Indian equities managed to end positive for the second week in succession even as the markets snapped seven-day rally on Friday. The Sensex advanced 136.48 points or 0.5% to end at 29231.41 in a holiday-shortened week, extending last week’s 1.31% gains.
On Friday, the 30-share gauge declined nearly 0.8% or 231 points led by energy and IT stocks, after having gained 4.4% in last seven sessions on optimism finance minister Arun Jaitley will boost infrastructure spending in his budget presentation on February 28. The rally pushed up valuation to a four-year high.
The Nifty lost 0.7% or 61.70 points to end at 8833.60, trimming this week’s gains to 0.3%. Reliance Industries (RIL) was the biggest loser after the refiner’s employee was among five people arrested by the Delhi police for illicitly procuring government documents. ONGC slid to a nine-month low. ICICI Bank was the worst performer on a gauge of lenders. Infosys and Wipro slid the most in at least three weeks.
Foreign portfolio investors (FPIs) turned net buyers after two weeks of selling. Overseas funds were net buyers to the tune of $622 million during the week, provisional and official data showed. Last week, FPIs had sold $284.5 million worth of shares in the cash segment and $107.41 million in the week ending February 6.
Broader markets outperformed benchmarks during the week with 0.8-1.6% gains. Eight out 11 sectoral indices ended positive this week. Shares of real estate, capital goods, and power companies witnessed fresh buying as well as short covering on expectations of big reforms from the Budget.
“We expect the FY16 Union Budget to reinforce the government’s commitment to fiscal consolidation and economic reforms. Low global crude prices and consequent savings will allow the government to pursue the twin objectives of fiscal consolidation and growth (capital expenditure). The budget session will be equally important given several pending legislations,” said Kotak Institutional Equities in a research note.
The Sensex has gained 6.3% this year on optimism the Modi govt will simplify tax rules and shift spending from food and fuel subsidies to investments in roads, ports and power plants. Foreign investors have poured in more than $7 billion into Indian stocks and bonds so far this year after a record $42 billion worth of purchases in 2014.
“The Union Budget will focus on a road-map for GST and fiscal incentives for “Make in India”. Also, we believe the Budget will provide the government a good opportunity to list reforms in PDS, PPP in infrastructure investments and direct benefit transfer payments for all subsidies,” said IDFC Institutional Securities’ note to investors.