Budget, RBI rate cut cheer investors as benchmark indices scale new highs

The week after the Union Budget saw a relatively volatile market, especially during intra-day trading, with the benchmark index-S&P BSE -closing at 29,473 points with marginal gains of 0.38% for the week. The broader index, CNX Nifty index, closed the week at 8,938 with gains of 0.40%. Its smaller counterparts were better off with BSE Mid-Cap gaining 2.17% and BSE Small-Cap gaining 1.02% during the week.

"As the market has moved high we are seeing sectoral shift towards defensive sectors like Pharma and FMCG. We believe this is a short-term direction, till the time action is taken for post budget measures (important bills in budget session). Having said that, confidence continues to be good with increasing momentum in mid- and small-cap", said Vinod Nair, head, fundamental research, Geojit BNP Paribas Financial Services.

Among the sectoral indices, BSE Healthcare and BSE Capital Goods were among the top performer with gains of 4.51% and 3.50% respectively, while BSE Metal and BSE Auto were the top losers, with losses of 3.13% and 1.91% during the week.  
 
The markets closed in positive territory in three out of four trading session during the week. The biggest news of the week was the 25 basis points rate cut by Reserve Bank of India (RBI) on March 4. After this cut, the repo rate stands at 7.50%. This was a non-routine rate cut which happily surprised the markets. The day witnessed a high amount of volatility, with the Sensex rising 400 points from the previous day's close to touch a high of 30,024. However, as profit booking came in, the markets fell to touch a low of 29,289 before finally closing at 29,380, down 213 points from the previous day's close.
 
The FIIs were net buyers of Rs 6,861 crore in the equity market while they infused Rs 6,315 crore in debt market. Markets will remain closed on March 6 on account of Holi.
 
"With market fears taming down, the continuance of FII flows towards Indian markets suggests that current market valuations are here to stay. We expect the markets to remain bullish in the coming week and remain in the range of 8,900-9,100 in the near term", said Hiren Dhakan, associate fund manager, Bonanza Portfolio.