After a promising start to the week,profit booking led to a fall in the Sensex which barely closed above the 20,000 mark on Friday. Despite the mediocre performance,compared to recent gains,foreign institutional investors (FII) continued to pour cash into the market over the course of the week.
Kishore P Ostwal,CMD,CNI Research said this week’s drop was only a mild correction which will soon be replaced by fervent gains. The two main reasons behind the correction were expiry of settlement and liquidity crisis due to substantial amount blocked in the Coal India IPO. FII’s,domestic funds and HNIs (High Net worth Individuals) had locked nearly two-lakh crore for the IPO,with HNIs borrowing heavily from brokers, Ostwal said. The correction likely won’t lead to long-term levelling off and this week’s mediocre performance will likely be forgotten by healthy gains in early November. Once the money is refunded,investors will start investing in capital markets, he said.
Many leading companies declared their second quarter results by week’s end. The India growth story is intact,and is reflected by the quarterly numbers. In fact,US and UK are showing signs of improvement. Almost $ 1.5 trillion stashed with the US companies has travelled back to equity markets,which suggests that confidence level is rising, said Ostwal.
In particular,the week saw a correction in the realty and banking stocks whereas other sectors booked profits. As regards the banking sector,IDBI Bank was one of the top gainers,followed by ICICI bank that reported a spectacular Q2 performance. State Bank of India was a gainer too,while Reliance Industries gave an average performance,says Ostwal. When its comes to the list of those who did poorly on the stock market,that included Bombay Rayon,HDIL and ACC. The results were in line with expectations. Cement companies performed poorly as there was no offtake of cement due to the monsoon season. The share price of these companies didn’t go down much,however,the impact will be felt in the next quarterly numbers, Ostwal said.
Commenting on the performance of the market in the short-to-medium term,Ostwal says that the market will not go down too much from here. As we near the year-end,based on the last 9 months performance,one can say that the growth is likely to be sustainable, Ostwal said.
As told to Smita Aggarwal