Defensive sectors gain from market shift

A. Srikanth

THE markets witnessed volatile trends during the week as both the BL-250 and the Sensex fluctuated wildly between extremes.

The broad-based BL-250 Composite Index and the Sensex diverged a little as many small-cap stocks gained in value during the week. Overall, while the BL-250 Composite Index ended with a net gain of 11.99 points, the Sensex finished 46.18 points down compared to the previous week's closing value.

The fact that the Junior Nifty Index posted a net gain of 4.60 per cent, when both the Sensex and the Nifty lost value over the week seems to support the view that mid-cap and small-cap stocks were the major gainers.

Besides domestic economic uncertainties, the markets were influenced by volatile trends in both the Nasdaq and Dow Jones indices in the US. Overseas earnings announcements seemed to affect the local bourses more than domestic developments.

The market's shift towards defensive sectors was evident from the fact that most of the major gainers were from the pharmaceutical and the information technology sectors.

Even within the pharma sector, MNC stocks such as Sun Pharma, E-Merck, Novartis, German Remedies, Wyeth Lederly, Pfizer and Rhone Poulenc were the major gainers. The gainers among Indian pharma companies were limited to Cipla, Dabur and Dr. Reddy's Labs.

The Computer Software index gained by 8.76 per cent on the back of superior returns posted by Infosys Technologies, NIIT and Hughes Tele.

The share price of Infosys Technologies went up by Rs 606.90 during the week to close at Rs 7,123.85. Similarly, Wipro was the largest gainer in the Computer Hardware index. The stock went up by Rs 117.30 to close at Rs 2,294.65.

Both the Shipping and Textile indices moved up in response to hostile takeover bids by certain companies. The buy-back proposal by the promoters of GE Shipping resulted in the stock gaining Rs 5.60 to close at Rs 32.65.

Similarly, the hostile bid for Bombay Dyeing resulted in the stock gaining Rs 6.05 to close at Rs 121.40.

However, the slowdown in industrial production did not dampened interest in some old-economy stocks. The share price of Hero Honda, SKF Bearings, MICO, Vikas WSP, Colour-Chem, Essel Packaging, Tata Steel, HPCL, Bayer and ABB gained significantly during the week.

Investment interest in the FMCG sector was lacklustre as was the case over the last few weeks. The Personal Products index declined as Hindustan Lever lost Rs 10.30 during the week to close at Rs 174.70. Other FMCG sectors such as Consumer Products and Food & Dairy too ended up in negative territory.

Major gainers in the FMCG sectors were limited to Indian Shaving, Asian Paints, SmithKline Consumer and Tata Donnely.