Metal, pharma stocks least favoured today

Wed, 14 Jan Closing

   Previous Close   

   Pre-Open   

   09:30 am   

   11:30 am   

   01:30 pm   

The Indian markets ended the day on a weak note with the BSE-Sensex closing lower by about 79 points or 0.3%, while the NSE-Nifty ended lower by about 22 points or 0.3%. Stocks from the information technology sector were the most preferred today, while those from the metal and healthcare sectors were least favoured. Midcaps and smallcaps ended the day on a weak note too.

Asian stocks ended the day on a weak note, while stocks in Europe were trading mixed. The rupee was trading at Rs 62.15 to the dollar at the time of writing.

Inflation numbers for the month of December 2014 were announced today. The same, measured by as the wholesale price index, stood at 0.11% in the month of December as compared to 0% in the previous month. Last year, the figure stood at 6.4%. Food inflation stood at 5.2% (the highest figure since August) versus 0.63% in the month of November. However, fuel inflation came in at a negative 7.82% as compared to a negative figure of 4.91% in November 2014. As for manufactured products, inflation stood at 1.57% in December as compared to 2.04% in November. As reported by the Hindu Business Line, retail inflation for the month of December stood at 5% as compared to 4.4% in November. With inflation continuing to show signs of cooling, and considering that crude prices continue to move lower, inflation for the short term is expected to remain subdued; thereby increasing the pressure on the RBI for a rate cut. It would be interesting to see what the outcome would be at the next review.

As reported by the Mint, Foreign Institutional Investors (FIIs) holding stood at the highest levels in six and a half years. Stocks from the oil and gas space, especially oil marketing companies have been in demand in recent times given the sharp fall in crude price along with the announcement of the deregulation policies. As per the analysis done by the business daily (of 46 companies out of the 100 that form part of the BSE-100 index), FII holding averaged to 17.8% as of December 2014. In the previous two quarters, the same stood at 16.88% and 16.74% respectively. As for 34 companies out of the 50 that form part of the Nifty, the average FII holding stood at 20.74%, the highest figure since June 2010. A total of US$ 16.2 bn was invested by FIIs in 2014.

Investors would possibly like to emulate the more informed or sophisticated investors' pool while building or replicating portfolios. However, this could be fatal we believe. For one, money is not made by replicating. Moreover, since the FIIs are largely short term fair-weather investors, investing based on the FII trends could expose investors to undue risks.