Sensex snaps 7 straight weekly rally, closes below 18000
24 Feb 2012
It was the first bad weekly close for the Indian equity market in 2012. The past seven weeks have seen positive rallies. The market fell more than 2% during this week while it rallied 18-20% in the previous seven weeks helped by inflow of around Rs 29,000 crore.
The fall witnessed in the last three sessions of the week may be due to large money flow toward the MCX IPO which got oversubscribed 43 times till 3 pm today. Experts feel that people may have sold shares to apply for this IPO as investors are seeing a quality IPO after more than a year. Other reasons may be profit booking, rising crude oil prices and tepid economic growth in euro zone.
The 30-share BSE Sensex fell 154.93 points or 0.86% today, to close at 17,923.57. It was weighed down by banks, capital goods, oil & gas and realty stocks. Meanwhile, the 50-share NSE Nifty dropped 54 points or 0.98% to 5,429.30.
Despite this fall, experts are still bullish on the market as they expect huge inflow of money in the near-term.
Varun Goel, Head - PMS, Karvy Private Wealth said he would not be worried too much by a 5-6% kind of correction. "Valuation-wise, the market is still trading around 13.5-14 times FY13 earnings. There seems to be ample liquidity in the global financial system; there is a new LTRO which is coming up on February 29. We expect another euro 300-400 million of liquidity to be provided to the European banking system," he says. Domestically, he sees monetary policy easing during the course of the year and by October-November, markets will start discounting FY14 earnings too. "So overall, the prospects for equity for this year look extremely bright and we would continue to be bullish on the markets," Goel reasons.
Oil & gas (respective BSE Index down 1.7%) majors and index heavyweights Reliance Industries and ONGC fell 2% each. Capital goods (Index down 3%) majors L&T and BHEL were down 3.6% & 2.55%, respectively.
