Last week equity markets moved in a range with profit-booking witnessed in a number of shares. The benchmark as well as the broad indices all dipped. Only mid-caps managed to stay afloat as investors continue to be attracted to them based on their fundamentals. Over the week, the 30-stock BSE Sensex fell 1.8 per cent while the 50-share S&P CNX Nifty was down 2.16 per cent. The broader indices too reflected this trend with the S&P CNX 500 falling 1.96 per cent over the week. However, the mid-caps lent the saving grace to the markets, the CNX Mid-cap increasing 0.1 per cent over the week.
On Monday and Tuesday, there were minor gains on the bourses. The downtrend began from Wednesday when the markets plummeted more than 1.5 per cent. PSUs were the major losers with broad-based selling pressures witnessed in the oil & gas, bank and steel stocks. Thursday proved to be a bad day for technology stocks with the overnight bearish trend on the NASDAQ spilling over on the Indian IT stocks. Finally, it was the turn of telecom companies to suffer reversals in the week's last trading session with both Bharti and MTNL plummeting.
The sectoral indices had a slightly different story to tell. The BSE TECk fell almost 2.36 per cent during the week mainly due to Thursday's fall in IT stocks and Friday's fall in telecom stocks. Bharti Tele-ventures, which has an 8 per cent weightage in the BSE TECk, slipped 5 per cent following a block deal on Friday in which Warburg Pincus, a global private equity fund, sold a 3.35 per cent stake in the company. However, the movement in FMCG stocks was slightly unexpected. Given the revival in monsoons it was expected that FMCG stocks would gradually move up, but contrary to expectations, the BSE FMCG showed a decline of 2.66 per cent over the week mainly due to weakness exhibited by the heavyweights – HLL, ITC and Colgate.
BSE Healthcare Index showed a healthy gain of 1.98 per cent over the week and this was primarily due to the buying interest that has been generated in select mid- and large-cap pharma stocks. PSUs were the major losers of the week. Oil PSUs continued to reel under the impact of high global prices of crude while a few others suffered reversals on Wednesday based on fears that the government may step in to check rising commodity prices. On the whole, the BSE PSU Index fell 3.16 per cent over the week. The banking industry seems worried over the rising bond yields as it could lead to a hike in interest rates and that would have an adverse impact on the banking sector's interest margins. Over the week, the BSE Bankex fell 0.6 per cent.
The average combined turnover on both BSE and NSE witnessed a 1.13 per cent fall on a week-on-week basis but volumes were high on Wednesday and Friday. While on Wednesday it was broad-based selling that had brought the markets down, volumes jumped on BSE following the Bharti Tele-ventures sale on Friday. FIIs turned net sellers this week, causing a reversal in the buying trend that had continued uninterrupted for three successive weeks. Over the week, their net equity holdings saw a fall of Rs 160 crore. Selling pressure from domestic mutual funds continued and their overall equity holdings were down Rs 91.4 crore till Thursday.
Outlook
The markets will probably keep a close vigil on the inflation rate which has touched a three and a half year high following record high global prices of crude oil coupled with hikes in food and oilseed prices. Monsoon fears have been allayed following healthy showers in most parts of India in the past couple of weeks. However, the extent of the recovery is yet to be ascertained.
Discussions are on in the petroleum ministry to merge BPCL and HPCL with ONGC and OIL India with IOC. This could lead to increased activity in oil stocks. Cement stocks have performed increasingly well and are expected to keep the momentum going. Most importantly, investors would be hoping that the correction is followed by another bullish trend which is why there is now increased buying activity in sectors which have undergone substantial correction.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
