Indian stock markets ended the week amid lacklustre trading in the absence of new triggers and an uncertain global economic scenario. Investors stayed away from the markets on anticipation of new policy announcements from the government. The BSE Sensex closed 1.3 per cent lower at 4770 points. The broader index S&P CNX 500 also closed weaker. Mid-caps took the worst hit with CNX Mid Cap 200 shedding 2.44 per cent. While all the sectors saw weakness, the BSE IT index managed to log marginal gains on back of a depreciating rupee. The BSE healthcare index fell by 5.58 percent with a major fall in Dr Reddy's Laboratories.
Trading volumes remained thin as the combined average daily turnover fell to Rs 4,984 crore, down 4.93 per cent from last week indicating the absence of clear direction in the market. FIIs were still wary of investing in the region as Asian markets continued to be nervous. They poured in a marginal Rs 105 crore in the market.
The week started on a subdued note with broad based selling on Monday that led the markets to close in the red. All the broad indices as well as sectoral indices lost with mid-caps taking the worst hit. FIIs sold stocks amounting to Rs 126 crore. Mutual funds were net sellers to the tune of Rs 87 crore. Market breath clearly favoured the bears. The advance decline ratio was an abysmal 0.13 implying that for every 100 stocks that were falling, only 13 stocks were rising.
The markets remained choppy for the rest of the week. News of possible changes by the government in the capital gain tax structure, which would benefit investors, did improve the sentiment. While all the sectors gained on this news, keen buying was witnessed in tech stocks. Tech stocks continued to remain strong for the rest of the week.
The bears came out in droves during mid-week as markets reacted negatively to the news of coal price hike. Oil PSU shares also closed on a subdued note even after the government announced a hike in oil prices to comfort these companies. A weak global scenario and rising crude prices took a further toll on stock prices. The markets continued its fall in the last few trading sessions of the week as there was heavy offloading in the major frontline heavyweight shares. Sliding Asian markets complimented the cocktail of factors that kept FIIs away from the market. Hong Kong's Hang Seng Index and Korea's Kospi both closed with a loss.
Higher inflation data announced by the government for the week ending June 5 unnerved the markets. Inflation rose to 5.5 per cent, up from the previous figure of 5.03 per cent. While the whole market continued to be weak with bouts of buying and selling, a fall in the rupee boosted prices of select software exporters. The markets finally ended in the red as traders relaxed their positions ahead of the weekend.
Outlook
The markets are likely to trade in a narrow range in the next few weeks. Volumes are expected to be low, as investors will remain cautious ahead of the Budget to be presented in the first week of July. Investors expect the government to announce some new measures to boost sentiment in a drowning market.
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