Equities advanced for the second week in succession, albeit at a slower pace, led by gains in banks and rate-sensitive stocks. Traders remained on the fringe, as markets grew cautious ahead of derivatives (F&O) expiry and as holiday season began, leading to a slowdown in foreign institutional investors (FIIs) buying.
Provisional data from stock exchanges showed FIIs net purchased $47.69 million worth of Indian equities in the cash segment on Friday, taking their weekly tally to about $205 million. This is far lower than the $969 million-worth of purchases in the previous week, and $821 million worth of buying in the week ended December 13.
Overall, FIIs have bought more than $20 billion this year – third highest inflows by foreign funds into Indian equities. Last year, FIIs bought about $24.5 billion of Indian shares, while the amount stood at $29.3 billion in CY10.
Gaining for the second straight day, Sensex ended at a two-week high of 21,193.58, up 118.99 points or 0.56% from Thursday's close. Nifty ended 34.9 points or 0.56% higher at 6313.80. Gains remained steady at 0.54% and 0.63% for Sensex and Nifty, respectively, during the holiday week. The week saw the broader markets outperform the frontline stocks for the first time in more than a month. BSE mid-cap and small-cap indices ended up 2.5% and 3.5%, respectively.
Software exporter Tata Consultancy Services was the biggest gainer on the Sensex. The country's largest lender by assets, State Bank of India rose to a two-week high. Cipla gained 1.8%, sending a gauge of drugmakers to a record.
Banks and shares of rate-sensitive sectors such as real estate, mining and metals, power, capital goods ended in the green. BSE Realty index by as much as 3.4%, followed by BSE Capital Goods index (2.4%), BSE Power index (1.8%), Bank Nifty (1.5%), and BSE Metal index (1.4%). BSE Auto, however, was the sole loser this week.
The mood in global markets was also positive, with the US equities rising to historic highs on Thursday after data showed home sales held near a five-year high and orders for durable goods rose more than forecast, indicating growing momentum in the world’s largest economy. A sharp decline in jobless claims also supported gains.
For the week, Dow Jones has gained 1.9%, whereas S&P 500 gained 1.7%. Other major Asian and European indices gained in the range of 1-5%. the list includes FTSE (3.9%), CAC (3.8%), DAX (5.2%), and Nikkei 225 Index (2.02%).
“Remarkable performance from developed markets is testimony to the fact that global economy is coming out of the rut and growth is accelerating. If economic growth keeps up the pace, expect 2014 performance of emerging markets to be as spectacular as developed economies in 2013,” said HDFC Securities in its research note.
Back home, market breadth was strong with 20 of 30 Sensex companies ending in the green. BHEL (up 4.65%) was the biggest gainer this week. ONGC (2.7%), Hindalco (2.5%), ITC (2.2%) and ICICI Bank (1.9%) completed the list of top five gainers.