Nifty has moved to a new orbit but is highly overbought

The BSE Sensex closed the week that ended on 7th March, at 21,919.79 (up 799.67 points or 3.79%), while the NSE Nifty closed at 6,526.65 (up 249.70 points or 3.98%) for the week. Both the indices hit and closed at all time highs on Friday.

On Monday the market snapped last five days of upmove. The indices closed in the negative on the back of geopolitical tension over Ukraine and an official gauge of Chinese manufacturing dropping to an eight-month low. Nifty closed at 6,221 (down 56 points or 0.88%).

Back home, up from 51.4 in the previous month to 52.5 in February, the headline HSBC India Purchasing Managers' Index (PMI) signalled a solid and stronger improvement in business conditions across the country's goods-producing sector, Markit Economics said.

With the global bourses mostly closing in the positive on the news that Russian President Vladimir Putin ordered his troops back to base which raised hopes of a peaceful solution to the recent geopolitical tensions in Ukraine, the domestic indices also moved higher. Nifty closed at 6,298 (up 77 points or 1.23%).

The data on manufacturing expanded at a faster pace than projected in February.  The Institute for Supply Management's manufacturing index rose to 53.2 in February from 51.3 a month earlier.

The Nifty continued to move higher on Wednesday and closed at 6,329 (up 31 points or 0.49%). Private sector output across India rose for the first time in eight months during February. The seasonally adjusted HSBC India Composite Output Index posted 50.3 in February 2014, higher than 49.6 in January 2014, indicating a fractional rate of expansion.

State-run banks' bad loans are anticipated to be slightly higher by March-end from a year earlier, Finance Minister P Chidambaram said on Wednesday after reviewing their quarterly performance. He added that the banks recovered bad loans worth Rs18,933 crore during April to December 2013.

For the third consecutive session, Nifty closed in the positive. On the data on shrinking of India's current account deficit the Nifty closed at its all time high of 6,401 (73 points or 1.15%). India's CAD narrowed sharply to $4.2 billion (0.9% of GDP) in Q3 of 2013-14 from $31.9 billion (6.5% of GDP) in Q3 of 2012-13 which is also lower than $5.2 billion (1.2% of GDP) in Q2 of 2013-14. The lower CAD was primarily on account of a decline in the trade deficit, as merchandise exports picked up and imports moderated, particularly gold imports.

Richard Fisher, president of the Federal Reserve Bank of Dallas, on Wednesday said he was concerned about "eye-popping levels" of some stock market metrics, and said the central bank has to monitor the signs carefully to make sure another bubble isn't forming.

The indices again closed at a new high after a massive rally on Friday. Nifty closed at 6,527 (up 126 points or 1.96%) with investors betting that a BJP-led government, headed by Narendra Modi will assume power within a couple of months.
 

For the week, among the other indices on the NSE, the top two performers were Realty (13%) and Bank (10%) while the worst two performers were Pharma (5%) and I T Sector (3%).

Among the Nifty stocks, the top five stocks for the week were D L F (18%); Hindalco Industries (18%); Bank of Baroda (18%); I C I C I Bank (15%) and Jaiprakash Associates (14%) while the top five losers were Dr. Reddy's Lab (6%); H C L Technologies (6%); Wipro (5%); Sun Pharma (5%) and Lupin (3%).

Of the 1,393 companies on the NSE, 945 companies closed in the green, 407 companies closed in the red while 41 companies closed flat.

Out of the 27 main sectors tracked by Moneylife, top five and the bottom five sectors for this week were: