a global slowdown.

In the week, the Organisation for Economic Co-operation and Development (OECD) lowered its global growth forecast to 3.3 percent for this year, down from the 3.5 percent it predicted in November, which was itself a downgrade from a previous 3.7 percent.

Moderations in global growth is likely to impact India the most compared to election uncertainty which will weigh on sentiment for a month or two, suggest experts.

“Polls are crucial but fundamentals of the Indian economy are very robust and whatever happens post elections could results in some volatility for about 2 months but if I take one-year view things to look good for India,” Shailendra Kumar, Chief Investment Officer at Narnolia Financial Advisors told .

“But I can’t say the same thing about the global issue. Any slowdown in growth will impact global trade. Europe is slowing down and ECB made it clear that EU growth will be much lower than forecasted. In the coming week, we have central bankers meeting in Japan and the UK. And, if the tone of the bankers hints at a slowdown will surely impact India companies which will in turn impact earnings,” he explained.

Stocks in news:

The rise in rupee pushed IT stocks slower. The Nifty IT index closed lower by over 1% weighed down by losses in Wipro, HCL Technologies, Infosys, Infibeam Avenues etc. among others.

Maruti Suzuki India’s shares fell nearly a percent after Kotak Institutional Equities downgraded its rating on the stock to add from buy earlier and also slashed price target to Rs 7,500 from Rs 7,600 apiece mainly driven by a cut in volume estimates.

Wipro plunged 4.6 percent after nearly Rs 700 crore worth of shares changed hands in a block deal on March 8.

Jubilant Life Sciences dropped 2 percent after the US Food and Drug Administration issued a warning letter to company’s Roorkee facility.

Tata Motors declined 4 percent after the Jaguar Land Rover’s global sales performance dented by China, down 4 percent YoY.

Global Markets:

On the global front, European markets were trading lower after President Mario Draghi announced a fresh round of loans to boost lending in euro zone banks. France’s CAC, Germany’s DAX and Britain’s FTSE were down 0.4-0.8 percent at the time of publishing this article.

Asian markets closed sharply lower after Chinese February trade data came in below analyst expectations. China’s Shanghai Composite plunged 4.4 percent. Japan’s Nikkei and Hong Kong’s Hang Seng dropped 2 percent each.

Crude oil prices were also down on global growth concerns and higher US supply. Brent crude futures, the international benchmark for oil prices, were down 1.5 percent to $ 65.34 a barrel at the time of publishing the story.