After a great start to the week, the equity market failed to preserve its positive momentum with the benchmark indices ending 0.5% lower on Friday. Increasing concerns over growing fiscal deficit, which acts a hurdle in the country’s growth path, coupled with renewed economic worries in the US and Europe, kept investors at bay.
Analysts said the market had yet another lacklustre week, with no announcement on reforms by the government that is caught in another political crossfire ? the Coalgate debate. The 30-share Sensex ended the day at 17,883.21, down 0.38%, or 67 points, from Thursday?s close, but with feeble gains of 0.5% from the previous week. The broader Nifty ended at 5,386.70, down 0.53%, or 28.65 points, from the close on Thursday. On a weekly basis, the 50-share Nifty gained a marginal 0.4%.
According to the Sebi data, FII inflows also remained muted this week, with foreign investors having purchased $173.1 million worth of equities against $197.7 million in the previous week and $543.9 million in the week-ending August 10.
?The rally witnessed in the recent weeks has been backed by foreign funds on hopes the government would act on reforms after missing on several occasions. But looking at the current situation, it looks like the reform process will be stalled and chances are that we could see a pause in FII inflows,? said Ambareesh Baliga, COO, Way2Wealth Brokers.
He felt that the runup seen by the market may not sustain due to increasing political mess and policy inaction. The market touched a six-month high on Thursday for a brief moment. However, investors booked profit due to widespread caution given the weak macro-economic scenario.
On a weekly basis, BSE IT and BSE FMCG indices ended on a positive note. BSE IT clocked gains of over 3% from the close of the previous week and BSE FMCG advanced 1.8%. BSE Oil & Gas and BSE Capital Goods indices ended the week down 1.2% each, BSE Realty index ended down over 2.5%, while Bank Nifty was down 1.3%.
Defensive stocks, such as Ranbaxy Laboratories and Hindustan Unilever, were among the biggest gainers this week. Interestingly, Infosys ? after touching its multi-month lows after its Q1 results ? has gained nearly 6% this week after a decision by an Alabama court in the US visa infringement norms case in the company’s favour.
Metal and commodity stocks were the biggest losers this week. Reliance Industries ended the week down 7.8%, while Jindal Steel and Power, and Hindalco Industries ending 5.2 and 4.9% lower, respectively. Analysts said that renewed fears of slowing economic growth in the US and speculation that European leaders are not making progress on resolving the region?s debt crisis also put Indian equities under pressure.
Major Asian indices, such as Japan’s Nikkei, China?s Hang Seng and South Korea’s Kospi, ended the week down 1-2%, while major European indices, such as UK FTSE, German’s DAX and Paris CAC, were down 1% this week. US markets also declined 0.5-1% this week.
