Weekly: Global cues, tax sops boost markets

Last Updated: Sun, Feb 23, 2014 04:29 hrs

Benchmark indices edged higher during the week ended Friday, buoyed by Finance Minister P Chidambaram's interim Budget speech, in which he said for 2013-14, the government's fiscal deficit would be restricted to 4.6 per cent of gross domestic product and for 2014-15, it would stand at 4.1 per cent. Positive global cues also aided the gains.

Foreign institutional investors continue to remain positive on the Indian equity space, pumping in $330.08 million through the previous seven sessions, exchange data show.

The 30-share Sensex gained 334 points, or 1.6 per cent, at 20,701, while the Nifty added 107 points, or 1.8 per cent, at 6,155. The broader markets outperformed the benchmark indices. The mid-cap index rose 110 points to 6,422, while the small-cap index rose 114 points to 6,393.

Global markets
Growth in Germany and France helped the Euro zone record 0.3 per cent growth in the quarter ended December 2013, compared to the previous quarter.

A preliminary survey showed in February, US factory output increased the most in four year. And, claims for unemployment benefits fell 3,000 to 336,000 in the week ended February 15. Minutes of the Federal Reserve's last meeting released this week signalled continuation of cuts in its bond-buying programme at $10 billion a month, unless economic data showed these were unwarranted.

However, the flash Markit/HSBC China's Purchasing Managers' Index (PMI) fell to a seven-month low of 48.3 in February from 49.5 in January. A reading below 50 indicates contraction, while one above 50 shows expansion.

Sectors and stocks
The capital goods index was the top gainer, with a five per cent rise, followed by the bank, power, information technology (IT) and health care indices (up two-3.5 per cent). The auto, technology and consumer durables indices gained one-1.7 per cent.

The metals, PS, oil & gas, fast-moving consumer goods (FMCG) and realty indices slipped 0.1-0.9 per cent.

Capital goods stocks gained after the interim Budget announced a cut in excise duty on some capital goods to 10 per cent from 12 per cent. The duty was cut till June 30 for capital goods and consumer durables under chapter 84 and 85 of the Schedule to the Central Excise Tariff Act. This includes products such as boilers, turbines, transformers, motors, air conditioners and switchgears.

ABB India and Siemens were the top gainers in this space, rising 18 per cent and 10 per cent, respectively. L&T and BHEL rose six per cent and 1.4 per cent, respectively.

Auto stocks soared, as the government reduced excise duty on cars, commercial vehicles, sports utility vehicles, motorcycles and scooters. Following the announcement, several automobile companies announced cuts in the prices of their passenger vehicles.

Mahindra & Mahindra gained the most (three per cent), followed by Tata Motors and Maruti Suzuki (gains of two per cent each). While Bajaj Auto rose one per cent, Hero MotoCorp slipped one per cent.

Metals stocks were under pressure, as the manufacturing index for China dropped more than estimated this month. Sesa Sterlite, Hindalco and Coal India lost two-3.5 per cent. Tata Steel gained one per cent.

Pharma stocks gained on renewed buying interest, with Dr Reddy's, Lupin, Ranbaxy and Sun Pharma up one-six per cent.

IT stocks gained marginally. Frontline names such as TCS, Infosys, HCL Tech and Wipro rose one-three per cent.

FMCG majors ITC and HUL slipped 0.7 per cent and one per cent, respectively.

Banks were among the top gainers, with Axis Bank leading rising eight per cent and ICICI Bank, HDFC Bank and State Bank of India gaining two-four per cent. Axis Bank was the top gainer among the Sensex-30.

In the power segment, Tata Power gained seven per cent, after an announcement Arvind Kejriwal had resigned as Delhi chief minister. The Kejriwal-led Aam Aadmi Party government in Delhi had announced 50 per cent subsidy on power consumption up to 400 units and asked the state regulator to look into the accounts of power distribution companies to see if these were profiteering.

Oil & gas had mixed fortunes with index heavyweight Reliance Industries down 1.2 per cent and ONGC rising 0.4 per cent.

Bharti Airtel fell 5.5 per cent, owing to the company saying it would move the Supreme Court of Nigeria against a February 14 judgment of the court of appeals, Lagos, which had ruled in favour of Econet Wireless of Nigeria. Earlier in the week, the mobile operator had entered into a strategic agreement with Loop Mobile to acquire Loop's subscribers, as well as some of its assets, for about Rs 700 crore.

Next week, the key triggers for the market will be US Federal Reserve Chairperson Janet Yellen's testimony before lawmakers for cues on scaling down the monetary stimulus, as well as the fourth-quarter gross domestic product data in that country. India's growth in the quarter ended December will also be closely watched.

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