Equities rebound on easing geo-political tensions, DIIs inflows

NSE, BSEBy Porisma P. Gogoi,

Mumbai : Key Indian equity indices — the Sensex and the Nifty50 — rebounded from their five-week lows during the week ended Friday as sentiments were buoyed by easing global geo-political tensions and healthy buying in realty, metal and FMCG stocks.

According to market analysts, despite the reluctance observed in foreign institutional investors (FIIs) to pump in funds, continuous purchasing activities by domestic institutional investors (DIIs) kept the Indian markets afloat.

The indices, however, gave up a bulk of their gains on the last trading day (Friday) in the wake of a major corporate announcement — the resignation of a key managerial personnel at global software major Infosys. The IT sector suffered the most, with the S&P BSE IT index plunging by 369.19 points, or 3.53 per cent intra-day.

On a weekly basis, the 30-scrip Sensitive Index (Sensex) of the BSE gained 311.09 points or 0.99 per cent to close at 31,524.68 points.

Meanwhile, the Nifty50 of the National Stock Exchange (NSE) closed at 9,837.40 points, gaining 126.6 points or 1.30 per cent.

“Markets witnessed a pullback rally this week, although a sell-off on Friday curbed the gains. Sectorally, the top gainers were the realty, metal and FMCG indices, while the top loser was the IT index,” Deepak Jasani, Head of Retail Research, HDFC Securities, told IANS.

Vinod Nair, Head of Research, Geojit Financial Services, said: “This bounce back was led by ease in tensions between North Korea and the US and the Fed’s dovish future outlook. Bargain hunting post healthy correction in mid and small-cap and DIIs inflows supported the up-move.”

Provisional figures from the stock exchanges showed that FIIs sold stocks worth Rs 5,892.1 crore, while DIIs bought scrips worth Rs 4,369.26 crore during August 14-18.

“Markets in Asia were weak on Friday’s morning trade after the Wall Street closed weak amid Trump administration’s inability to follow through economic policy. Strength in the yen against the dollar also weighed on markets,” said Dhruv Desai, Director and Chief Operating Officer of Tradebulls.

“In the Indian markets, as per technical charts, the Nifty has formed a spinning top pattern, which indicates that the bears were not in a mood to give up easily,” said Desai.

On the currency front, the Indian rupee closed the week on a flat note at 64.14 to a US dollar from its previous week’s close.

Figures from the National Securities Depository (NSDL) revealed that foreign portfolio investors (FPIs) divested equities worth Rs 6,804.47 crore, or $1.06 billion, during the week ended August 18.

“Broader markets continued to outperform as mid-caps and small-caps remained attractive to domestic liquidity after the profit-booking spells. Further, a major sell-off witnessed in IT major Infosys due to surprise resignation by Chief Executive Officer (CEO) and terrorist in Europe attack put market in cautious mood,” added Nair.

On Friday, scrips of Infosys plummeted almost 10 per cent, eroding over Rs 22,400 crore in the firm’s market capitalisation (m-cap) at the end of the day’s trade, post the resignation of Vishal Sikka as its CEO and Managing Director (MD). In the process, it pulled down two key market indices by almost one per cent.

Analysts pointed out that the fall in the company’s scrip was the biggest since early 2013. “Infosys shares fell as much as 13 per cent, on way to their steepest intra-day percentage loss since April 2013,” added Desai.

The top weekly Sensex gainers were: Tata Steel (up 3.45 per cent at Rs 625.40), Tata Motors (DVR)(up 3.23 per cent at Rs 227), ITC (up 3.19 per cent at Rs 281.80), Cipla (up 3.06 per cent at Rs 565.70) and Hero MotoCorp (up 2.47 per cent at Rs 3,982.75).

The losers were: Infosys (down 6.05 per cent at Rs 923.10), State Bank of India (down 6.04 per cent at Rs 278.65), Larsen and Toubro (down 2.46 per cent at Rs 1,131), ONGC (down 1.80 per cent at Rs 160.75) and Mahindra and Mahindra (down 1.31 per cent at Rs 1,371.15).

(Porisma P. Gogoi can be contacted at porisma.g@ians.in)



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