FIISs continue to remain net buyers of Indian equities.
R. Chandrasekaran
CHENNAI: Indian stock markets continued its downtrend for the third straight week, slowly erasing the gains recorded in January in the current year.
The stock indices have reached a nearly two month low. The last time the Bombay Stock Exchange’s benchmark index closed below 19,450 was on December 28, whereas the National Stock Exchange’s Nifty finished the week below 5,900, on December 21. The markets would have lost further ground, but for the continued support from the foreign institutional investors or FIIs.
The market sentiments remained mixed with fluctuating fortunes emanating from the economic data. While the easing of inflation was somewhat positive and the market reacted favorably, the fall in industrial output and the demand notice for tax to corporate and individuals dampened the spirits of investors towards the close of the week.
While the foreign institutional investors continue to remain net buyers of Indian equities, domestic mutual funds are the net sellers in February pressured by redemption from investors, who want to exit at higher levels. However, domestic funds’ buying lifted the major indices on Tuesday and Wednesday.
The major headlines to hit the Indian stock markets during the week included, Industrial output contracted 60 basis points for second straight month in December, National Association of Software and Services companies or NASSCOM sees IT exports to grow 12-14% next fiscal year ending March 2014, political donations to see transparency with the government notifying rules for electoral trusts allowing companies to de-link funding from business operations, domestic IT sees more uptick than exports, tax demands to MNCs and individuals drag down sentiment, Cognizant Technology Solutions management believes that entry level pay for IT will remain stable, exports grow 1 percent in January, Supreme Court rules that unsuccessful telecom bidders in new 2G auction will cease to operate, Vijay Mallya’s UB Group and lenders of Kingfishers talks to cut down debt, Securities Exchange Board of India or SEBI gives its nod to gold ETFs to invest in gold deposit schemes, India’s gold imports record 23 percent growth in January, and Reserve bank of India lighten up rules on gold deposit schemes.
The week opened on a subdued note on Monday and recovered in the next two days. However, the last two days saw selling coming back to haunt the investors. Of the five trading sessions, three sessions closed in the negative territory. While the BSE’s 30-share barometer slipped 24.2 points on Monday, it recovered to post a gain of 100.47 points and 47.04 points or 0.52 percent and 0.24 percent on Tuesday and Wednesday, respectively, snapping seven days of losing streak taking cue from the easing of inflation data.
However, the Indian Industrial output data on Thursday and Moody’s warning on current account deficit dragged down the stocks in the last two trading sessions.
For the week ended February 15, the BSE’s Sensex slipped 16.62 points or 0.09 percent to close at 19,468.15, while the NSE’s Nifty lost 16.1 points or 0.27 percent to finish the week at 5,887.4 points. The BSE’s mid-cap and small-cap indices performed badly losing in the process 1.91 percent and 3.73 percent, respectively.
In the sectoral performance, it was a mixed bag of fortunes. While the Banks, IT, and PSU advanced 0.3 percent apiece, auto index rose 0.2 percent. The worst performers were realty index that dropped by 5.4 percent, followed by Capital Goods by 4 percent, Power by 2.8 percent and Metals by 1.6 percent.
In the BSE’s Sensex pack, 17 stocks closed in the red, while 12 stocks finished in the green. Interestingly, the benchmark index’s top performer and loser belonged to the auto segment with Tata Motors gaining 6.48 percent on Jaguar Land Rover’s quarterly performance, whereas Maruti Suzuki turned out to be the worst performer with a loss of 7.28 percent. Bajaj Auto and Hero MotoCorp slipped 3.42 percent and 2.8 percent respectively. However, another truck maker Mahindra & Mahindra managed a gain of 1.04 percent.
Similarly, Tata Consultancy Services advanced 1.25 percent, whereas Wipro and Infosys shed 3.06 percent and 0.11 percent, respectively, in the IT space. Tata Steel, Jindal Steel and Power, and Sterlite Industries shed 2.78 percent, 6.39 percent, and 1.98 percent respectively in the metal sector. However, Hindalco closed flat during the week.
The index heavy weight Reliance Industries dipped 2.24 after the company disclosed that it scheduled maintenance of a unit in its Jamnagar in Gujarat for 4 weeks from next week. Similarly, ITC slipped 0.55 percent pressured by sellers after the stock had hit a yearly high in the previous week.
Meanwhile, the FIIs pumped in $716.54 million into Indian equities during the week ended February 15 and for the month of February it was $3.95 billion thus suggesting the support from the FIIs. On the other hand, domestic mutual funds remained net sellers to the tune of Rs.13.37 billion until Thursday in February though they have remained net buyers on Tuesday and Wednesday when the market closed in the green.
As the Union budget is round the corner, the stock markets will continue to see volatile trading in the coming week too.