Despite suffering a severe setback on the first session, the Indian stock market moved higher last week (May 12 - 17, 2013), extending gains for a fifth straight week. Though gains were just modest on three off the sessions, the market ended the week moderately higher, due largely to a splendid rally on Wednesday amid rising hopes of further monetary easing by the central bank on the back of a drop in inflation.
While the 30-share BSE sensitive index Sensex ended the week with a gain of 163.80 points or 0.8% at 20,286.12, the broader 50-stock Nifty index of the National Stock Exchange closed with a gain of 80.05 points or 1.3% at 6187.30. Midcap and smallcap stocks underperformed. While the BSE Midcap index closed 1.1% up, the Smallcap barometer ended 0.2% up.
The benchmark indices Sensex and Nifty plunged sharply on Monday, recording one of their worst sessions in recent months, as heavy profit booking took a toll of several blue chip stocks. Weak trade data, some disappointing results and weakness in some Asian and European markets too contributed to the sell-off.
The Sensex, which plummeted to 19,667, ended the day with a huge loss of 430.65 points or 2.14% at 19,691.67. The Nifty closed at 5980.45, slightly off the day's low of 5972.90, recording a loss of 126.80 points or 2.08%.
The market ended marginally up on Tuesday, with the decline in wholesale price inflation aiding sentiment to an extent. The Sensex moved up by about 31 points that day.
On Wednesday, the bulls stormed the ring and lapped up stocks, betting on hopes the central bank will resort to further monetary easing following a drop in wholesale price inflation. The key indices vaulted to their best levels in over 28 months. Besides encouraging data out of the U.S., some relaxations in norms for overseas borrowing for short term capital requirements aided sentiment to a significant extent.
The Sensex ended the day with a gain of 490.67 points or nearly 2.5%, while the Nifty gained 151 points or a little over 2.5%.
Profit taking and lack of triggers rendered price movements quite sluggish on Thursday. But the benchmark indices still managed to eke out modest gains, with the Sensex edging up by 32 points and the Nifty adding 23 points for the day.
After a fall from higher levels and a subsequent choppy ride that resulted in more losses, the market bounced back smartly past mid afternoon, and despite a mild sell-off in the final minutes, managed to close on a positive note on Friday. Though most of the markets in the Asian region ended higher, weakness in European markets weighed on sentiment to an extent. Quarterly results from India Inc were mixed. The Sensex gained about 39 points and the Nifty surged 17.40 points in that session.
FMCG heavyweight ITC, which saw some bright spells in recent weeks and even recorded a new high in the process, ended the week with a loss of over 5.5% despite the company posting better than expected quarterly results.
Bharti Airtel lost nearly 3%. GAIL India and Hero Motocorp ended lower by around 1.5%. Maruti Suzuki, which moved up sharply on Wednesday following a sharp decline of the yen against major currencies, ended the week on the losing side, declining by around 1.3%. Bajaj Auto declined by over 1.5% as quarterly results fell short of expectations.
Bank and realty stocks were in demand, amid expectations the Reserve Bank of India will cut policy rates following a sharp fall in wholesale price inflation in April 2013. ICICI Bank and State Bank of India jumped by over 5% and HDFC Bank moved up 2.3%. Several other private and PSU bank stocks too ended with solid gains last week.
According to the data released by the trade ministry on Monday (13 May), India's April trade deficit leapt to $17.8 billion, on a massive surge in imports of cheaper gold that will increase concerns about the current account deficit in Asia's third largest economy.
Overall, merchandise imports rose 10.9% to $41.95 billion, according to the data. The trade deficit was up more than 72% from March. Exports rose 1.6% from a year earlier to $24.16 billion, up for the fourth straight month.
Meanwhile, the consumer-price inflation came back to single digit at 9.39% in April against 10.39% in the previous month. In both urban areas as well as rural parts, inflation was in single digit in the first month of 2013-14, with the rate of price rise standing at 9.73% in the former and 9.16% in the latter.
However, food and beverages still stood at double digits at 10.61%, official data showed on Saturday. This category has the highest weight in CPI inflation. The food and beverages inflation stood at 10.94% in urban areas and 10.53% in rural areas.
The annual rate of inflation, based on monthly wholesale price index, eased sharply to 4.89% in April 2013, from 5.96% in March 2013, according to the data released by the government on Tuesday, 14 May 2013. Core inflation or non-food manufacturing inflation declined further to 2.74% in April 2013 from 3.41% in March 2013. Meanwhile, WPI inflation for February 2013 was revised upwards to 7.28% from 6.84% reported earlier.
Meanwhile, Standard & Poor's, the global rating agency, has affirmed India's sovereign rating at "BBB-minus" with a "negative" outlook, reiterating there was a one-in-three chances of a rating downgrade over the next 12 months. The agency says the government's ability to prop up investment growth remains uncertain. The ratings agency, however, is not ruling out scope for an upgrade in sovereign ratings if the government unleashes public and private investments to spur economic growth.