Weekly Wrap:Sensex extends winning streak

Last Updated: Sat, Jan 28, 2012 07:54 hrs

Recording gains on all the four sessions - the market was closed on Thursday, 26 January 2012 for Republic Day - on the back of some hectic buying by foreign institutional invests, the benchmark indices Sensex and Nifty extended their winning streak to a fourth straight week and ended at the best levels since early November 2011, last week.

According to the data available from the exchanges, foreign institutional investors bought shares worth a net Rs 7,778 crore in January 2012 (till 25th), contributing substantially to the market's strong upmove.

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Though there were concerns about the European economy, some upbeat results from India Inc and the Reserve Bank of India's surprise 50 basis points cut in Cash Reserve Ratio buoyed up sentiment and triggered a buying spree.

It was not a great start for the market last week with the investors treading mostly cautiously, choosing to wait for the monetary policy statement from the apex bank. After a choppy ride, the Sensex ended with a marginal gain that day, while the Nifty closed with a small loss.

Heavy buying in key bank and capital goods stocks after the central bank announced a 50-basis points cut in CRR, lifted the Sensex by nearly 250 points or 1.5% on Tuesday. The Nifty surged 81 points or 1.6% in that session. The central bank

Despite moving sideways for a major part of the session, following Intenrational Monetary Fund forecasting a weak global economic growth, the benchmark indices Sensex and Nifty closed on a firm note on Wednesday, gaining 81 points and 31 points, respectively.

The market stayed positive on Friday as well, with a fairly steady trend in global markets and encouraging data on food inflation keeping the mood upbeat. The Sensex added 157 points or nearly a percent to close at 17.234, while the Nifty ended up 46 points or 0.9% at 5,205.

Maruti Suzuki turned in a sparkling performance last week and gained almost 10%. Despite a significant fall in net profit for the quarter ended 31 December 2012, Maruti Suzuki shares rallied sharply during the week, following the launch of A-Star in a revamped form. Traders picked up the stocks amid expectations of an improved performance in the fourth quarter.

Tata Motors ended with a gain of over 9.5% and Mahindra & Mahindra moved up by nearly 6.5%, while Bajaj Auto and Hero Motocorp drifted down by 1.2% and 6.6%, respectively.

Metal stocks had a good week thanks to a firm trend in global metal prices. Tata Steel and Sterlite Industries were among the prominent gainers in the metal space.

Bank stocks saw some hectic buying following the cut in CRR. State Bank of India, ICICI Bank, Axis Bank, Kotak Bank, PNB and a host of other stocks from the banking space ended the week with handsome gains.

Telecom stock Bharti Airtel and IT major Infosys closed on a high note last week. Reliance Industries moved up by a little over 3% despite starting the week on a weak note following a sharp 13.6% drop in net profit in the third quarter.

On Tuesday, 24 January 2012, the Reserve Bank of India cut Cash Reserve Ratio by 50 basis points to 5.5%, paving for an infusion of Rs 32,000 crore into the banking system. The central bank, which left repo rate unchanged at 8.5%, retained inflation projection for March 2012 at 7% and expects inflation to moderate in financial year 2013.

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The apex bank cut GDP growth forecast for FY 2012 to 7% from the earlier forecast for a 7.6% surge. Stating that fiscal slippage is a grave risk to inflation management, the RBI governor said, timing of future rate action will depend on inflation. Though interest rate cycle has peaked, the governor said it was premature to cut repo rates due to a likely upside risk for inflation due to high oil prices.

According to the data released by the government on Friday, food inflation in India remained in negative territory in the second week of January, due largely to base effect and seasonal factors. The data revealed that food inflation shrank by 1.03% in the week ended 14 January 2012 after shrinking by 0.42% in the preceding week.

Inflation in the Primary Articles group declined to 1.89% in the week under review, from 2.47% in the week ended 7 January 2012. Inflation in the Fuel & Power group stood at 14.45% in the week ended 14 January, unchanged from the previous week, the data showed.

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