Weekly update: Market retreats from record highs on profit-booking

Sensex and Nifty close the week with 2% and 1.7% gains respectively

Markets were on a firm footing for the week ended July 25, supported by continuous buying from foreign institutional buyers and robust global cues, which lifted the benchmark indices to fresh record highs. On Thursday, the Sensex registered its longest eight-day rally in the last almost two-years. The 30-share Sensex, surged 1,265 points between July 15 and July 24.

Meanwhile, the International Monetary Fund (IMF) chopped its 2014 forecast for global economic growth to take into account weakness early in the year in the US and China. Out of the BRICS countries, only India avoided an IMF ratings downgrade, as business sentiments recovered after the Narendra Modi-led government took over.

Another major development was Finance Minister Arun Jaitley approved 49 per cent foreign investment in insurance companies through the Foreign Investment Promotion Board (FIPB). This move will help insurance firms to get the much-needed capital from overseas partners.

Over the last five trading sessions, the Sensex gained 485 points or two per cent to close at 26,127 and the Nifty advanced 127 points or 1.7 per cent to close the week at 7,790. Both the indices had hit a record high of 26,300 and 7,841 on the last trading day of the week.

However, profit booking was visible in the broader markets for the second consecutive week, as both the Mid-cap and Small-cap indices closed in red. The Small-cap Index was down 1.4 per cent and the Mid-cap Index lost nearly one per cent.

Movers & shakers

Defensives continued to be the preferred area of interest as IT, FMCG and Health Care indices emerged as the top sectoral gainers with gains ranging between 2.6-4.2 per cent.

Meanwhile, high beta segments like Power, Realty, Capital Goods and PSU scrips fell off the buying radar with the respective indices down 1.6-3.4 per cent over the last five trading sessions.

Profit-taking was also visible in Auto, Metal, Consumer Durables and banking spaces.

There was plenty of stock-specific action as the earnings season rolled in. Some of the prominent names that reported their earnings this week were Axis Bank, HDFC twins and Wipro from the frontlines, where the numbers were almost in line with expectations.

However, there was disappointment in the broader market universe as Thermax, CEAT, Biocon, Polaris disappointed the Street with their Q1 numbers.

Among Sensex-30, 13 out of 30 stocks closed in red.

Sesa Sterlite, ONGC, SBI, Tata Motors, GAIL, Tata Power and BHEL down 2-5 per cent were the laggards.

On the other hand, HDFC, HUL, Bharti Airtel and Reliance industries up 4.6-8.5 per cent were the top gainers.

TCS which hit 52-week high and also became the first Indian company to exceed Rs 5 lakh crore in market capitalisation ended the week on a strong note with nearly a seven per cent gain.

Week ahead

Fed is scheduled to release the July FOMC statement in which the Fed is likely to upgrade the assessment of the labor market.

Infrastructure output data for June and India and China manufacturing PMI

L&T, HUL, ITC, Ranbaxy, Bharti Airtel, Lupin, Dr Reddys, Tech Mahindra, Maruti Suzuki, ICICI Bank, HCL Tech and NTPC are some of the companies expected to announce their quarterly numbers.