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Market Report

Tuesday, 27-May-2014

NSE

  • After gaining nearly 419 points in previous three days to close at its highest ever level, the BSE Sensex succumbed to profit-booking in recent gainers and closed 167.37 points, or -0.68 per cent, lower at 24,549.51 after shuttling between 24,777.31 and 24,422.33 intra-day. The 50-scrip NSE Nifty, which had lost 8.05 points yesterday, ended down 41.05 points, or -0.56 per cent, at 7318.00 today.

  • Traders say investors are adopting a cautious stance this week that will see expiry of derivative contracts on Thursday. Gains of almost 10.25 per cent in May so far have also prompted them to take some gains off the table, they added. Yesterday, the 30-share Sensex had ended at its new closing high of 24,716.88 in a highly volatile session that saw it breaching 25,000-mark for the second time ever. Retreating from the record, the Sensex today fell for the first time in four days, but the Nifty had closed in the red yesterday.

  • A narrowing current account deficit at 1.7 per cent of GDP in FY'14 from 4.7 per cent in FY'13 was apparently ignored by market participants, said equity dealers. Selling activity was seen picking up in mid and small-cap stocks largely in line with overall trends, they added.

  • Meanwhile, foreign institutional investors (FIIs) have remained net sellers in 5 of the last 6 sessions. FIIs sold shares worth a net Rs 84.13 crore yesterday and Rs 202.61 crore today as per provisional data. Volumes have also decreased today, specially from the retail sector. See our 'Market Statistics' page.

  • Foreign brokerages have said a leaner council of ministers will help the Prime Minister streamline operations and speed up ground-level implementation. British brokerage Barclays said the new Cabinet boosts expectations of strong, decisive and swift action by the new government. It noted that that the appointment of Arun Jaitley as finance minister will instill confidence in investors and industry. This will also improve confidence in the economy, apart from improving supply-side issues to fight inflation. The merging of key ministries will help in better coordination among these critical sectors, it added.

  • Even though the markets have rallied in quick time, experts tracking the index are of the view that valuations appear relatively inexpensive for a market which is at the cusp of change. Relative to its own history, experts do not deem the Sensex to be in an expensive zone. The Sensex is currently trading at 12-month forward PE of 15.8x. Most analysts view this as a golden opportunity as equity as an asset class is likely to outperform in the next couple of years.

NIFTY 3-Month

(Data/Charts courtesy NSEI/Yahoo!/iCharts/The Economic Times)