Despite staying a bit sluggish at times, the Indian stock market saw some bright spells during the week (December 31, 2012 - January 4, 2013), as investors, read FIIs, mostly remained bullish, betting on hopes the government will push forward reforms and the central bank will soon resort to some monetary easing.
The market reacted positively to the news out of the U.S., where policymakers agreeing on a deal to avert the fiscal cliff. As key stocks - some of them hit their new multi-year highs - moved up smartly, the benchmark indices Sensex and the Nifty recorded their near 2-year highs during the week.
While the BSE benchmark Sensex ended the week with a gain of about 340 points or 1.7% at 19,784, the broader Nifty index of the National Stock Exchange closed stronger by 108 points or 1.8% at 6016.
Midcap and smallcaps too had a good week - in fact, they outperformed the big ones - and the BSE Midcap and Smallcap indices moved up by 3.1% and 3.7%, respectively.
It was a weak start for the market last week with investors treading cautiously on the final session of the calender year 2012, amid worries about the U.S. fiscal cliff. However, losses were just marginal that day, as there was some hectic buying at lower levels at a few heavyweight counters.
On Tuesday, the market moved up smartly following the U.S. Senate approving a bill that While the Sensex notched up a gain of over 150 points that day, the Nifty moved up by nearly 50 points.
The mood was bullish on Wednesday. Besides positive news out of the U.S., a firm trend in Asian and European markets, and encouraging report on Indian manufacturing activity in December lifted sentiment to a significant extent. The Sensex ended the day with a gain of 133 points, while the Nifty closed 42 points up.
Some large cap stocks and several midcap and smallcap stocks saw some strong buying on Thursday, but the market overall, stayed quite sluggish, due largely to profit taking. The Sensex ended the day with a gain of 51 points, while the Nifty surged 16 points.
Thanks to some late buying, the market ended on a slightly positive note on Friday. Worries about the U.S. economy following concerns expressed by the Federal Reserve about the impact of stimulus hurt sentiment. The Sensex and the Nifty ended higher by 19 points and 7 points, respectively.
ONGC turned in a sparkling performance and added more than 7% last week. The recommendation of the committee set up to look into Production Sharing Contract Mechanism in petroleum industry, that the government should make changes in the current mechanism and gas pricing, aided the rally in the oil space. Reports of a likely hike in diesel prices buoyed by shares of state run oil marketing firms.
GAIL India ended nearly 5.5% up. Indian Oil Corporation, Hindustan Petroleum Corporation and BPCL, all saw some hectic buying on the final session last week.
BHEL gained over 6.5%. Reliance Industries moved up by nearly 2.5%. Hindustan Unilever, Tata Consultancy Services, Infosys and Wipro posted notable gains.
Bank stocks had a good week. Besides heavyweights State Bank of India and ICICI Bank, several bank stocks posted impressive gains, even as HDFC Bank edged up marginally.
Despite a sell-off on Friday, metal stocks posted gains for the week. Hindalco, Sterlite Industries, Tata Steel and Jindal Steel & Power moved higher. Pharmaceutical stock Dr Reddy's Laboratories gained nearly 3.5%, following the company launching Finasteride Tablets 1 mg in the US market.
December vehicles sales data from automobile manufacturers were not highly encouragint. Still, the space saw some good buying during the week. Tata Motors, Mahindra & Mahindra, Maruti Suzuki and Bajaj Auto recorded impressive gains, while Hero Motocorp declined marginally, despite a surge in sales.
Manappuram Finance and Muthoot Finance posted hefty gains last week, amid reports of a likely hike in Loan-to-Value ratio.
According to a survey, India's manufacturing activity surged to a six-month high in December, boosted by strong factory output and a spike in new orders, both of which hit their highest levels since June. The HSBC Markit India Manufacturing PMI, which gauges the business activity of India's factories but not its utilities, jumped to 54.7 in December from 53.7 in November, its biggest monthly rise since January 2012.
India's services sector grew at its strongest pace in three months during December, as company order books filled at the quickest rate since last February, accordind to a survey released on Friday. The HSBC services Purchasing Managers' Index rose to 55.6 in December from November's 52.1. The new business sub-index jumped to 57.1 in December from 54.9 in the previous month.
On Monday, the Ministry of Labour & Employment said that the year-on-year inflation measured by monthly consumer price index-industrial workers eased to 9.55% for November 2012, from 9.6% for October 2012. Among the components of CPI-IW, food inflation edged up to 10.85% in November 2012 from 9.91% in October 2012.