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Markets Undergo Correction

In a week devoid of any major news, the markets took a breather. Large-caps lost more than mid-caps though

After a fiery week, it was time for some correction in the equity markets. Volatility ruled the markets with the 30-stock BSE Sensex ending down 1.41 per cent to 6233.54 points, while Nifty shedding 1.36 per cent to 1,969 points over the week.

Among the broader indices, S&P CNX 500 lost 0.71 per cent after giving positive returns for the last six weeks. Mid-caps continued to impress—the CNX Mid Cap Index delivered positive returns for the eighth straight week to end the week up 2.22 per cent.

Moving to the sectoral indices, a bug seems to have hit the technology counters. Under pressure from heavy selling, frontline software companies including Infosys Technologies (-0.99 per cent), Wipro (-0.48 per cent) and Satyam Computer (-1.22 per cent) ended the week in red. Consequently, the BSE IT Index shed 1.12 per cent over the week.

The scene was no different at FMCG and PSU counters. Profit booking pulled the BSE FMCG and BSE PSU indices down 0.11 and 0.68 per cent. While HLL ended the week gaining 0.20 per cent, ITC shed 0.91 per cent. HPCL, which had gained a massive 7.95 per cent last week, lost 0.31 per cent this time.

The BSE Healthcare Index seemed to be in the pink of health, while investors banked in good numbers on the banking stocks. The result was that the BSE Healthcare index gained 2.45 per cent, and BSE Bankex closed up 0.06 per cent. Both SBI and ICICI Bank ended the week up 3.17 and 1.77 per cent, respectively.

With the fight between the two Ambani brothers taking new twists every day, the Reliance stocks lost their charm this week. While Reliance Energy dived a whopping 12.97 per cent, Reliance Industries followed with over 8 per cent fall. In fact, on the last trading day of the week, Reliance Energy fell 6.50 per cent to drag the Sensex down 1.12 per cent.

Under hammer in the week ended November 25 due to the ongoing differences between the Ambani brothers, Reliance stocks had recovered last week (both Reliance Energy and Reliance Industries had gained 5.85 and 7.90 per cent, respectively).

The combined average daily turnover of BSE and NSE reversed trend this week to end down 14.63 per cent.

Outlook
Oil prices are coming down, domestic companies are in a good shape, the global economy is recovering and inflation too is on its way down. All these factors augur well for the equity markets. Don't be surprised if we see another bull run on the Dalal Street. However, be calculative while taking a bet now.