Recovery continues, investors are cautious while investing

PFW Bureau / Sep 8

After staying bearish for several weeks, the recovery continued at the domestic equity market for the second consecutive week ended on September 7. Both the major bourses have witnessed a cautious investment by the investors between September 3 to September 7.

The Bombay Stock Exchange (BSE) Sensex went up by 271.82 points or 1.77% to end at 15,590.42 points during the previous week. The National Stock Exchange (NSE) S&P CNX Nifty gained 45.5 points or 1.02% to close at 4,509.50 points during the corresponding period.

The commitments from US President George Bush and Federal Reserve’s Chairman Ben Bernanke to pull out the financial markets and consumers from the subprime mortgage crisis helped the markets across the glob including Indian markets to open with a positive note on Monday.

However, the shadow of subprime mortgage crisis in US and the political uncertainties prevailing at the Centre due to the rift between United Progressive Alliance (UPA) and Left parties over nuke deal has witnessed a mild volatility during the week in the market. And, the investors were cautious while trading.    

The sector-wise major gainers at BSE were - Consumer Durables (4.20%), Health Care (3.72%), FMCG (3.68%), Realty (3.16%), Bankex (3.01%), PSU (2.72%), IT (1.61%), Capital Goods (1.40%), Teck  (0.43%), Metal (0.37%), Oil & Gas (0.31%) and Auto (0.24%).

The above normal rainfall, improved fundamentals and reasonable valuations has rejuvenated the investors’ interest in FMCG, which was earlier seen as laggards.

This week too BSE Midcap and Smallcap continued to perform better, in comparison to other group Indices, gaining by 3.68% and 4.63% respectively.

The last week trading sessions saw revival of foreign funds renewed interest in Indian equities. The data available with Securities and Exchange Board of India (SEBI) for the four trading sessions show that MFs and FIIs were net buyers at Rs 353.9 crore and Rs. 2191.5 crore respectively as against their preceding week’s buying of Rs.1,177.60 and Rs.710.8 crore.

The retail investors need to be cautious, as the problem of sub-prime mortgage crisis is yet to be unfolded fully. Moreover, the differences between UPA and Left Parties are yet not over.