The Sensex ended last Friday at 16,881 points, down (-)2.96 per cent compared to its closing level at the end of the previous week. It is currently trading at a 12-month trailing price to earnings (PE) ratio of 21.49. Foreign institutional investors (FIIs) pumped in Rs 2,279.3 crore into Indian equities last week.

According to Kanwar Vivek, chief executive officer, Birla Sun Life Distribution, “The market declined last week due to negative indications from the global markets, and some profit booking (though not significant) from FIIs. Domestic institutions were also net sellers in equities.”

Except for IT (up 3.62 per cent) and FMCG (up 1.4 per cent), all the other indexes fell last week. Says Vivek: “What propelled these sectors up were stock-specific plays and better quarterly results. IT continues to enjoy an edge due to improvement in business prospects, mainly offshore contracts, and a likelihood of improvement in business margins, emanating from the improved environment in the US and Europe.”

The two biggest laggards were Oil and Gas (down -6.14 per cent) and Capital Goods (down -5.75 per cent). Says Vivek: “The abandoning of the KG Basin exploration by the UK firm Hardy Oil and Gas Plc caused RIL to lose about 4 per cent in trading. The rise in global oil prices to around US $80, which could worsen conditions for oil PSUs, was another negative.” As for the Capital Goods sector, Vivek says: “There have been profit-booking pressures in the CG segment in the heavyweights. Moreover, Punj Lloyd reported worse-than-expected results for the last quarter.” An important statement last week was the Fed saying that the labour market in the US is not improving. As for next week, the market is looking forward to RBI’s monetary policy review. “There is an expectation that in the light of rising inflation the accommodative policy may be abandoned,” says Vivek.