After a gap of three weeks, Indian equities once again entered positive territory. Nonetheless, markets were volatile with gains and losses coming on alternate days. The BSE Sensex gained 1.59 per cent (90.68 points) to close at 5786.35 points. The S&P CNX Nifty gained slightly less (1.32 per cent) to close at 1833.65 points. However, the upmove was restricted to large-caps and the CNX Midcap 200 Index lost 1.4 per cent. Losses in mid-caps were also reflected in the BSE 500, which gained just 0.47 per cent.
Though markets gained, FII investments declined. Over the week, net FII inflows stood at Rs 264.8 crore. This was nearly 60 per cent less than that recorded in the previous week. Mutual funds, were, however net buyers to the tune of Rs 105.6 crore till Thursday. Average daily trading volumes at Rs 8,888.85 crore, were 7 per cent less than that recorded in the previous week and also mirrored the lower FII inflows. Declining issues led advancing ones on all days except Wednesday.
The highlight of the week was the presentation of the vote on account (Interim Budget). Some of the key announcements were
Tax exemption of BPO earnings of foreign companies if the services rendered were ancillary in nature.
Concession to the power sector were extended upto 2012.
Shipping companies would now be subject to a tonnage tax.
Long-term capital gains exemption for listed equities to continue if the government is voted back.
The markets were not impressed by this, at least on Interim Budget Day. The Sensex, in fact, lost 1.3 per cent. The very next day it was a different scenario with the index shooting up 135 points. Shipping and power stocks led the rally with SCI gaining 5.3 per cent while GE shipping was up 4.2 per cent. Tata Power and BSES were at the forefront among power stocks, with gains of 6.5 and 5.8 per cent respectively.
By the end of the week, the score among the BSE sectoral indices read as follows: BSE IT Index (+1.39 per cent), BSE Healthcare Index (-2.57 per cent), BSE FMCG Index (-1.02 per cent), BSE PSU (+1.14 per cent) and BSE Bankex (+4.15 per cent). For banking stocks, most of the gains came towards the latter part of the week. Initially, the finance minister's statement on enhanced priority sector lending drove down bank stocks.
Overseas, the Nasdaq had a lackluster show, falling 0.1 per cent, while the Dow Jones rose one per cent.
Outlook
The feeling in most quarters is that markets are fairly valued and any increase in share prices will come from an increase in earnings growth. A long-term investment horizon would now be one of the most important factors while contemplating entry.
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