The Sensex ended last Friday at 17,119,up 0.11 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 21.82. Foreign institutional investors (FIIs) invested Rs 1,139.2 crore in Indian equities last week. According to Kishor P. Ostwal,chairman and managing director,CNI Research,The Nifty oscillated between 5,000 and 5,180 the whole of week last. 5,182 was the previous high achieved some time back. This has become a strong resistance point where profit booking takes place. However,the market consolidating above 5,000 is a sign of its strength. There is limited downside in the current market as at every dip we see fresh inflows and renewed interest from global investors. While financial institutional investors (FIIs) and mutual fund investors are currently providing liquidity to the markets,high net worth individuals are yet to step into the market in full strength. On the sectoral front,the two sectors that showed the maximum gains this week were capital goods (up 3.98 per cent) and IT (up 2.15 per cent). Said Ostwal: The BSE capital goods index rose on account of the economic recovery heralded by the robust index of industrial production (IIP) number. IT rose on account of the recovery in global markets which is leading to IT companies receiving fresh orders. The biggest laggards this week were metal (which fell -2.66 per cent) and healthcare (which fell -2.12 per cent). Metal fell due to rise in inventory levels,and rise in the US dollar after US Fed indicated to the US Congress that the $700 billion stimulus should be extended till October 2010. The reaction in both gold and commodity stocks was due to this, said Ostwal. The most important event last week was the announcement of the strong IIP number (10.3 per cent). Announcements by the government of India regarding disinvestment of PSU companies also helped sustain the markets. As for the near future,much will depend on the Q3 results which will start coming in soon. If they show an improvement over Q2,the markets could move towards the 18,000 mark. But FIIs will be largely absent from the markets after 15th December because of the onset of Christmas vacation in the West. In their absence,the markets will be driven mostly by local triggers. The registration of more mutual funds in India is creating additional liquidity and this will help sustain the markets at current levels. And once the Nifty crosses the 5,200 mark,retail and high net worth investors will get the confidence to return to the markets. The sectors,according to Ostwal,that are expected to outperform in the near future are realty,metal,textile,telecom,paper and oil and gas.
