The stock markets took a breather in the first week of the new year. The much-expected correction saw the Sensex shed 1.20 per cent and the Nifty about 0.82 per cent. The broad-based BSE 200 Index ended the week flat. Apart from the continuous seesaw ride in PSU stocks, technology buyers sat on the fence. However, what turned out to be disappointing for markets was FII inflows, which were much below market anticipation. The FIIs sold equities to the tune of Rs 36 crore. On the other hand, domestic mutual funds were net buyers, picking up equities worth Rs 61 crore.
The week started with the Sensex heading southwards, dragged down by PSU major, HPCL. Last week, for the want of attorney general's opinion on whether government needs to seek parliament's permission for divestment, the Cabinet Committee on Disinvestment's meeting was postponed. As a result, PSU stocks went for a toss. However, during mid-week, the two stocks (HPCL and BPCL) managed to make up some ground. Over the week though, HPCL shed 4 per cent while BPCL gained 5 per cent. The latter moved following the company's announcement that it was considering an interim dividend.
Besides disinvestment woes, lack of strong buying interest for technology stocks was visible from the daily movements on the BSE IT Index. The index ended the week with a marginal gain of 0.40 per cent. However, the much-needed support came from cyclical sectors: cement and automobiles. A possible rise in cement prices saw cement scrips inch up, while good sales growth figures in December of key two-wheeler players, generated interest in the respective stocks. Towards the end of the week though, these sector stocks succumbed to profit-booking.
Finally, this week, after a gap of several weeks the upward journey of banking stocks slowed down. However, taking into account the improved profitability of banks, the Reserve Bank and SEBI are considering increasing the participation of banks in capital markets as well as revise the margin trading norms. Currently, banks are allowed a 5 per cent exposure in stock markets.
If macro statistics are to provide long-term trigger to stock markets, then there was enough good news that poured in during the week. In the second quarter of the current fiscal, the GDP rose to 5.8 per cent. Th reason: high growth figures recorded by financial, construction and manufacturing sectors vis-a-vis the corresponding period in the last fiscal. However, the spillover effect of drought could act spoilsport for the agricultural sector. And this perhaps explains the lacklustre performance of FMCG stocks -- the BSE FMCG Index was down 11 per cent during 2002.
Outlook
Over the next week, Infosys' third-quarter results should guide the movement of technology stocks, and the overall market. And, of course, much would also depend on the pace of FII inflows.
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