Weekly Wrap:Markets extend gains on FII buying, encouraging economic data

Last Updated: Sat, Feb 04, 2012 11:15 hrs

Riding on some impressive economic data, a few strong results from India Inc and heavy by foreign institutional investors, the market posted solid gains on four of the five sessions last week and extended its winning streak to a fifth successive week.

There were some concerns about the financial situation in Europe with the Greek authorities still not making any great effort to resolve the debt crisis. But, a batch of encouraging economic data from the U.S., and good reports from China more than offset the negative news from Europe.

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However, what contributed to the market's extended winning run were the reports on India's services sector growth and the one on the manufacturing activity in the country. Expectations of a series of rate cuts over the next few quarters, strong sales and shipments figures from automobile and cement manufacturers and a few upbeat report cards from India Inc too played a key role in lifting sentiment during the week.

While the BSE benchmark Sensex ended the week with a gain of 371 points or 2.15% at 17,605, the National Stock Exchange's Nifty index closed stronger by around 121 points or 2.33% at 5,326. Mirroring strong buying at side counters, the BSE Midcap and Smallcap indices gained around 3% last week.

Automobile stocks Maruti Suzuki, Tata Motors and Bajaj Auto gained 2.5% - 5%. Hero Motocorp ended nearly 7.5% up.

HDFC Bank ended the week with a gain of over 4.5%. ICICI Bank ended higher by over 3% with strong results aiding the surge. State Bank of India gained nearly 3% after the bank informed that the Government of India, vide its letter dated January 30, 2012, has conveyed its approval under section 5(2) of the State Bank of India Act to increase the issued capital by State Bank of India by way of preferential allotment of equity shares to GoI to the extent of approximately Rs. 7,900 crore (including premium).

Shares of several private sector banks saw some hectic buying during the week after the Reserve Bank of India announced its decision to allow private sector banks to undertake central and state government business.

Reliance Industries saw some hectic buying during the week after the commencement of the company's share buy-back programme on 1 February 2012. The stock ended the week with a gain of around 2.5%.

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Realty stock DLF closed the week with a gain of almost 9%. Sun Pharmaceuticals, Jindal Steel, Tata Consultancy Services and Hindalco gained 5% - 6%, while Tata Power moved up by over 7%.

Coal India ended lower by over 4% on the back a demand from trade unions for higher wages to the company's employees. Capital goods heavyweights Bhel and Larsen & Toubro, which were among the prominent gainers in the previous week, ended notably lower last week despite seeing a few bright spells.

Telecom stocks, with the exception of Bharti Airtel, suffered a setback last week after the Supreme Court canceled all the 122 licenses issued on or post January 2008.

According to the data available, FIIs bought shares worth a net Rs 3600 crore on Wednesday and Thursday, contributing substantially to the market's impressive surge up north. The data from SEBI shows FIIs were net buyers to the tune of nearly 10500 crore in January 2012.

According to the data released by the government on Wednesday, India's merchandise exports rose 6.7% to $25 billion in December, while imports during the same month surged 19.8% to 37.8 billion. As a result, the trade deficit for December stood at US$12.7 billion, as compared to US$8.06 billion in the corresponding month a year earlier.

Due to better performance in the previous months, the country's exports grew by 25.8% year-on-year to $217.6 billion in the April-December 2011-12. During the first nine months of the fiscal, imports also rose by 30.3% to $350.9 billion leaving a trade gap of $133.2 billion. Oil imports during December surged 11.2% to US$10.27 billion, while non-oil imports were up 23.4% at US$27.47 billion.

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India's manufacturing sector activity jumped to an eight-month high in January as factories stepped up production on increased demand, data released by HSBC Holdings Plc and Markit Economics showed. The HSBC-Markit India manufacturing PMI rose to 57.5 in January from 54.2 in December. A reading over 50 indicates expansion while any reading below it implies contraction. India's manufacturing PMI has stayed above the 50 mark for nearly three years.

India's factory output sub-index jumped to 62.9 in January from 55.8 in December, the biggest month-on-month gain on record. Both the output and the new orders indexes rose to their highest level since May last year.

According to a survey, India's services sector grew at its fastest pace in six months during January as new business swelled, extending the previous couple of months' positive trend into the new calendar year. The HSBC Business Activity Index, compiled by Markit and based on a survey of around 400 firms, bounced to 58.0 in January from 54.2 in Decembe, the third month the index has been above the 50-mark separating growth from contraction.

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