Weekly roundup: Sensex, Nifty flat; Nifty Midcap index at all-time high

Another instance of consensus falling short on predicting actual outcome! Surprising the market participants, the Reserve Bank of India (RBI) unexpectedly kept the interest rates on hold with the benchmark indices settling the week barely higher even as foreign investors poured in over Rs 700 crore, while global markets found succour in US President Donald Trump’s announcement of unveiling soon some "phenomenal" tax reforms. 

During the week ended February 10, the S&P BSE Sensex added 0.3% or 94 points to settle at 28240, while Nifty50 gained 0.6% or 52 points to close at 8793. 

Midcap and Smallcap stocks outperformed. Nifty Midcap 100 index hit its all-time high of 16227, up 1.2% for the week, while the BSE Midcap index rose 1.3%. The BSE Smallcap index surged 1.4%, ending above its nine-year high. 

“Contrary to the expectation of a 25bps rate cut, RBI held the rate steady. Cautiousness crept-in due to uncertainty over Fed rate hike, US policies and rising crude price which could impact inflation and rupee movement,” said Vinod Nair, Head of Research at Geojit Financial Services.

“Market has started to consolidate as it has lost the steam for further upside given change in RBI stance. Nifty was trading in a narrow range of 8700-8800 levels for the week. On a positive note, the government’s prudence on fiscal side and positive quarterly results gave cushion to further downside,” he added.

FII inflows

Foreign institutional investors turned net buyers for the week and poured in nearly Rs 240 crore in equities during the four days to Thursday, data available with NSDL showed. On Friday, they bought net equities worth Rs 504 crore, provisional data available with BSE showed. 

Sectors and stocks

BSE Consumer Durable index hit its all-time high, and was the leading sectoral gainer rising over 5% for the week. 

IT stocks hogged the limelight. BSE IT index, pressured by Trump’ H1B visa move, rebounded to settle the week 4% higher. TCS (up 7%) and Infosys (up 3%) were the top Sensex gainers this week.  

Titan Company surprised the Street by reporting a 13% increase in its standalone net profit at Rs 256 in Q3 against Rs 226 crore reported in the same quarter of last financial year. The stock gained over 13% to Rs 431 for the week.

Among losers, Dr Reddy’s Labs (down 5%), Cipla (down 4.7%), ONGC (down 3.7%), Tata Motors (down 2.5%) and Lupin (down 1.7%) shed the most on Sensex. 

Sectorally, BSE Metal (down 1.6%), BSE Healthcare (down 0.7%), BSE PSU (down 0.2%) and BSE Oil & Gas (down 0.04%) were the top losers. 

Medium-term strategy

Nair of Geojit Financial Services believes the pledge by Trump to relax corporate tax and pressure tactics to increase US jobs is expected to hurt emerging markets, however, domestic equity market is holding a positive stance. 

“This positive trajectory can continue in stocks with restorative Q3 results. Interest sensitive stocks like banks, realty and construction may underperform in the medium-term given the hike in short-term yields. FIIs continue to be on the sidelines and we feel that it is fair to turn cautious in the medium-term as valuation is turning frosty,” he added.

MARKET NEXT WEEK

The market will take cues from the December industrial growth, which came in at 0.4%, below expectations. Key corporate earnings such as DLF, Tata Motors, Grasim, Vedanta, Sun Pharma and Adani Ports are lined up for the week. Globally, Fed Chair Yellen’s semi-annual testimony to house panel, GDP growth in Japan and China’s CPI data will also be eyed.