Markets Extent Rally Into 5th Week In a Row

Review of the Week ended 03rd Feb 2012.

After witnessing a stellar rally in the month of Jan 2012, markets have continued the robust performance into the month of Feb. The SENSEX has rallied by a good 2 per cent for the week ended 3rd Feb 2012. With this the markets have managed to end on a positive note for a 5th week in a row.

However, the start to the week was completely opposite to the way it’s ended. On Monday the markets tanked by 2.2 per cent, which was pretty much expected on the back of profit taking by investors and traders. However, as the week progressed, a further improvement in HSBC PMI manufacturing data for month of Jan to 57.5 from 54.2 in Dec 2011 helped cheer market sentiments. A good set of Q3 earning from ICICI bank coupled with decent performance from auto manufacturers on the auto sales front helped buoy the markets.

On the global front, the mood seems a bit mixed and uncertain. While manufacturing data showed an improving trend in China, Germany and US, a contraction in the same data was seen for countries like Spain, Italy and France. Moreover there seems to be no clarity on Greece’s debt woes for now.

Moving on the rupee seems to be convincingly winning its battle against the dollar. The rupee has managed to break below the Rs 50 levels and currently stands at Rs 48.67 per dollar. As a result of the positive inflows this week, FII net investments in equity now stand at Rs 4040 crore for week ended 03rd Jan 2012.

Among the sectoral indices, Realty sector was amongst the top gainers for the week, notching up nearly 5 per cent gains. Auto and IT companies came in next for a second consecutive week at 4 per cent gains. Consumer goods and capital good were the only sectors treading in the red zone. This was mainly on the back of some profit taking by investors and a sharp decline in the share price of BHEL which reported rather week Q3 earnings.

Among the individual stocks, Tata Tea was the top gainer as the company finally cemented its deal with Starbucks Coffee to set up retail coffee shops in the country. Sintex Industries, Jet Airways and Havells India were among the other top gainers for the week. Among the top losers, TTK Prestige topped the list. Glenmark Pharma lost 6 per cent as the company reported dismal Q3 earnings. Domestic refiner IOC also lost 5 per cent this week on reports that it will have to pay over Rs 979 crore in unpaid entry tax to the Uttar Pradesh government within two weeks.

Moving on, we urge investors to continue booking profits on investments that have yielded significant gains over these past few weeks. Markets are likely to turn volatile as the Q3 results seasons continues ahead. Global factors are very jittery as there seems to be no clarity on Greece’s efforts to resolve issues with its private lenders. Add to this the caution that RBI has raised over the future of the Indian economy in the near future. Keeping all this in mind we recommend readers to book profits and keep cash in hand to buy again at cheaper prices.