Markets drop on profit booking amid lack of fresh triggers

Uncertainty over a hike in interest rates by the US Fed and prospects of weak fourth quarter earnings weighed on market sentiment

Benchmark share indices ended lower for the second consecutive week, as traders booked profits at higher levels with power and realty shares leading the decline. Further, the uncertainty over the hike in interest rates by the US Federal Reserve and prospects of weak fourth quarter earnings also weighed on market sentiment.

In the week to March 20, the 30-share Sensex ended 242.22 points, or 0.84 per cent, lower at 28,261.08. The 50-share Nifty, the benchmark index of the National Stock Exchange, lost 76.85 points, or 0.88 per cent, as it slid to 8,570.90.

Following the duo’s downward glide, the BSE Mid-cap Index slumped 1.57 per cent and the BSE Small-cap Index declined 3.12 per cent. Foreign institutional investors were net buyers in Indian equities worth Rs 830 crore for the week, provisional stock exchange data showed.

Key events

The Wholesale Price Index-based for February contracted further to -2.06 per cent compared with -0.39 per cent in the previous month, because of drop in global crude oil prices.

The US central bank removed a reference to being “patient” on rates from its policy statement, opening the door wider for a hike in the next couple of months while sounding a cautious note on the health of the economic recovery.

With the Rajya Sabha’s assent to the Mines and Minerals (Development and Regulation) Amendment Bill, 2015, (MMDRA) Bill 2015, Parliament has just passed a Bill. The rupee gained against the Greenback for the entire week and ended at 62.46 with a gain of six paise on sustained selling of dollars, wrapping up its best week in about two months.

Stocks

The BSE Realty and Power Index emerged as the top losers among the sectoral indices during the week down 3.5 per cent each followed by FMCG, Auto and Capital Goods indices. Shares of the real estate companies declined across the exchange on profit taking. HDIL, Indiabulls Real Estate, Unitech, Sobha, Omax, Anant Raj Industries, NBCC, Mahindra Lifespace, Prestige and DLF lost up to 9 per cent on the BSE.

NTPC, India’s largest energy conglomerate, NTPC slumped nearly 9 per cent after the stock turned ex-bonus debenture on Friday. As per scheme of arrangement, the existing shareholders will get bonus debentures of face value of Rs 12.50 each against each equity shares of Rs 10 held by its members. The technology pack ended the week with gains. Infosys climbed 2 per cent on reports that the company plans to focus on the products business and is in the process of including core banking software Financle in its products and platform business EdgeVerve.

Wipro advanced 2.3 per cent after it won a five-year contract from a US-based utility company, Greater Cincinnati Water Works.

Week ahead

The trend in global markets, investment by foreign portfolio investors (FPIs), the movement of rupee against the dollar, and crude oil price movement will dictate trend on the bourses.

Investors will patiently wait for the F&O expiry for the month of March on Thursday, 26 March 2015. Idea Cellular and Yes Bank will replace DLF and Jindal Steel & Power in Nifty on Friday, 27 March 2015.