Sensex ushers in 2nd worst new year Index Loses 500 Points In First 5 Sessions On FII OutflowsInvestors Cautious

Mumbai: Sliding in each of the five sessions of 2014, the sensex is now down nearly 500 points, or 2.3%, from its 2013 close, making this the second worst index performance in its history in terms of points loss. The worst was in 2011, when index had lost a little over 800 points in the first five sessions in the new year. In terms of percentage loss, however, 2014 is the third worst in the last decade, BSE data showed. 

    Market players blame the continuous foreign fund selling for this loss in the index, which is now 800 points below the all-time peak scaled exactly a month ago. In the last three sessions, the pace of selling by foreign institutional investors (FIIs) has gained pace with the net outflow figure during the period at about Rs 900 crore now. 
    Other than FII selling, brokers said that investors will take a call after the results seasons begins. "By looking at index movement since the beginning of this year, it seems that market participants are now waiting for earning season to start and accordingly they'll plan their bets," said Jayant Manglik, president-retail distribution, Religare Securities. The October-December quarterly results would start with technology Major Infosys announcing its numbers on Friday. 
    However, not everyone is convinced that the current trend could be something that investors should be worried about. "Usually, towards the end of the (financial as well as calendar) year we see NAV propping by fund managers. So if such acts could help keep the market at an elevated level, after the start of the New Year we could expect some profit taking," said Arun Kejriwal, director, KRIS. 
    The silver lining behind this slide in the sensex is the emergence of some buying interest in the mid- and small-cap stocks. "Investors have shifted their focus to mid-cap and small-cap counters and rightly so, as these segments have been showing upward momentum and facing negligible impact despite erratic moves in the benchmark index," said Manglik. Kejriwal, who agrees that the current buying in select stocks from these segments augurs well for the market. 
    BSE data showed that Suzlon Energy, a Rs 2,825-crore market capitalization company, is up 13% during these five sessions while Ashok Leyland, valued at close to Rs 4,900 crore, has gained nearly 7%. Financial Technologies (FTIL) and Multi Commodities Exchange (MCX) have also gained 46.4% and 23.7%, respectively, but there is talk of merger and selloffs in these stocks. 
    In comparison, Tata Power is down nearly 13% during the same period, while JSW Energy has lost 8.8% and Tata Steel is off 6.8%. Software stocks too are witnessing profit taking after some of the frontline ones hit their life highs recently. On Tuesday, sector leader TCS closed 1.5% lower while Infosys lost 1.7% and Wipro was down 1.4%.