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Weekly wrap: Indices rise slightly, but shares look overbought for now

The News International Team

Equity benchmarks crawled higher during the week as investors reacted positively to the Budget. The out of turn repo rate cut (of 25 basis points) by the RBI on Wednesday lifted Sensex and Nifty to record highs, but profit taking pared gains.

The Sensex closed at 29448.95, up 87.45 points over last Friday, after touching a record high of 30024.74 intra-week. The Nifty gained 35.9 points over the week to close at 8937.75, after hitting a peak of 9119.20.

Experts feel the market is overbought for now, and could see a correction on technical factors. With two major triggers—Budget and rate cut—out of the way, the focus will once again shift to corporate earnings. The picture on that front does not look too flattering, say brokers.

“We still have more highs to come but the next four to six weeks, probably even eight weeks look at bit shaky,” Jai Balal of cashthechaos.com told CNBC-TV18 in an interview.

“But it (correction) is a welcome move and if does come through, it will be taking out the froth in the market,” he said.

Core sector growth weakened considerably in January, and economists are anticipating a dismal index of industrial production (IIP) reading for the month. By extension, this means that earnings growth for this quarter is likely to be subdued.

“I don’t think you are going to see this pickup upfront. I think at best it is going to be back ended into FY16,” Citi’s Aditya Narain said in an interview to CNBC-TV18.

“So, it is going to be a more slow and a more measured kind of a pickup. I would make the argument that this entire trajectory is going to be more stable, more sustained but not necessarily as sharp on the upside as people might hope for at points in time,” he said.

Realty, consumer durables, auto and IT were among the underperforming sectors during the week. Power and FMCG shares firmed, and investors showed a marked preference for small and midcap shares.

The CNX Midcap Index gained 1.8 percent and the BSE Small Cap was up 1.7 percent for the week.

Leading gainers in the Nifty were Sun Pharma (+14 percent), Cipla (+8.4 percent), Lupin (+5.2 percent), HDFC (+4.5 percent), BPCL (+4 percent), L&T & HUL (+3.3 percent each), IDFC (+3.1 percent), Reliance (+2.3 percent), and BHEL (+3.1 percent)

Among big losers, Tata Motors, ITC, M&M, Cairn, JSPL, Coal India and NMDC fell 4-8 percent.

Among big midcap gainers, NCC, SML Isuzu, Mastek, Geometric, SPARC, JP Associates and Strides rose 13-18 percent.

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