15 Aug 2009, ET Bureau
MUMBAI: Equities retreated on Friday as investors booked profits on the hunch that the market may have peaked out in the short term. Key benchmarks were weighed down by a 3% fall in index heavyweight Hindustan Unilever. Market players are worried that deficient rainfall this year will hurt the profits of fast-moving consumer good companies, which earn a good chunk of their revenues from the rural segment.
The Bombay Stock Exchange’s (BSE) 30-share Sensex ended the day at 15,411.63, down 106.86 points over the previous close. The index has risen 1.7% over the past one week, led by gains in metal, banking and automobile segments. NSE’s 50-share Nifty closed at 4580.05, down 24.95 points over Thursday’s close.
Recent macro data — both local and global — have been encouraging. But most investors feel shares are fairly valued for the time being.
Key markets in Asia ended higher, ignoring the weakness in US equities the day before. All European markets ended in the red, with losses ranging between 1% and 2%. “Markets are unlikely to cross the highs made last month any time soon, as valuations are a bit on the higher side,” says Dilip Bhat, joint managing director, Prabhudas Lilladher.
“Foreign fund flows coming into the country are now getting divided between the secondary and the primary (IPOs, QIPs) markets, and this trend is likely to continue for some time. Also, the recovery in some key European markets could promote portfolio investors to cut exposure to some of the expensive emerging markets and deploy that money in Europe,” he said.
Despite the weakness in key indices, market breadth on BSE was positive with gainers outnumbering losers 7:6, as investors continued to buy into mid- and small-caps. After keeping low profile over the past few days, domestic institutions stepped on the gas on Thursday, net buying shares worth Rs 444 crore. Foreign institutional investors were net sellers to the tune of Rs 126 crore. The BSE Realty index was the worst performer among sectoral indices, falling 1.7%. The BSE FMCG index was next, declining 1.3%.
“Our base case revenue growth forecast for the FMCG sector is 11.4% and 12% for FY10 and FY11, respectively,” said a note by brokering house Morgan Stanley to clients.
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