Weekly wrap: Profit booking ahead of elections, US jobs data

Investors turned cautious ahead of the general elections next week and crucial March employment numbers in the US, released late Friday

Key indices remained flat, owing to profit booking at higher levels in the latter half of the week, as investors turned cautious ahead of the general elections next week and the US jobs data for March, released after market hours on Friday.

Globally, investors can now breathe easy, as jobs in the US economy rebounded after a lull in the winter months to pre-crisis levels. The US added 192,000 jobs in March; the unemployment rate was 6.7 per cent.

For the week ended April 4, foreign institutional investors were net buyers of Indian shares by Rs 2,873 crore. During the week, the 30-share BSE Sensex added 19.53 points, or 0.08 per cent, at 22,359.50. The 50-stock National Stock Exchange Nifty shed 1.55 points to close at 6,694.35. On Thursday, both the Sensex and the Nifty touched their all-time highs of 22,621 and 6776, respectively, but failed to sustain these.

“The momentum in the index appears to be slackening, as it failed to sustain at more than 6,750-levels. This visibility of falling momentum suggests the market is stalling and will drift lower in the short term. However, on declines towards 6,600, the Nifty is likely to attract buying interest, as the overall positive structure remains intact,” said an IIFL report.

Among the key events that shaped investor sentiment were the Reserve Bank of India (RBI)’s monetary policy review and the HSBC services Purchasing Managers' Index (PMI). On Thursday, HSBC PMI data showed in March, India's services sector contracted for the ninth consecutive month. The PMI stood at a three-month low of 47.5 points, against 48.8 points in February.

In its first bi-monthly policy review, RBI kept key policy rates unchanged. The central bank said it took steps to encourage long-term capital flows from foreign portfolio investors and reduce risks from volatility in flows. It added it was in talks with the Securities and Exchange Board of India to allow foreign institutions to hedge currency risks through the exchange platform.

Rupee
For the currency market, it was a volatile week. After the rupee rose to an eight-month high of 59.6/dollar on Wednesday, dollar-buying by importers saw the currency rising a day later. During the week, RBI bought dollars to replenish its forex reserves and control the pace of the rupee’s rise, reports said. The central bank expressed discomfort over the steep rise of the rupee, as this would hurt exports. According to latest data, foreign exchange reserves rose by $5.04 billion to $303.67 billion in the week ended March 28.

Sectors & stocks
Among the Sensex and Nifty heavyweights, Jindal Steel & Power was the top gainer (6.7 per cent), while Tata Steel, Hindalco Industries, HDFC, Cipla, Bank of Baroda, Lupin, M&M, Reliance Industries, Cairn India, Sun Pharmaceutical Industries and Tata Motors rose one-five per cent. Meanwhile, Bharat Heavy Electricals Ltd, GAIL (India) and Tata Power fell 3.5-7.7 per cent on bourses.

Among segment indices, the bank Nifty fell 1.5 per cent this week on profit-booking. The BSE capital goods and fast-moving consumer goods indices shed one-two per cent, while the realty, metals and health care indices rose three-seven per cent.

Reliance Industries Ltd (RIL) gained 3.28 per cent at Rs 944.2. On Thursday, the RIL stock hit a 52-week high, after Canada announced $500 million in financing for the company’s projects in that country.

L&T shed 0.86 per cent at Rs 1277.09 after the company said it would trim its order book.

Broader markets outperformed the benchmarks. The BSE mid-cap and small-cap indices rose 2.67 per cent and 3.8 per cent, respectively, against the Sensex’s flat movement. In the BSE mid-cap space, HDIL, MMTC and Suzlon rose 10-16 per cent.

Next week, data on the Index of Industrial Production for February, as well as trade data for March, will be watched keenly.