Weakness across select pharmaceuticals, fast moving consumer goods (FMCG) and technology stocks, pulled the stock markets lower on Friday. While the benchmark BSE Sensex ended down 57 points or 0.2 per cent at 29,365.30, the wider NSE Nifty 50 index closed 17 points or 0.2 per cent lower at 9,119.40 points.
The indexes ended in the red for the second straight week. Both Sensex and Nifty ended 0.3 per cent lower for the week.
“We have been cautious on the markets for a month. The valuation was looking very high, and the earnings growth so far has not been good enough as much as the market was expecting. So overall, you should expect some profit booking happening,” said Vinod Nair, head of research at Geojit Securities.
The major losers on Friday included Sun Pharma, which declined 2.4 per cent after Bloomberg News reported that the US Food and Drugs Administration raised several manufacturing violations at the pharmaceutical company's Dadra plant.
Among other pharma losers were Cipla and Lupin, which declined 1.8 per cent and 1.3 per cent respectively. FMCG stocks ITC and Hindustan Unilever fell 1.8 per cent and 1 per cent respectively.
Meanwhile, Reliance Industries regained its status as India's most valued firm by market capitalisation in intra-day trading, overtaking India's largest software services exporter Tata Consultancy Services on Friday. However, TCS, eventually ended the session slightly higher.
TCS had replaced RIL as the most valuable company four years ago. But a recent rally in RIL, after its aggressive entry into the telecom market with Jio and disappointing growth at TCS helped close the gap in recent days.
RIL closed the session at Rs 1,399.75, up 2.2 per cent. It had a market cap of Rs 4,55,105 crore. TCS, on the other hand, ended down 0.7 per cent at Rs 2,311.20. It had a market cap of Rs 4,55,405 crore.
HDFC Bank, on the other hand, closed 2.4 per cent higher after the country's second largest private sector lender reported 18 per cent year-on-year rise in fourth quarter net profit at Rs 3,990 crore. Its net interest income was also up 21% to Rs 9,055 crore in January-March.
Corporate earnings will continue to be on investors' radar and there are several big results next week. Reliance Industries and Ultratech Cement will announce fourth quarter earnings on Monday, April 24, followed by Axis Bank, ICICI Prudential Life Insurance and Wipro on Tuesday, April 25. India's largest passenger car maker Maruti Suzuki and two-wheeler major TVS Motor will announce their earnings on Thursday, April 27.
While there has been some consolidation in the large caps, several mid and small cap stocks have continued to rally, so there could be more correction there, said Nair of Geojit.
“The risks have increased as the gap in valuations (mid caps to large caps) is increasing. We are suggesting everyone to assume some profit booking,” he added.