Indian equity markets snapped its winning streak of last six weeks and ended in losses for this week on the back of mixed global cues and profit booking. Both Nifty50 and Sensex were down -1.1%/-1.4% to close at 11,073/37,607 respectively. The broader market, however, was mixed with Nifty Midcap100 down -0.4% while Nifty Smallcap100 was up 0.4%.

Sectorally it was a mixed bag, with Pharma being the biggest gainer, up +8.9% led by strong results. Even IT and metals saw strong traction, both up +4.5%/+2.9% respectively. On the other hand, Banks (4.5%), Financial Services (-4.1%) and Energy (-3.7%) witnessed profit booking. This was reflected in net institutional outflows. Both FIIs and DIIs were net sellers this week, selling equities worth Rs 1,312 crore/Rs 2,445 crore respectively.

Global cues continues to be remain mixed with disappointing US GDP data and rising global Covid-19 cases on the negative side, while strong US tech earnings and manufacturing recoveries in China and Japan were there on the positive side. US Fed’s pledge to use all its tools to support the US economy failed to reassure markets. Further argument in the US Congress over the new proposed stimulus plan also dented market sentiments.

On the domestic front, profit booking was witnessed amidst mixed global cues and expensive valuations. Reliance witnessed selloff post its weak results while credit risk concerns raised by RBI in its Financial Stability Report led to profit booking in the Banking stocks.

Lot of stock specific action was witnessed post their results announcement. Unlock 3.0 failed to enthuse investors, as markets turned volatile. Concerns over the rising number of Covid-19 cases too spooked market after India’s tally went past 16 lakh during the week.

We expect the market volatility and stock specific action to continue for a while. Technically too, Nifty formed a Bearish candle on daily as well as on weekly scale, indicating selling pressure at higher levels. Going ahead, investors would watch out for the quarterly results for stock specific action and development over US fiscal stimulus which could provide some cheer to the markets. Further BoE monetary policy next week would also provide some direction to the market.

(The writer is Head – Retail Research, MOFSL)

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