Market likely to open lower

Key indices are likely to open lower on Friday, tracking weak global cues, but the rally in mid- and small-cap stocks is likely to continue.

“Large-cap stocks have already had a good run up. Compared with their peers in the mid-cap space, they are way too expensive for local investors,” said DD Sharma, senior vice president at AanadRathi Securities.

“Foreign investors are buyers in the large-cap space, but currently they are not buying aggressively. Now, local players - retail, institutional and HNIs - are driving the market,” Sharma said.

On Thursday, FIIs were net sellers of shares worth Rs 152.83 crore, while domestic institutions net bought Rs 585.82 crore equity (according to provisional data on NSE).

The Bombay Stock Exchange’s Sensex ended at 19,784.89, down 144 points or 0.72 per cent.

The National Stock Exchange’s Nifty finished 26 points or 0.43 per cent lower at 5912.1.

BSE Mid-cap Index added 1.55 per cent and CNX Mid-cap Index was up 2.17 per cent.

Several foreign institutions prefer to restrict their bets to frontline or the bigger mid-cap shares because of higher liquidity and perception of superior transparency in these companies. But, with valuations of many frontline shares discounting even the 2008-09 earnings, FIIs are unwilling to take fresh bets, especially in uncertain times like the current one.

US stocks intensified losses on Thursday as investors found dark spots in economic data and credit-related anxieties lingered. The labor department reported that first-time jobless claims last week jumped 20,000 to 339,000, more than had been expected. The Dow Jones Industrial Average finished 0.91 per cent lower, the Standards & Poors 500 Index was down 1.32 per cent and the Nasdaq Composite Index closed 0.98 per cent lower.

Asian stocks extended losses on Friday amid renewed worries about the health of the US economy as investors moved out of equity investment and into the relative safer government bonds. Japan’s Nikkei was down 1.60 per cent, the Hang Seng in Hong Kong was down 3.14 per cent and Singapore’s Straits Times lost 1.68 per cent.

Sentiment may also be subdued as investors back home await the government’s response on a set of questions regarding the IAEA safeguard talks at the UPA-Left committee meeting on the nuclear deal later today.

CPI (M) Politburo member Sitaram Yechury indicated to party MPs on Thursday that the Left will allow the Government to go to the IAEA, but there would be no change in its stand on the nuclear deal.