Markets Rally For 7th Consecutive Week

DSIJ Intelligence / 18 Feb 2012

The markets have gained for yet another week, taking this rally into its 7th consecutive week.

The markets have gained for yet another week, taking this rally into its 7th consecutive week. Before we talk about how the markets panned out this week, let’s just focus a bit on this sustained rally in the equity markets.

Benchmark Indices

Index

10-Feb-12

17-Feb-12

% Change

SENSEX

17748.69

18289.35

3.05

NIFTY

5381.60

5564.30

3.39

Hang Seng

20783.86

21491.62

3.41

Nikkei

8947.17

9384.17

4.88

Shanghai

2351.98

2357.18

0.22

Dow Jones*

12801.23

12904.08

0.80

S&P 500*

1342.64

1358.04

1.15

NASDAQ*

2903.88

2959.85

1.93

Bovespa*

63997.90

66141.74

3.35

FTSE*

5852.39

5885.39

0.56

DAX*

6692.96

6751.96

0.88

CAC*

3373.14

3393.25

0.60

* closing till Thursday

The highlight of this excellent rally has been the confidence shown by the foreign investors, who have for long been considered as the messiah of the Indian equity markets. If foreign inflows are anything to talk about then one must keenly note down that the FIIs have pumped in nearly Rs 19,000 crore into the equity markets on a YTD basis.

So what’s the main reason behind such generosity shown by the FIIs towards the Indian equity markets would be the prime question on an investor’s mind. The answer to this is quite simple. If we take a look at the past few months, headline inflation has shown concrete signs of lowering down from 9.87 per cent in the month of October 2011 to the latest figure of 6.55 per cent in January 2012. This has consequently given rise to hopes of a likely cut-back in key policy rates in the near future. The RBI has already given some indications of a possible reversal in the rate cycle during its latest monetary review meet which saw a 50 bps cut in CRRs. 

Add to all this is the immediate need for revival in economic growth activity, which has been lagging behind for quite some time. With the Union Budget 2012-13 around the corner, the government is expected to step up its efforts to spur the economy and shake off its policy paralysis image.

Back to talking about the current week, the December quarter results’ season has finally come to an end. From the initial look at the numbers, it seems that the domestic refiners have shown some positive respite thanks to the budgetary support and higher discount from the upstream majors. India Inc.’s growth has been majorly fueled by them and if we exclude them then we see the more realistic picture of robust topline growth followed by yet another quarter of muted growth on bottomline.

Key Global Indicators

Index

10-Feb-12

17-Feb-12

% Change

Gold

28254

28040

-0.76

Silver

56908

55896

-1.78

Crude Oil (Brent)

117.61

119.03

1.21

Crude Oil (Nymex)

99.05

102.88

3.87

However, as much of this was expected and priced in, the markets hardly reacted negatively. In fact, investors cheered the recent fall in inflation to 6.55 per cent for January 2012. The week also saw the government finally deciding to go ahead with its disinvestment plan by offloading 5 per cent of its stake through the auction route on the exchanges. 

One of the major highlights of the week was the announcement of the Multi-Commodity Exchange (MCX) IPO offer. The company plans to tap the equity market to garner roughly Rs 600 crore through offer for sale of 64.27 lakh equity shares. The price band has been fixed at Rs 860-1,032 per share. The issue is expected to open next week on February 2012. Investors and traders would keenly deliberate on the IPO offer and the possibility of a likely revival of the IPO markets, which last year saw some dismal performances. 

Currency Rate

Index

10-Feb-12

17-Feb-12

% Change

USD

49.64

49.39

-0.51

EURO

65.80

64.90

-1.37

GBP

78.35

78.20

-0.20

JYP (per 100)

63.94

64.42

0.75

On the global front, the mood seemed very upbeat thanks to improving economic data in the US and Greece’s ability to positively sort out its debt woes by reaching a level of agreement with its lenders.

Among the sectoral indices, the realty sector was yet again among the top gainers for the week, notching up a whopping 10 per cent gains. The power index was also up by 8 per cent after the prime minister initiated clearance of coal supplies to power companies. CG and CD came in next. Almost all the sectors except for oil & gas were in the positive zone. The oil & gas sector was down by 1 per cent for the week.

Sectoral Indices

Category/Index

10-Feb-12

17-Feb-12

Change (%)

Broad

MIDCAP

6,246.61

6,544.56

4.77

SMLCAP

6,890.85

7,116.49

3.27

BSE-100

9,304.31

9,641.94

3.63

BSE-200

2,181.79

2,262.14

3.68

BSE-500

6,825.15

7,076.99

3.69

Sectors

REALTY

1,887.49

2,079.72

10.18

POWER

2,177.33

2,363.28

8.54

CG

10,293.52

11,106.78

7.90

CD

6,168.83

6,647.43

7.76

BANKEX

11,986.92

12,736.09

6.25

AUTO

9,713.36

10,319.20

6.24

IT

6,050.22

6,266.87

3.58

PSU

7,672.83

7,909.08

3.08

TECk

3,580.95

3,689.31

3.03

METAL

12,364.36

12,572.46

1.68

FMCG

4,130.91

4,153.20

0.54

HC

6,347.10

6,375.30

0.44

OIL&GAS

8,770.65

8,644.71

-1.44

Among the individual stocks, Lanco Infra was the topmost gainer for the week as the PM initiated clearance of coal supplies to power companies and the company management decided to offload a minority stake in its power business. Other power stocks like Reliance Power and Adani Power were also among the gainers’ list for this week. IFCI gained 19 per cent this week.

Top Gainers

Scrip

CMP

% Change (WoW)

Lanco Infr

22.65

39.38 

Indiabulls

236.20

31.77 

HDIL

122.70

27.22 

JainIrriga

117.45

21.65 

IRB Infra

207.65

21.22 

Reliance P

126.30

19.94 

IFCI

46.30

19.02 

Adani Powe

85.00

17.73 

Gitanjali

384.20

16.80 

BHEL

303.45

16.67 

Among the top losers, TTK Prestige topped the list. Cipla and Educomp Sol were also among the losers for this week as both companies reported weak set of December results. Index-heavyweight RIL was also in the list as the concerns surrounding its gas business continue to haunt the counter.

Top Losers

Scrip

CMP

% Change (WoW)

TTK Presti

2938.30

-8.43 

Cipla

321.55

-7.87 

Educomp So

233.25

-6.57 

Suzlon

29.05

-5.53 

Sun TV

322.90

-5.17 

MMTC

838.70

-4.34 

Apollo Hsp

603.85

-3.14 

RIL

817.90

-2.88 

HIND COPPE

283.40

-2.75 

LIC Hsng F

269.35

-2.27 

In conclusion, we expect volatility on the bourses to accentuate over the next couple of weeks as the Union Budget 2012-13 inches closer. We urge investors to continue booking profits on investments that have yielded significant gains over these past few weeks. This will help have cash in hand to buy during the dips.