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A recovery in rupee, coupled with aggressive buying by domestic institutional investors (DIIs), saw Indian equities reverse early-week losses and helped benchmark indices post their first weekly gain in six weeks. The rupee, which closed at 65.7050/$ on Friday, recovered 4.5% from its all-time lows of 68.8250/$ on Wednesday.
After losing over 550 points in the first two trading sessions of the week, the Sensex staged a strong comeback and ended with 0.5% gains on week-over-week basis. Nifty, too, recovered all its losses to end flat from the previous week. However, the broader market succumbed to selling pressure on continued risk aversion. Both the BSE Midcap and Smallcap indices lost over 1% each, thus extending losses for the second straight week.
On Friday, Sensex rose 219 points to the highest level in more than two weeks after the PMs optimistic comments on the rupee and economy assured investors ahead of the release of Q1 GDP data.
Over the week, defensive stocks like Pharma and FMCG, along with IT direct beneficiaries of a weak rupee continued to be the most preferred pick for investors. Gaining for the second week in succession, the CNX IT index surged 6.2% this week as counters like TCS (+12%), HCL Tech (+10%), Wipro (+8%), Mindtree (+4%), Infosys (+3.5%), and Tech Mahindra (+0.7%) touched respective highs.
The Healthcare and FMCG indices on BSE advanced 3.5% and 0.8%, respectively, thanks to scrips like Dr Reddys Laboratories, Cipla, Sun Pharma, Lupin, Ranbaxy that gained in the range of 1-10%.
Banking and financial stocks continued to be beaten down, albeit in a controlled manner, as domestic institutions aggressively bought into oversold counters. Market sources said LIC bought around R 1,500-2,000 crore of Indian equities in the last two-three trading sessions.
Latest stock exchange disclosures showed Life Insurance Corporation acquired 2.86% stake in State Bank of India (SBI) worth almost R50 crore to further increase its holding to 13.26% in the countrys largest lender. The insurance behemoth also acquired 2.33% stake in Yes Bank worth R3.75 crore and upped its holding to 7.37%. Recently, United India Insurance also acquired a sizeable chunk of shares in Axis Bank.
Data shows DIIs net bought R1,250 crore of Indian shares during the week. In contrast, foreign institutional investors (FIIs) have net sold around $380 million of Indian equities during the same period. For the month of August, DIIs have bought nearly R 6,200 core of Indian equities vis-a-vis net selling worth $900 million by their foreign counterpart.
On the domestic front, insurance companies, particularly LIC, have been aggressive buyers in the market, said Gaurav Bhandari, MD, institutional equities, Centrum Broking. On the losing side, 10 out of 13 sectoral indices ended in the red. Sectors like realty, banks, consumer durables, oil & gas, power and metal indices ended down 0.5-5% this week.
Some of the prominent losers included ONGC (-9.8%), Jindal Steel & Power (-7.7%), Coal India (-7.1%), Mahindra & Mahindra (-4.1%), Maruti Suzuki (-4%), GAIL (-3.3%), Bharti Airtel (-3.3%), Tata Power (-2.9%) and Larsen & Toubro (-2.2%), among others.
Despite the recovery, experts feel the markets are likely to remain weak and volatile in the near term due to prevailing concerns around economic growth and a weak currency, in addition to geopolitical tensions in West Asia that could disrupt oil supplies.