Mumbai: Shares eased 0.2% on Friday as investors locked in profits in stocks such as Reliance Industries and Infosys Technologies, but stretched weekly run of gains to four in a row.
Activity is expected to be cautious ahead of the central bank’s policy review on 29 January and the annual federal budget due by the end of February. Quarterly earnings from companies should propel the market, but the road is expected to be bumpy.
“The market will be rangebound until the budget,” said Jigar Shah, senior vice president of Kim Eng Securities. “There is a lot of activity in mid- and small-caps because valuations in those stocks are attractive compared with large cap stocks.”
Energy major Reliance Industries dropped 1% to Rs1,109.20 , after climbing 3.6% over three previous sessions, while outsourcer Infosys shed 0.5% to Rs2,675.40 after rallying 9.1% over four days.
The 30-share BSE index ended down 0.17%, or 30.57 points, at 17,554.30. Eighteen of its components declined.
The benchmark eked out 0.1% rise for the week, its fourth straight weekly gain that was the longest run since a 14-week rally that ended in June last year.
JPMorgan set a fair value target of 20,500 for the index by December, but said the market would be volatile.
“Monetary tightening and potential withdrawal of fiscal stimuli, expected early in the year, will likely be potential speed breakers in the markets ascent,” the U.S. investment bank said in a note seen by Reuters.
“Sustainable returns for equities could consequently be back ended,” it said.
Demand for bank loans in India is reviving but because the loan growth is sluggish, the central bank is expected to limit monetary tightening in spite of a pick-up in inflation.
Top lender State Bank of India shed 6.3% this week, while top private lender ICICI Bank dropped 3.7%.
Reliance Communications rose 4.8% to Rs191.50 after the No. 2 telecoms operator got regulatory nod for its planned initial public offering of its tower unit that sources have said could raise up to $1 billion.
Tata Motors raced 1.8% to Rs796.70 , after the leading Indian vehicles maker’s sales in December jumped 84% from a year earlier to 74,707 units.
Tata Consultancy Services climbed to a record high of Rs799.20 before closing up 1.2% at 791.80, ahead of its quarterly results due after market hours.
The top outsourcer is expected to report net profit rose 18.6% in the December quarter, a Reuters poll showed last Friday.
Infosys, the trendsetter for the export-focused industry, had this week raised its full-year revenue forecast, indicating the prospects for outsourcing was improving on the back of a recovering world economy.
In the broader market, gainers outpaced losers in a ratio of 1.1:1 on volume of 552 million shares, lower than last week’s daily average of 625 million shares.
The 50-share NSE index closed down 0.15% at 5,252.20.