Large-cap stocks took a breather this week, as investors slowed down their buying in order to book profits. Nevertheless, stock prices of most large-caps were still up, although the gains were small.
The Sensex rose 1.05 per cent (37 points) and the Nifty was a step ahead gaining 1.15 per cent (12.9 points). Mid-cap stocks, however, continued to storm ahead with the CNX Mid Cap 200 Index gaining 5.81 per cent over the week. Though advancing issues continued to outnumber declines, the pace slowed down significantly. The advance-decline ratio reduced from 1.7 in previous week to 1.07 this week.
Foreign institutional investors stormed the markets as they poured in Rs 913 crore in the week. This was almost twice the amount of their net purchases in previous week. Domestic mutual funds were net sellers, though only marginally.
This week belonged to pharma stocks, as the BSE Healthcare Index gained a whopping 10 per cent to reach its three-year high of 1614. Ranbaxy — the largest constituent of the index — gained 10 per cent over the week as the company got approval to market one of its generic drugs in the US and it also announced a tie-up with a US firm to market scientific laboratory products in India.
Banking stocks, came back in the limelight on Thursday with rumours that the government may soon announce the equity buyback mode. BSE Bankex rose 4.55 per cent over the week.
Though the monsoon continues to spread over various parts of country, the rally slowed down in FMCG stocks as BSE FMCG Index lost half a per cent. Hindustan Lever was the main contributor for this weakness. Technology stocks also underwent a correction with the BSE IT Index losing 3.7 per cent over the week. With the earnings season around the corner, wary investors preferred to cash in on gains in large-cap tech stocks. It may be recalled here that investors had dumped the sector in April, when Infosys projected an earnings growth of 12-13 per cent for the current fiscal.
Contrary to Indian technology stocks, Nasdaq gained 2.37 per cent over the week while Dow Jones edged by a per cent.
Back home, on the macro front – the economic data still presents a bleak picture. Led by a decline in agriculture growth, the GDP grew by 4.3 per cent in 2002-03 compared to 5.6 per cent in the previous fiscal. But this year's adequate monsoon should give a kick-start to agricultural growth, and that is what the stock markets are expecting.
Outlook
Stock markets have become more cautious this week as stock prices have continuously gone up for five successive weeks. All eyes are now on the first quarter results which will set the mood for the stock markets. The Infosys results and its guidance would set the mood for technology stocks.
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