The optimism continued to prevail in the stock markets and drove the key indices to a new high, with some intermittent sell-off. Though lower than previous week, the BSE Sensex gained 1.79 per cent to reach the 3,883-mark, while S&P CNX Nifty faired better with a 2.25 per cent gain. While trading volumes ranged in between Rs 5,000-5,800 crore a day, the market breadth improved marginally over the week.
While the FII inflows declined from previous week's Rs 717 crore to Rs 651 crore during the week, domestic mutual funds bought equities worth Rs 104 crore over the week.
Good quarterly performance and hopes of economic recovery saw the stock markets start the week on a bullish note with automobile, cement and steel stocks attracting most of the buyers. But soon, there was a correction with the BSE Sensex slipping much below the 3,800-mark that it had achieved in the previous week. At BSE, losers outpaced gainers for two consecutive trading sessions on Tuesday and Wednesday. The sell-off was across the board as all sectoral indices –BSE IT, BSE FMCG, BSE Healthcare and BSE Bankex lost on two consecutive days. The only exception was the BSE PSU Index, which lost on Tuesday. Led by a strong rally in oil PSU giants, BSE PSU Index sizzled with an 8.96 per cent gain for the week.
The Nasdaq plunge took its toll on Indian technology stocks, which were the biggest casualty this time. BSE IT Index dropped 2.51 per cent over the week. Lack of strong guidance from US networking major Cisco resulted in a 4.17-per cent loss in Nasdaq over the week. Despite volatility in US interest rates, the Dow Jones managed to gain a marginal 0.41 per cent.
Back home, as Jaswant Singh presented the first quarterly review of the economy, the market sentiment changed for the better. The finance minister stated that all macroeconomic factors like low inflation, strong forex reserves, and ample rains are favorable for a strong economic growth. These comments went on the reassure stock market's reason for bullishness. After losing 2.37 per cent over two sessions, the Sensex advanced 3.79 per cent in the last two trading sessions. The rally was broad-based as all sectors managed to recover the losses, except technology. A strong rebound in FMCG major HLL saw the BSE FMCG Index gain 2.58 per cent, and was the second largest gainers after BSE PSU Index.
As always, the mid-cap stocks once again outperformed the large-cap stocks with CNX Mid Cap rising 3.24 per cent and S&P CNX 500 gaining 4.27 per cent.
Notwithstanding intermittent profit booking, markets are likely to maintain their steady upward course. However, the pace of FII inflows will be a crucial factor.