Stock market gets bear hug in a volatile week

As global markets fell heavily on the back of a ban on short selling by Germany, India too felt the repercussions. Foreign institutional investors (FIIs) withdrew Rs 3,655 crore during the first four sessions of the week and an additional Rs 1,540 crore on Friday as per provisional figures from the exchanges.

The Sensex posted a weekly fall of 549 points, with Wednesday’s seeing the biggest intra-week fall by 467.27 points. Going ahead, the German Parliament’s approval of its contribution to the euro zone bailout provides hopes, say experts. 

The broader market shared similar fate as it also ended the week with losses as the BSE mid-cap index and BSE small-cap index fell by 3.65% and 4.48%, respectively.

Monday’s session set the trend for the week as the Sensex went down 159.04 points. Minor consolidations were seen in the following session but the final blow was delivered on May 19 as the Sensex went down by 467.27 points to close the week down by 3.23%.

Experts believe that global cues continue to weaken, exerting a downward momentum on global bourses but the commitment by the government to infrastructure growth will keep the growth momentum intact driven by increased domestic demand and consumption.

The market breadth was negative as 12 of the 13 sectors closed the week with losses. The capital goods space was the only one which managed to end in the green, with gains of 1.2% helped by ABB and talks of a possible buyback.

Better than expected Q4 results from L&T also contributed to the rise, said experts.

The FMCG space was also resilient and remained relatively flat throughout the week. Among the loss-making sectors, realty, which was the top gainer in the preceding week, closed the week down 8.82% followed by the metal and auto sectors that fell by 6.49% and 5.05%, respectively.

On the Nifty, ABB was the top gainer this week as it moved up by 22.91%, followed by GAIL India and L&T, which rose 6.08% and 5.18%, respectively. In the banking sector, which fell by 4.17%, SBI quoted an upside of 2.11%. The top losers this week were Tata Motors, down 13.04% and Suzlon Energy that fell by 10.52%.

Domestic cues, however, are relatively better notwithstanding the pressures on growth momentum driven by reduced demand from external sector for the country’s goods and services.

“The global cues continue to weaken and the market still remains uncertain for short-term investment. The monsoon will be effective in competing with the weak global cues as it will bring down inflation,” said Anil Advani, head of research at SBICap Securities. The market may have ended on a negative note this week but German parliament’s approval of a €148 billion contribution to the euro zone bailout package has given hopes of a swift recovery in the upcoming sessions.

“The week reflected the volatile situation of the Greece bailout package and investors Germany has finally approved of the package, global scenario will improve and so will the Indian market. The upcoming week is expected to get off to a good start on account of this approval,” said Daljeet Kohli, head of research at Indianivesh Securities Ltd.