Market sentiment continues to remain bullish

After three weeks of steep rise, large-cap equity indices took a pause this week. The Bombay Stock Exchange Sensex and the National Stock Exchange Nifty ended the week flat due to profit-taking and weak global cues.

The Sensex closed the week at 27,061, up 35 points, or 0.13 per cent, from the last week's close, while Nifty closed at 8,105, a gain of 0.23 per cent.

The week was marked by volatility as the Nifty, which touched a high of 8,180 on Monday, struggled to close above 8,100 due to selling pressure later in the week.  The Sensex touched a high of 27,355 on Monday and a low of 26,905 on Thursday.

Among Sensex stocks, Cipla (10%), SBI (4.6%), HUL (3.24%), Bharti (3.22%) and Maruti Suzuki (3.16%) were the top gainers, while Sun Pharma (-6.03%), NTPC (-3.57%), Coal India (-3.4%) and ONGC(-3.36%) were the top losers.

The broader market, though, continued to be upbeat. The BSE 500 index rose 1 per cent during the week. But mid-cap and small-cap stocks made healthy gains. BSE Mid-cap and BSE Small-cap indices rose 3.25% and 5%, respectively, during the week.

Though there were no big domestic triggers, globally, the US' aggressive stand against ISIS in Iraq and the EU's plan for tougher sanctions against Russia weighed down on markets. "Indian benchmarks ended on a flattish note. Given the sideways movement in frontline stocks, investor interest shifted to mid-caps. There was a sharp up move in auto component and fertilisers stocks and select midcaps," says Sanjeev Zarbade, vice president, Private Client Group Research, Kotak Securities.

Among sectors, auto, FMCG and banking were top gainers. BSE Auto, FMCG and  Bankex indices rose 2%, 1.8% and 1.7%, respectively. Among the top losers were BSE Oil & Gas and BSE IT (0.9% and 0.7%, respectively). Real estate and capital goods sector also closed the week in the negative territory.

Foreign institutional investors (FIIs) remained upbeat. They were net buyers of equities worth Rs 2,221 crore. Mutual funds were net sellers of shares worth Rs 356 crore.

According to Neelesh Surana, head of equities, Mirae Asset Mutual Fund, things have moved too fast in the last one month and probably fund managers are a little cautious about valuations in the short term. "However, we remain positive in the longer term," he says.  

In the coming week, equity markets will take cues from Consumer Price Index (CPI) and Index of Industrial Production (IIP) data. CPI grew at slower pace of 7. 8% in August as against 7.96% in July. This will enhance chances of a softer RBI stance on interest rates.

There was some disappointment on the IIP front as it grew at a much slower rate of 0.5% in July compared to 3.9% in June. However, the overall growth between April-July is 3.3% compared to -0.1% in the same period last year. The data were released after market hours.

"We are hopeful of a rebound in manufacturing as demand picks up by end of the current quarter," says Debopam Chaudhuri, chief economist, ZyFin Research.

The overall sentiment continues to look bullish.

According to Rajshekar, senior research analyst, HBJ Capital, next week will see the Nifty consolidate between 8,000 and 8,200 levels, with 8,000 acting as a pivotal support and resistance coming at 8,200 levels.

"Technically, the Nifty is making higher top and higher bottom pattern and we would like to extend the target  to 8300 by September-end and 8500 by October-end," he says.