Though the Sensex has closed over 5,000 points on six trading sessions in the last two weeks, it has still not managed to close the week over that magic figure. Even last week, the Sensex closed over 5,000 points on the first two trading sessions, but went downhill thereafter. The Sensex closed 1.2 per cent lower at 4,911 points last week. The Nifty declined 1.84 per cent in the same period. Both Bombay Stock Exchange and National Stock Exchange had a special trading session on Saturday. All the gains of early November are now wiped out with indices at the same levels as that of October-end.
Markets were driven by news of financial performance in October, but in November, the news flow has reduced considerably. The market began on Monday with a reconstituted Sensex. Five new scrips were added in the Sensex—ONGC, Wipro, Tata Power, HDFC Bank and Bharti Tele-ventures, while Nestle, HCL Technologies, Castrol, Colgate and GlaxoSmithkline exited. Both indices closed in the positive for Monday and Tuesday.
A downward spiral began on Wednesday and by the end of Friday, the Sensex had lost 165 points in three days. This decline was due to a lack of positive news flow, some profit-taking and smaller FII numbers on Tuesday and Wednesday. On Friday, the Sensex was down to 4,865 points and the Nifty was at 1,562 points. But the special session on Saturday saw a reversal with both indices gaining lost ground. On late Friday, the government raised the GDP growth forecast to over 7 per cent from 6 per cent earlier. This brought renewed buying in the stock markets.
The rest of the market did not fall as much as the key indices. The S&P CNX 500 was down just 0.98 per cent. Mid-caps did even better, gaining 1.27 per cent.
In terms of sectors, the market selected FMCG and pharma last week. The BSE FMCG Index gained 0.89 per cent over previous week and the BSE Healthcare Index was up 0.32 per cent. Tech stocks took a beating with the BSE IT Index losing 3.33 per cent. Even PSUs and banks followed the overall trend. The BSE PSU Index was down 1.37 per cent and the BSE Bankex lost 1.29 per cent. Cement is one industry where shares have risen last week.
Though FIIs were low-key on two days. By Thursday, they were net investors to the tune of Rs 869 crore.
Outlook
Stock markets have reacted positively to the revised GDP forecast on Saturday and markets should open firm next week with higher FII inflows. Some market players are already advising caution at the 5000-point level. The rally from here appears slower and longer than what we have seen in the last six months.
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