The markets closed with yet another week of gains with the Sensex rising 1.01% in the last five sessions. Inflows from foreign institutional investors and buying in large-cap companies by index funds contributed to the rise.
Small and mid-cap companies underperformed the blue-chips. The Bombay Stock Exchange’s midcap and smallcap indices were down 0.51% and 0.79%, respectively, even as the Sensex added 172.13 points to take the cumulative gains over the last five weeks to 1250.97 points.
The IT sector rose 2.10% following an improvement in outlook for the technology sector in the US.
Greater corporate spending on technology there is expected to benefit Indian companies as well.
Market watchers also say that the rise came after the management of top IT companies met with analysts and investors, clarifying on the future outlook for the sector.
The banking sector was the second-biggest gainer, rising 1.39% as greater clarity on the government’s borrowing programme emerged.
Eight of the 13 sectoral indices ended with gains. The BSE PSU index was down 2.70%, while the realty sector went down 2.09%.
On the derivatives side, the Nifty March futures on Friday closed at a 7.7 point discount with a 0.55% decrease in open interest, suggesting further short covering by those betting against an upward move.
The Nifty 5000 call continues to have the maximum open interest, suggesting strong support at these levels for the index.
The Nifty Vix, which is a measure of market volatility, has gone down to 19.73, its lowest ever level since inception. The low volatility suggests markets moving in a tight range.
The coming week will see the market taking cues from inflation and advance tax numbers.
“Inflation numbers will be closely watched next week as it will have a bearing on the Reserve Bank of India’s monetary policy,” said Sandeep Nanda, CIO at Bharti Axa Life Insurance.
“Expectations of Q4 results would drive the markets. Also, this being the year end, advance tax to be paid by corporates by March 15 for Q4 would act as trigger,” said Jitendra Panda, senior vice-president at Motilal Oswal Financial Services.
Domestic institutions are unlikely to provide major inflows to the market, suggest experts, as many large players have already allocated funds to the primary market for various government issues.
“Technically, broader markets are expected to be in the range of 5080-5180 next week. Also, the month of March typically sees no fresh commitment from domestic participants, which again suggests we may not see major breakout next week,” said D D Sharma, VP, research - retail, Anand Rathi Financial Services.
The markets also shrugged off the Index of Industrial Production (IIP) numbers on Friday.
The IIP numbers came in at 16.7%, which analysts say was within expectations. There were some positive surprises on the capital goods side, which could see outperformance from the sector in a stock-specific manner.
However, some say there is reason for caution.
“Since last couple of days, we are struck at 5140 kind of levels, suggesting some hesitation for the markets. We are on the upper end of the range in the near term. At current juncture, one should be cautious as we may see some amount of correction going by the negative divergence seen on charts. In the medium term, we expect markets to be moving in range of 4700 to 5310 with any movement beyond these levels leading to sharp movements in either ways,” said M K Srivatsan, VP (technical research), Darashaw Broking.
Comments