Seesaw week ends on a high as investors bolstered by favorable reports.
R. Chandrasekaran
CHENNAI: Indian stock markets managed to keep its week-over-week uptick during the week ended January 25 that witnessed a sea-saw trend. There were positive as well as some negative moments, thereby pushing the stocks up and down. However, the significant point is that despite the benchmark indices trading at a two-year high for over a week now and a section of investors trying to lock profits at higher levels, markets are getting enough support to keep the sentiments at an elevated level driven by some favorable December quarterly earnings report. Aside from this, solid foreign institutional investors or FIIs buying into Indian equities is also keeping the spirits at a higher level.
The week did not belong to any particular sectors unlike the previous two weeks that belonged to IT and Oil sectors following the strong results and some positive government action on oil pricing front.
Among the major news to hit the markets during the week were foreign direct investments dropped 13.5 percent in 2012; India’s exports to ASEAN fell 18.6 percent in the 8-month period of the financial year to $19.17 billion from $23.55 billion; Moody’s retains its sovereign rating on India with a stable outlook; India’s five-year steel output ranked second in the world, telecom companies raises mobile tariff, Ambani brothers may engage in business deals; the Reserve Bank of India lifted the ceiling of FII investments in corporate debt and government securities; finance minister P.Chidambaram restarts debate on ‘super rich’ tax; India’s total public debt rose 3.6 percent in the December quarter; Religare emerges the biggest shareholder in Hyderabad-based Deccan Chronicle Holdings Ltd.; Infosys CEO Shibulal expects client budgets to be flat; ING quits Indian life insurance; finance minister says unstable government in 2014 will be a big threat for reforms; and Chidambaram denies any differences with RBI on rates cut.
If the week opened on a buoyant note on Monday after the index heavyweight Reliance Industries’ stunning Q3 results on the preceding Saturday surprising analysts’ and investors, the global cues dragged down the sentiments on Tuesday only to see a reversal of trend on Wednesday just ahead of a vote to lift the U.S. debt ceiling. The lackluster trading on Thursday had only brought down the stocks before hopes of a rate cut brought back the markets to a positive territory on Friday.
Reliance Industries and Maruti shares hit a yearly high following their strong quarterly earnings number. However, Hindustan Unilever lost after the company disclosed that their royalty payments to parent company will more than double to 3.15 percent of its turnover in a phased manner by March 31, 2018, from the current 1.4 percent.
The Bombay Stock Exchange’s 30-share barometer advanced 62.78 points or 0.31 percent on Monday, dropped 120.25 points or 0.60 percent on Tuesday, again gained 45.04 points or 0.23 percent on Wednesday only to lose 102.83 points or 0.51 percent on Thursday and the week closed on a favorable note with a gain of 179.75 points or 0.90 percent.
The Friday rally has effectively lifted the BSE’s Sensex weekly gain by 64.49 points or 0.32 percent to close the week at 20,103.53 points, while the National Stock Exchange’s Nifty edged up by 10.25 points or 0.17 percent to end the week at 6074.65 points.
Among the sectors, the BSE’s Capital Goods, FMCG, Bankex and IT gained by 2.4 percent, 1.4 percent, 0.1 percent and 0.1 percent, respectively, whereas Realty, PSU, Auto, and consumer durables slipped by 5.5 percent, 2.3 percent and 2 percent, and 1.9 percent, respectively in the week ended January 25. Similarly, the BSE’s mid-cap and small-cap indices edged lower by 2.67 percent and 3.09 percent thereby underperforming compared to the benchmark index.
Of the 30 Sensex stocks, 16 companies’ shares advanced, while 14 dipped during the week. L&T led the gainers pack with a 4.61 percent gain followed by ITC by 4.32 percent, and Bharti Airtel by 4.13 percent. RIL, which reached a 52-week high during week, settled with a gain of 1.44 percent. Other notable gainers were Dr. Reddy’s Laboratories, Jindal Steel & Power, Sun Pharmaceutical, and BHEL by 2.94 percent, 2.34 percent, 1.86 percent, and 1.3 percent, respectively.
In the automobile, Mahindra & Mahindra advanced 1.57 percent, while Maruti gained 3.52 percent. However, Tata Motors dropped 8.24 percent. Similarly, in the banking space, SBI and HDFC Bank edged up by 0.89 percent and 0.83 percent, whereas ICICI Bank slackened 0.21 percent during the week.
Gas Authority of India Limited or GAIL is the worst performer among the Sensex pack with a loss of 7.93 percent followed by Hindalco Industries by 5.21 percent. While the government-controlled Coal India and NTPC dipped 3.83 percent and 2.95 percent respectively, Hindustan Unilever dropped 3.04 percent.
While FIIs net inflows into Indian equity market was $723.97 million for the week till January 24, their net inflows for the month until January 24 reached $3.17 billion thus indicating their strong preference for the Indian equities. However, the domestic funds are selling the stocks probably on redemption pressure as they sold Rs.29.94 billion for the month until January 23.
Looking ahead, on January 29, RBI will be meeting to take a call on reducing interest rates. The expectation is that the Central Bank will cut interest rates by 25 basis points. The optimism comes on the back of a slower inflation rate and improved currency performance compared to earlier. If the RBI cuts interest rates more than the expectations, then the banking and realty stocks could witness upsurge in the upcoming week. The strong point witnessed during the week is that enough support is coming from investors to lift the Sensex above the psychological level of 20,000 points whenever it traded below.