Weekly Wrap: Sensex, Nifty Fall Nearly 2%; Reliance Industries Outperform

The Indian equity benchmarks fell nearly 2 per cent for the week ended March 22on weak global markets as hawkish comments from the US Fed Chair dented the risk sentiment for the equities, analysts said. The Sensex fell 1.96 per cent to close at 57,197 and Nifty 50 index declined 1.74 per cent to settle at 17,172. The markets fell for three out of five sessions during the week.

In a panel discussion held by the International Monetary Fund, Fed Chair Jerome Powell said the Fed must move faster than it has previously to tackle inflation, which suggests sharp interest rate increases are likely in coming months.

"The market is very volatile for the last 7 months and witnessing large swings on both sides amid lots of headwinds like geopolitical tension, high commodity prices, record inflation, rising US bond yields and relentless selling by foreign investors but the good part of this market is that it is not breaking down because the outlook of the Indian economy is still promising and the market is continuously getting support of domestic money," said Santosh Meena, head of research at Swastika Investmart. 

"The long term outlook is bullish for the market with short term volaitlity therefore long term investors should remain invested while short term investors can maintain stop loss of 16,500. Investors should focus on Indian economy facing sectors like capital goods, infrastruture, real estate, financials and consumer durable etc.," Meena added.

Index heavyweight Reliance Industries outperformed in an otherwise weak market. The stock, during the week, jumped 8.21 per cent to close at Rs 2,762 on the BSE. Mukesh Ambani-led Reliance Industries' telecom arm Jio surpassed Bharti Airtel to become the country's second largest fixed-line service provider in February 2022, according to data published by the sector regulator Trai. The company's refining business is also doing well with a key benchmark of profitability surging to record highs.

Reliance Industries' Singapore gross refining margins, a key metric to assess how much it has earned by refining a barrel of crude oil, improved to $17 per barrel which is at multi-year highs, market participants told Outlook business.

"Refining is doing extremely well and market observers were expecting GRMs around $20 will not be sustainable but they are there since October and will continue to remain strong. They are making good cash flow refining business. Secondly, Jio is doing quite well they have gained a lot of market share from Idea and the sector has been witnessing price rises and retail business is also doing good. The stock went through a period consolidation in last 12-18 months and now it has just started moving. I am bullish on the stock and expect 10-15 per cent upside in the near term," Varun Saboo, director institutional equities at Prabhudas Lilladher told Outlook Business.

Sugar stocks also performed well during the week with shares such as Balrampur Chini, Shree Renuks Sugars, EID Parry, Bajaj Hindusthan, Dwarikesh Sugar, Rana Sugar, Magadh Sugar, Sakthi Sugar and Ravalgaon Sugar shares rose between 2-13 per cent.

"Sugar stocks are trending due to the Ethanol Blending Policy of the government, rising crude oil prices and other commodity prices have compelled government to raise ethanol blending target from existing 7-8 per cent to 20 per cent. There is a supply dearth of ethanol in India currently, thus creating a great opportunity for sugar companies. Sugar prices have soared a lot these days; hence these two factors have changed the fortunes of sugar companies," Meena said.

Meanwhile, on Friday selling pressure was broad-based as all the 15 sector gauges compiled by the National Stock Exchange ended lower led by the Nifty Bank index's over 2 per cent fall. Nifty PSU Bank, Private Bank, Pharma, Realty, Metal and Financial Services indexes also fell between 1.5-2 per cent.

Mid- and small-cap shares also faced selling pressure as Nifty Midcap 100 index fell 0.94 per cent and Nifty Smallcap 100 index declined 0.32 per cent.

Hindalco was top Nifty loser, the stock fell 4.85 per cent to close at Rs 514. State Bank of India, Hindustan Unilever, Cipla, Dr Reddy's Labs, IndusInd Bank, HDFC Life, Axis Bank, Grasim Industries and Bajaj Finserv also fell between 2-4 per cent.

On the flipside, Adani Ports, Mahindra & Mahindra, HCL Technologies, ITC, Maruti Suzuki, Bharti Airtel and Asian Paints were among the notable gainers.