The week that started with a wave of profit-booking saw stock markets close higher for yet another week, albeit slowly, vis-à-vis last week. The BSE Sensex moved up 83 points (up 2.39 per cent) to close at 3583, while the Nifty registered a 2.25 per cent gain over the week to close at 1125. In contrast, the S&P CNX Mid-cap 200 Index raced ahead, clocking a 3.78 per cent gain as against a 2.37 per cent rise the last week.
The pace of inflows from foreign institutional investors also slowed down this week. The FIIs pumped in Rs 482 crore against last week's Rs 867 crore. Much of these inflows came towards the fag end of the week, thereby leading to a sharp rise in the combined trading volumes of the BSE and the NSE. In fact, the average trading volumes of Rs 4,437 crore for the week surpassed the daily average of Rs 3,972 crore for the month of June (till June 20, 2003).
The week had started on a weak note, as there was profit booking across sectors. Barring the BSE FMCG Index and the BSE PSU Index, the broad indices as well as the BSE IT Index and the BSE Healthcare Index lost more than a per cent in the first two trading sessions. However in no time, the bullish sentiment made a comeback.
Technology stocks were big winners, as the BSE IT Index gained 4.05 per cent over the week. However, in the US, the Nasdaq lost 1.20 per cent over the week. In fact, the US stock markets were expecting a 0.50 per cent cut in the Fed rate. But the Fed Reserve reduced the Fed rate by 0.25 per cent only and the Dow Jones slipped below the 9000-mark, thereby losing 2.30 per cent over the week.
Back home, the BSE Healthcare Index was the second-largest gainer (up 2.85 per cent) after the BSE IT Index. The passage of the Medicare Benefit Bill in the US and the news of Ranbaxy getting approval for selling the generic version of anti-acne drug were positive triggers. Besides, the consolidation story continued to prop up cement majors and hopes of a good monsoon saw auto and FMCG stocks generate buying interest.
The key development of the week was the announcement of small investor-friendly measures by SEBI. The listing time for a stock has been reduced from 15 days to 6 days, thereby enabling quicker movement of monies invested during the IPO. The reduction in mandatory allocation for institutional buyers via the book-building route will increase retail participation. Moreover, the retail investor will be classified on the basis of investment amount (upto Rs 50,000) rather than the number of shares (upto 1,000 shares). Besides, the top officials of the company coming out with a public issue have to certify the disclosures in the offer document. An encouraging response to the Maruti IPO has perhaps provoked the market regulator to restore the lost interest in primary market.
Several PSU banks have reportedly given suggestion to the government on the issue of buyback of equity. Either this can be offloaded in the stock market or the banks could make a rights issue and its pricing can be used as a benchmark for pricing the buyback price for government. A decision on this could be crucial for bank stocks.
Outlook
Apart from the steady progress of the monsoon, the markets are likely to look forward to first quarter corporate results. FII inflows will also be crucial in determining the future direction.
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