Weekly wrap: Bluechips pause but midcap run continues

Moneycontrol Bureau

After a week of gains, benchmark indexes took a breather this week after domestic institutional investors sold shares to likely offset inflows from foreign institutional investors. Mid- and small-cap stocks, however, continued their outperformance.

Market started the week on a weak note, closing in the red for the first three trading days of the week, before registering a bounceback on Thursday, and again closing lower today.

On Tuesday, the Reserve Bank of India left monetary policy unchanged, in line with consensus expectations, dashing rising last-minute hopes it would slash rates given the steep fall in consumer inflation lately. But RBI chief Raghuram Rajan indicated a rate cut could follow through early next year if inflation continues to be on the decline.

Through the week, the 30-share BSE Sensex fell 0.8 percent while the NSE Nifty 50 closed 0.6 percent lower. The CNX Midcap index, however, advanced 2 percent while the BSE Small Cap index climbed 1.8 percent.

Among sector gainers, FMCG stocks rose 5.6 percent, consumer durables were up 3.2 percent while realty shares added 1.8 percent. The closely-tracked Bank Nifty, too, outperformed the market with a 1.3 percent gain.

Among sector losers were oil & gas (down 3.2 percent), IT (3.1 percent) and infrastructure stocks (2 percent).

Gainers in the Nifty included JSPL, DLF and ITC, which rose 7.8 percent to 8.7 percent.

JSPL were boosted by news it was in the market with a USD 1 billion fund raising plan, an indication economic activity was picking up for economically-sensitive companies. DLF got a breather from the Supreme Court, which allowed it to deposit a Rs 480-crore fine easier than was earlier required, while ITC surged on reports the government had put its plan to ban sale of loose cigarattes on the backburner.

While in losers, Hindalco, Dr Reddy’s and Infosys fell 5 percent to 6.2 percent.

The overall downmove was led by selling from DIIs, who net sold (provisional data) stocks worth Rs 1,338 crore in the first four days of the week for which data was available at the time of this writing. FIIs, on the other hand, net bought shares were worth Rs 959 crore.

Some analysts warned that the recent upmove, in which Indian equities climbed to fresh all-time highs and are among the best perforning in the world this year, may be running out of steam or at least volatility could be expected ahead.

“There is a lot of optimism for what the government can do in the budget, my fear is that optimism to a large extent is misplaced,” Ajay Srivastava of Dimensions Consulting told CNBC-TV18 in an interview, pointing out to the fact that the government’s recent decision to twice hike excise duty on fuels was indicative of the fiscal stress. “The budget is telling you the government cannot spend money.”

But the midcap party continued: with stocks such as Tourism Finance, HMT and JBF Industries surging 25-26 percent.