Profit-booking, coupled with disappointing railway budget and a slump in crude oil prices dragged the Indian equity markets lower during the just concluded weekly trade.
Even a weak rupee and caution ahead of the derivatives expiry weighed heavy on the equity markets. The Indian bellwether indices declined for the better part of the week under review.
The barometer 30-scrip sensitive index (S&P Sensex) of the Bombay Stock Exchange (BSE) plunged by 554.85 points or 2.34 percent to 23,154.30 points during the just concluded weekly trade.
Similarly, the wider 50-scrip Nifty of the National Stock Exchange (NSE) declined by 181 points or 2.51 percent to 7,029.75 points.
"Markets closed the week lower driven by profit-booking, disappointing rail budget, intensified selling pressure, weak rupee and a slump in crude oil prices," informed Gaurav Jain, director with Hem Securities.
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Profit-booking was triggered after the Indian bellwether indices posted healthy gains of over 3.10 percent each during the week ended February 19.
Vaibhav Agarwal, vice president and research head at Angel Broking, pointed out that benchmark indices corrected by 2.5 percent this week, as caution prevailed ahead of the Union Budget.
"Friday's trade witnessed some short-covering after three straight sessions of ending in the red," Agarwal told IANS.
"Expectations from the budget continue to remain low with investors awaiting the finance minister's decision regarding fiscal consolidation."
Pankaj Sharma, head of equities for Equirus Securities, blamed a disappointing railway budget for dampening investors' sentiments.
"We think the estimates are very aggressive for both revenues and operating ratio. The 92 percent number on operating ratio looks difficult to achieve," Sharma disclosed.
Sharma exclaimed that investors' worried about the possibility that the current session might turn out to be a washout, due to political stalemate.
"The budget session has not begun too well with a lot of belligerence visible from both the sides. If this trend continues, it is extremely unlikely that the current session will not be another washout, a successive third," he added.
Further, sentiments were battered after the International Monetary Fund (IMF) warned that the world economy is highly vulnerable and called for new mechanisms to protect the most vulnerable countries.
"The global crisis raised concerns that world growth had slowed and could be derailed by market turbulence, oil prices crash and geopolitical conflicts," Dhruv Desai, director and chief operating officer, Tradebulls, told IANS.
Besides, volatile crude oil prices which dipped to around $30 a barrel (one barrel is equal to 159 litres), deterred investors to chase stock prices higher.
"Oil which had earlier been trigger for last week's rise, slipped, on reduced chances of production cuts," Anand James, co-head, technical research desk with Geojit BNP Paribas Financial Services, told IANS.
In addition, a weak rupee kept investors unnerved and capped gains through the week's trade.
"The rupee, which had been stable within the 68-68.5 region, weakened further against the dollar, and was seen edging towards 69 as the week progressed," James cited.
On a weekly basis, the rupee weakened by 15 paise to 68.62 (February 26) against a dollar from its previous close of 68.47 (February 18).
This weakness is due to a massive outflow of foreign funds from the equity and debt markets.
The National Securities Depository Limited (NSDL) figures showed that the FPIs (Foreign Portfolio Investors) sold Rs.6,763.11 crore or $986.13 million in the equity and debt markets from February 22-26.
Data with stock exchanges disclosed that the FPIs divested stocks worth Rs.3,841.63 crore during the week under review.
Conversely, the data showed that domestic institutional investors (DIIs) bought stocks worth Rs.3,052.79 crore.
Nitasha Shankar, vice president for research with YES Securities stated that broader markets extended their decline in the week under review led by persistent selling in the mid and smallcap stocks.
"The banking index weakened further, making it one of the worst performers for the week. The IT index dropped in excess of three percent, while market defensives like pharma and FMCG indices were down 2-3 percent," Shankar noted.
(Rohit Vaid can be contacted at rohit.v@ians.in)