Sensex up marginally

The Sensex ended last Friday at 17,554,up 0.08 per cent compared to its closing level at the end of the previous week.

The Sensex ended last Friday at 17,554,up 0.08 per cent compared to its closing level at the end of the previous week. It is currently trading at a 12-month trailing price to earnings PE ratio of 22.63. Foreign institutional investors FIIs invested Rs 4,453 crore in Indian equities last week.

Explaining the flat performance of the Sensex,Sarabjit Kour Nangra,vice president of research at Angel Broking said: The Sensex heavyweights like Reliance,ONGC,and the other oil and gas stocks hardly moved last week. The only activity that occurred was among IT stocks. And some PSU stocks were also active because of the optimism surrounding the governments disinvestment proposals. Overall not much movement occurred at the index level.

The two sectoral indexes that rose the maximum were BSE IT up 9 per cent and PSU up 2.10 per cent. According to Nangra,IT moved up last week primarily because of the good numbers from Infosys. That rejuvenated IT stocks. What also came across from the Infosys results was that the Western markets have stabilised and offshoring is likely to gain momentum. As for the PSU sector,she said: The government announced last week that it would divest 10 per cent of its holdings in Engineers India. That caused some of the other PSU stocks to also move up.

The two biggest laggards last week were Bankex,which fell - 2.28 per cent and FMCG - 1.79 per cent. Said Nangra: The Bankex fell because the inflation numbers that came in last week were on the higher side. WPI inflation was reported at 7.31 per cent for December,so there are concerns that interest rates are going to be raised sooner or later. Earlier,it was assumed that rate tightening would happen at a gradual pace,but now there is a view that the pace could be quicker. As for the FMCG sector,she said: FMCG stocks may have fallen because of recent reports that growth rates within the FMCG sector have fallen. Also,food inflation has been rising. If FMCG companies are able to pass on the price to customers,then they will not be affected. But if they are not able to pass on the higher input costs,their profitability will get affected.

The next week is likely to be a busy one with a lot of corporates announcing their results. Said Nangra: Corporate results are going to drive the markets in the near future. The numbers that we have seen so far in IT and banking have been encouraging. If the positive trend continues the markets could gain strength.