Indian equity benchmarks rose on Friday amidst gains in tech heavyweights but ended the week with declines, snapping their seven-week winning streak. The Sensex on Friday ended the session at 71,107, a gain of 242 points or 0.3 per cent. Nifty gained 94 points to end the session at 21,349, 94 points or 0.4 per cent. Both indices declined 0.5 per cent during the week. In the preceding seven weeks, the Sensex had gained 12 per cent and the Nifty 12.6 per cent, the first seven weeks of consecutive gains after December 2020.
Indian equity markets have been gaining over the past seven weeks amidst an easing global rate outlook, solid macroeconomic data, moderation in crude oil prices, and hopes of policy continuity in the Centre following the recently concluded state elections.
Profit booking after the excellent run was cited as the primary reason for this week’s market rout.
“It was a bit of profit booking, there was more turbulence than in the recent past. But we usually get that at the year’s end; people wanting to take some money out,” said Andrew Holland, CEO of Avendus Capital Alternate Strategies.
UR Bhat, co-founder of Alphaniti Fintech, said a bit of profit booking after such steep gains is par for the course.
“You can’t have markets going in one direction long. It’s always a zigzag, even if it gains in the long term. There are also concerns about whether a recession will be around the corner and about the attacks in the Red Sea. It may not be as much of a worry as it used to be, but these flashpoints are a matter of concern,” said Bhat.
Concerns about valuations, especially in the mid and small-cap space, after gains this year and the recent spurt in Covid cases, the Reserve Bank of India’s (RBI) tighter norms for lenders relating to making investments in units of Alternative Investment Funds (AIFs) have also been weighing on investors’ minds.
The new RBI norms related to AIF investments led to a correction in banking and non-banking finance stocks this week. During the week, the Nifty Bank index fell 1.4 per cent, and the Nifty Financial Services index fell 1.5 per cent. India’s active Covid cases have stood at 328 in the past 24 hours, with the resurgence of the new variant.
India’s strong economic fundamentals will likely sustain the gains this year.
“It will be more of the same, but that does not mean markets can’t go higher,” said Holland.
The market breadth was strong, with 2,368 stocks advancing and 1,396 declining. More than two-thirds of Sensex stocks gained. Infosys, which rose 1.7 per cent, Larsen and Toubro, which rose 1.5 per cent, and HCL, which rose 2.8 per cent, were the biggest contributors to Sensex gains.
Foreign Portfolio Investors (FPIs) were net sellers worth Rs 2,829 crore, according to provisional data from exchanges. For the week, FPIs have been net buyers to the tune of Rs 1,514 crore, and in December, they have been buyers worth Rs 44,740 crore.
LIC rose 3.7 per cent after it got an exemption regarding minimum public shareholding norms.
First Published: Dec 22 2023 | 7:13 PM IST