Strong new year’s opening week for Indian market

Financial stocks attract buyers’ interest.

By R. Chandrasekaran

CHENNAI: It was a grand New Year’s opening week for the stock markets worldwide. The Indian market was no exception to this rule after the U.S. thrashed out the mind boggling fiscal cliff shortly after the deadline expired.

The Asian markets were the first one to react favorably since the U.S. markets were closed on January 1. In fact, major global stock exchanges closed the week on some record highs, including the U.S. stock market’s S&P 500 reaching a 5-year high. Similarly, Indian stock markets too reached a two-year high, thus indicating the underlining strength of the market sentiments.

Among the major news to hit the markets were India’s current account deficit increases to 5.4 percent in September quarter due to higher imports compared to moderate exports growth amidst slow rate of economic growth; government cuts 5 percent in core defense budget; HSBC India Manufacturing Purchasing Manager’s index rises to 54.7 in December from 53.7 in the previous month thus suggesting improved conditions for the manufacturing sector; and the services sector growth hit a three-month high of 55.6 in December. The auto sales in December were not encouraging despite scores of companies offering lofty discounts since the interest rate continues to hurt buyer’s enthusiasm. Mahindra & Mahindra reported moderate upside in sales in December, whereas TVS’ overall sales came in below street expectations.

The first four days of trading in 2013 presented only a gain as the Bombay Stock Exchange’s 30-share barometer Sensex advanced 1.8 percent. The other major stock exchange, National Stock Exchange, too recorded a gain of 1.88 percent. The Sensex grew 0.8 percent, 0.7 percent, 0.3 percent and 0.1 percent respectively during the first four days of trading in 2013.

Investors were trying to sell shares taking advantage of the higher levels seen for the first time in nearly two years. This was particularly visible on Friday when the markets were suffering losses in most part of the trading. However, the selling pressure was warded off following a survey pointing out services sector growth in December, which was considered strongest in three months.

This left the Sensex to close with a gain of 1.74 percent or 339.24 points for the week at 19784.08 points, while the NSE’s Nifty settled with a gain of 1.88 percent or 111.05 points to end the week above the psychological 6,000 mark at 6016.15.

Financial stocks continued to be in the limelight as the stocks, which missed the rally in December, attracted buyers’ interest. This is quite evident when seven of the top ten gainers in A group shares were from the financial sector led by IndiabullsFinService by 15.75 percent followed by government-controlled IFCI by 15.26 percent. Public sector banks such as Indian Bank, Dena Bank, and Indian Overseas Bank advanced over 10 percent, whereas Central Bank, Allahabad Bank, Uco Bank, Punjab National Bank, Andhra Bank, Bank of India, and Corporation Bank gained in excess of 7 percent.

Similarly, oil stocks too continued to attract investors’ attention after reports indicated that the government may raise cooking gas and diesel price. The oil ministry has also forward a note to the cabinet stressing the need to cut down subsidy over a period of 15 months time. HPCL led the sector with 7.17 percent gain followed by ONGC by 7.11 percent, BPLC by 5.66 percent, and IOC by 4.71 percent. While ten stocks in A group shares in the BSE recorded more than 10 percent gain, 45 stocks edged up by over 5 percent.

Similarly, on the losers pack, ten stocks suffered 2 percent and above losses. Suzlon Energy, which attracted interest among investors last week, turned out to be the worst performer in A group shares with a loss of 4.66 percent. Multi Commodity Exchange and Madras Cement followed it with a loss of 4.40 percent and 3.85 percent respectively. While another ten stocks witnessed a fall of one percent or more, fourteen stocks skid less than a percent.

On an overall scenario, Arya Global shares more than doubled in a 14-stock pack that recorded 30 percent or more gain during the week ended January 4. Similarly, more than 60 stocks surged 20 percent or more, while over 80 companies stocks advanced 15 percent or above during the same period.

On the losers’ side, Visesh Infotechnis suffered the worst as the stock plunged 87.37 percent. Similarly, Tuni Textile Mill stock plummeted 34.9 percent. While seven stocks dropped more than 20 percent, 50 companies’ shares lost between 10 percent and 10 percent.

Among the sectors, Fast Moving Consumer Goods or FMCG alone is the whipping in an otherwise positive market. Realty gained the most in BSE’s sectoral indices by 5.2 percent with optimism growing for an interest rate cut as indicated by the Reserve Bank of India earlier.

The continued run in stocks last week will likely allow investors to lock profit at higher levels at least when the market opens on Monday. However, the market seems to be in the bullish phase with bulls having an upper hand.

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