The markets took a break this week after moving upwards for seven consecutive weeks. The BSE Sensex lost 0.17 per cent. The Nifty too was down 0.63 per cent. Overall, it was a mixed week, with market participants sticking to banking and key pharma stocks, while booking profits in technology. Mutual funds remained net sellers. Ahead of Christmas and the New Year, the FIIs pumped in Rs 166 crore, down from last week's net purchase of Rs 275 crore.
The week started with profit booking in technology stocks. The much-anticipated foreign funds' participation, arising out of the BJP victory in Gujarat, did not happen. Along with this, a weak Nasdaq added to the sector's woes. While the Nasdaq was up a marginal 0.04 per cent, the BSE IT Index lost 2.51 per cent.
Notwithstanding the correction in technology, banking and financial sector kept the momentum alive, though the gains were not as sharp as witnessed in the previous weeks. Initially, State Bank of India, rose by 4 per cent following rumours that RBI would allow an increase in its foreign institutional investment limit. However, with the apex bank denying any such move, the stock underwent a sharp correction to end flat. Nonetheless, SBI's initial gains coupled with mid-week spurt in pharma stocks -- Dr Reddy's Labs (DRL) and Ranbaxy -- contributed to marginal gains for the Sensex in later trading sessions.
With DRL getting approval from a US court to sell a variant of Pfizer's drug in the US market, its scrip moved upwards. What brought cheer to Ranbaxy was the announcement of a generic drug launch in the US as well as royalty receipt for its new drug discovery system. As a result, the BSE Healthcare Index went up by 3 per cent.
Coming back to banking stocks, the attention grabbers, however, this week were small-cap banks. For instance, Andhra Bank gained 17 per cent while large-caps like HDFC Bank was up 8 per cent. The Securitisation Act could be the reason for this renewed buying interest. However an improvement in the profitability of banks and financial institutions, may not happen so fast given the possible hindrances in disposing off seized properties.
Apart from all this the week didn't have much to offer, which could have acted as a trigger for stock markets. The final report of the Joint Parliamentary Committee (JPC) on the stock scam and US-64 issue blamed the regulatory authorities for not keeping a close eye on the events which led to these mishaps. However what needs to be seen is how speedily recommendations such as corporatisation of stock exchanges, a clear policy on short sales mechanism and an advanced settlement system are implemented.
Outlook
Since hitting a one-year low of 2,834 in September 2002, the Sensex has bounced back by 17 per cent. Over the next week, the lack of active FII participation could see the market move in the narrow range, though we don't rule out any surprises. Long-term triggers could come in the form of third-quarter results.
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