Oil, telecom, realty sectors prop up favorable sentiments.
R. Chandrasekaran
CHENNAI: There was everything that was favorable for the stock markets to rejoice in the week ended January 18. There were enough domestic cues to take the markets higher to end the week above the psychological level of 20,000 points in the Bombay Stock Exchange’s 30—share barometer for the first time in two years.
If Infosys was the cynosure of the previous week following its robust results and positive outlook, the week belonged to the oil marketing and telecom companies. IT sector driven by strong performance from the leader Tata Consultancy Services also supported the rally.
Interestingly, it was the oil and IT sectors that were the laggards last year. However, the year 2013 started off on a strong note for these two sectors and lifting the benchmark index. TCS produced Q3 results that were above the market expectations. Oil marketing companies got a shot in the arm on Thursday after the government allowed them to hike diesel prices in a phased manner.
Among the major news to hit the markets were, inflation has slowed to its weakest rate in three years to 7.18 percent in December from 7.24 percent in November triggering high hopes of a rate cut; deferring of the implementation of the General Anti Avoidance Rules or GAAR till April 1, 2016 in accordance with the recommendations of the Parthasarathi Shome Committee; RBI rules out opening of Islamic banking, Securities Exchange Board of India (SEBI) eases share auctions rules to allow companies meet the norms stipulating a minimum of 25 percent of public holding by June end; Air India’s Rs.300 billion overhaul hit by red tape; the government reduced auction reserve price for CDMA spectrum by 50 percent; the government-controlled oil companies are allowed to hike diesel prices in a phased manner in tune with the global crude oil prices. Aside from these, finishing touches are being given to float a holding company for all public sector banks with the objective of raising more funds for the state-run lenders. Troubled Kingfisher Airlines have been asked by the lenders to bring in Rs.8 – 10 billion to restart its operations compared to the company’s offer of Rs.4 billion.
Of the five trading sessions, the markets closed on positive zone on four occasions with Wednesday playing the spoil sport following hawkish comments from the Reserve Bank of India Governor Dr. Subbarao besides weakness from the global front.
The BSE’s benchmark index recorded gains of 242.77 points or 1.91 percent on Monday and extended its gain by another 80.41 points or 0.4 percent on Tuesday before being dragged down by 169.19 points or 0.85 percent after the observations from the RBI governor tempered rate cut expectations on Wednesday. However, the market sentiments were bumped up by the government’s move to cut CDMA spectrum auction price by half triggering telecom stocks to trade higher on Thursday thereby ending the barometer index higher by 146.4 points or 0.74 percent. The week ended on a high note as the oil stocks took the BSE’s Sensex to close above the psychological level with a gain of 75.01 points or 0.38 percent.
For the week ended, BSE’s benchmarked index advanced 375.4 points or 1.91 percent to close at 20,039.04, while National Stock Exchange’s Nifty ended at 6064.4 points, up 113.1 points or 1.90 percent from the previous week.
On the sectoral performance, Oil & Gas was the topper with 8.9 percent gain followed by the Realty sector by 7.7 percent, and PSU and technology also advanced 4.7 percent and 2.8 percent, respectively. The losing sectors were led by auto by 2.9 percent followed by metals and capital goods by 1.4 percent and 0.4 percent respectively.
The oil companies stocks were getting some interest from investors in the last few weeks after reports indicated oil ministry sent a note for an increase in diesel price for cabinet approval. As the government announced its cabinet clearance and oil companies started increasing the diesel prices, the oil sectors have become too hot on Friday. Looking at the last seven days of trading pattern, four out of the top five stocks performers belonged to oil companies.
Indian Oil Corporation or IOC led the surge with 21.33 percent gain followed by Oil India, ONGC, and Bharat Petroleum Corporation by 17.88 percent, 15.6 percent, and 12.92 percent, respectively. Similarly, Infosys surged 19.8 percent in the last seven days of trading. At least seven companies’ stock advanced over 11 percent in the BSE’s A group shares, while ten stocks gained between 5 percent and 9.16 percent. Similarly, nine stocks closed higher by 3 percent or more and eleven stocks edged up by two percent or more.
Realty is another sector to drive the rally. DLF and Oberoi Realty surged 12.34 percent and 10.97 percent, respectively. Telecom stocks Idea Cellular and Bharati Airtel also closed higher by 5.87 percent and 5.68 percent, respectively.
On the negative zone, United Breweries was the worst performer with the stock plummeting 19.76 percent followed by Exide Industries and Jaiprakash Power Ventures that lost 13.32 percent and 10.86 percent, respectively. About 24 stocks traded lower between 5 percent and 10 percent in the BSE’s A group shares.
On the overall market, Rankin Solutions is the top performer climbing 41.98 percent, while 20 stocks jumped over 30 percent. Similarly, 42 companies stocks surged 20 percent or above, whereas more than 50 stocks advanced 10 percent or more and over 90 stocks advanced more than 7 percent.
On the losers pack, Moryo Industries plunged 46.98 percent followed by Arshiya International and IOL Netcom by 37.33 percent and 34.83 percent respectively. While 24 companies stocks dropped 20 percent or more, 50 stocks slipped 15 percent or more during the same period.
Foreign institutional investors were the net buyers to the tune of $839.53 million for the week ended January 18 and for the month, FIIs pumped in $2.45 billion into Indian equity market. However, domestic funds are the net sellers to the tune of Rs.19.48 billion until January 17.
Meanwhile, Reliance Industries announced its quarterly earnings number after the markets closed on Friday. The company’s results topped Street expectations. This could well be a rally point on Monday unless any other unfavorable news hurts market sentiments.