Benchmark equity indices ended slightly higher in a volatile trading session on Friday, but saw their first weekly loss in four weeks as investors remained worried about growing tensions following North's Korea's repeated missile tests.
The BSE Sensex rose 25 points or 0.1 per cent to close at 31,687.52. The wider NSE Nifty 50 index rose five points or 0.1 per cent to end the day at 9,934.80.
For the week, the Sensex ended 0.6 per cent lower and the Nifty declined 0.4 per cent.
“Equity markets typically enter a lacklustre phase once the quarterly earnings are behind us. On top of that, the rising worries over North Korea's missile tests have also weighed on investor sentiments,” Yogesh Nagaonkar, fund manager, Bonanza Portfolio, told THE WEEK.
Investors have been worried for the past several weeks now, as tensions have risen between US and North Korea, over the later's nuclear programme. Over the last weekend, North Korea carried out another missile test, which prompted a stern warning of a massive military response from the US.
Back home, Larsen & Toubro was the biggest gainer on the Sensex; the engineering and construction major surged four per cent after a foreign brokerage raised its target price, while maintaining it a top pick among industrials.
Among other gainers, Bharti Airtel rose 1.50 per cent, Kotak Mahindra Bank was up 1.2 per cent and ITC, Maruti Suzuki and HDFC Bank rose about one per cent.
On the other hand, after recent gains, auto stocks saw some correction; utility vehicle maker Mahindra & Mahindra declined over three per cent, Bajaj Auto slipped close to two per cent and Tata Motors and Hero MotoCorp were down about one per cent.
Dr Reddy's fell three per cent after the pharma major said a German regulator had made six major observations about its drug making facility in Duvvada, Andhra Pradesh.
Other pharma stocks were also under pressure, Sun Pharma declining two per cent and Lupin down about one per cent on Friday.
A lot of analysts had raised concerns over the valuations of Indian markets, after the Sensex hit a life high of 32,686.48 on August 2. However, it has fallen almost 1,000 points since, easing the valuation concerns some what.
Foreign institutional investors pulled out Rs 14,293 crore from India's equity markets in August and have been net sellers worth Rs 2,965 crore so far in September as well.
On the other hand, domestic institutional investors continue to pick up stocks as mutual fund inflows have remained strong. Equity mutual funds saw a record Rs 20,000 crore in net investor flows in August, driving the overall assets under managements of the mutual fund industry to more than Rs 20-lakh crore mark.
Nagaonkar of Bonanza Portfolio said he was not too worried of the valuations right now and expects consumption-related stocks to do well, given a second year of good monsoon and as the uncertainties around demonetisation and GST (Goods and Services Tax) rollout are now behind us.
However, certain sectors like real estate, which were first hit by demonetisation and now by the strict guidelines under RERA (Real Estate Regulation Act) will take a long time to recover, he added.
Overseas, Asian markets ended mixed on Friday, with Japan's Nikkei Stock Average, ending 0.6 per cent lower, but Hong Kong's Hang Seng and Taiwan Weighted Index ending higher.
It was a similar trend across Europe, where some of the major markets like the London's FTSE 100 Index were down, but the German DAX was trading marginally higher.
US stock index futures declined as investors remained concerned over Hurricane Irma, which is fast approaching Florida. The category five hurricane, the strongest ever recorded in the Atlantic Ocean, has already caused a lot of damage across the Caribbean islands, and comes just days after Hurricane Harvey struck Texas and impacted 25 per cent of US Gulf of Mexico oil production.
