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The broader markets outperformed the benchmark share indices in the week to February 7, as investors turned their focus to mid-cap and small-cap shares available at attractive valuations. However, the benchmark share indices ended lower, as foreign institutional investors booked profits in blue chip shares, while concerns over downward revision in the GDP estimates for 2013-14 also weighed on investor sentiment.
Markets witnessed huge volatility during the week under review hitting four-month lows only to rebound in the latter half of the trading week as foreign institutional investors turned buyers. The India VIX, a volatility index based on the NIFTY Index Option prices, breached 20 during the week under review.
In the week to February 7, the 30-share Sensex ended down 137 points or 0.7 per cent at 20,377 and the 50-share Nifty closed 26 points or 0.4 per cent lower at 6,063. FIIs were net sellers in equities to the tune of Rs 1,666 crore during the week.
In the broader markets, the BSE Mid-cap Index ended up 0.5 per cent at 6,337 and the BSE Small-cap Index ended up one per cent at 6,329.
The gross domestic product (GDP) is estimated to rise 4.9 per cent in 2013-14 from 4.5 per cent in the previous year, as per the advance estimates released by the Central Statistics Office (CSO) late Friday. For the previous year 2012-13, India's GDP growth was revised down to 4.5 per cent from five per cent estimated earlier.
Economic growth was estimated to grow sub-5 per cent for the second year in a row in 2013-14, thanks to contraction in manufacturing for the first time since 1991-92. The other culprit was mining, which too declined for the second straight year.
In January, India's manufacturing sector expanded the most this financial year, while inflation, particularly on the raw material front, rose, according to the widely-tracked HSBC Purchasing Managers' Index (PMI).
The PMI for January rose to 51.4 points from 50.7 in December. While a reading of above 50 shows expansion, one below 50 indicates contraction. State-owned BHEL was the top Sensex loser down 10 per cent after it reported a sharp 41 per cent year-on-year (yoy) decline in net profit at Rs 695 crore for the third quarter ended December 31, 2013 (Q3) due to lower realisation. L&T ended down 0.4 per cent.
Information technology (IT) majors ended lower after lower-than-expected revenue growth guidance for 2014 by the US-headquartered Cognizant, which follows the same offshore delivery model like Indian IT services companies. Infosys, TCS and Wipro ended down two-four per cent each.
In the oil and gas space, Reliance Industries and ONGC extended losses to end down two per cent each.
However, auto shares, which had weakened last week amid slowdown in January sales growth, rebounded after they launched new vehicles at the Auto Expo 2014 in Delhi. Tata Motors, Mahindra & Mahindra, Maruti Suzuki, Hero MotoCorp and Bajaj Auto ended up 0.6-3 per cent each.
Coal India was the top Sensex gainer to end nearly nine per cent up after the stock rebounded from the recent correction post the payment of huge dividend of Rs 29/share.
WEEK AHEAD
Markets will react to the government's downward revision of GDP growth estimates to 4.5 per cent from five per cent earlier.
Third quarter earnings of major companies such as Tata Motors, Hindalco, Tata Steel, Dr Reddy's Labs, SBI, Coal India, Cipla, Sun Pharma and ONGC will be in focus.
On Wednesday, February 12, the government will release inflation based on the consumer price index for January and the industrial production for December.
Further, the government will also release inflation based on the wholesale price index on Friday, February 14.
