Weekly Wrap: Sensex gains 2.6% on Infosys results, U.S. stimulus hopes

Last Updated: Sat, Jul 13, 2013 09:45 hrs

The Indian stock market rose sharply on Friday and ended higher for the third successive week, as investors indulged in some hectic buying in four of the five sessions.

After ending the first session of the week on a losing note, the market bounced back on Tuesday, but faltered again on Wednesday, with traders tracking somewhat weak global cues and pressing sales. Caution ahead of key results and economic data too appeared to be weighing on sentiment till Wednesday.

However, stocks rallied on the final two sessions of the week, and, more importantly, managed to hold gains till the end. While the statement from the U.S. Federal Reserve Chairman Ben Bernanke that suggested that the accommodative monetary policy will continue for the foreseeable future, triggered a buying spree across global markets on Thursday and aided sentiment on the Indian bourses as well, better-than-expected results and an encouraging earnings guidance from IT bellwether Infosys aided the rally on Friday.

While the BSE benchmark Sensex, which sailed past the 20,000 mark in intra-day trades on Friday, ended the week with a gain of 462.25 points or 2.37% at 19,958.47, the broader 50-stock Nifty index of the National Stock Exchange closed up 141.10 points or 2.4% at 6009. Midcap and smallcap stocks were relatively subdued. While the BSE Midcap index rose nearly a percent, the Smallcap barometer ended the week with a gain of around 0.8%.

A sell-off in Asian markets rendered the mood bearish on Monday and dragged down stocks on the Indian bourses. While the Sensex lost around 171 points, the Nifty closed lower by about 56 points that day.

On that day, the rupee fell to a new low of 61.21 against the U.S. dollar, prompting the central bank to resort to some dollar selling through state run banks.

The market opened on a firm note on Tuesday on positive global cues, and, despite coming off the day's high levels, ended with solid gains. Besides a firm trend in Asian and European markets, the rupee's recovery against the U.S. dollar and a bit of bargain hunting after recent setback aided the market's upmove.

In a significant move, the regulators tightened rules for derivatives trading in the currency market, aiming to arrest rupee's steep fall against the greenback. While the central bank banned banks from proprietary trading in rupee futures and the exchange related options market, the market regulator SEBI hiked the margin requirements on dollar-rupee trade, besides reducing the exposure limit of brokers and their clients with regard to currency derivatives.

The Sensex, which declined to around 19,380 after rising to 19,486 in early trades, ended the session with a gain of 115 points and the Nifty moved up by 48 points.

The market ended lower on Wednesday, with investors treading cautiously ahead of key economic data and earnings reports. While the Sensex declined by 145 points, the Nifty closed lower by 42 points.

The market bounced back on Thursday after the U.S. Federal Reserve Chairman Ben Bernanke spoke about the need to continue the accommodative monetary policy for the U.S. economy. The Sensex spurted 382 points that day, while the Nifty shot up by 118 points.

Riding on the strength of IT bellwether Infosys, which came out with better - than - expected quarterly results, the Indian stock market ended on a firm note on Friday. The Sensex, which very nearly breached the magical 20,000 mark - it hit a high of 19,991.94 in late afternoon trade - ended the day with a gain of 282 points at 19,958. The Nifty closed with a gain of 74 points.

Infosys Limited reported a 3.7% year-on-year increase in its first-quarter net profit, at Rs 2374 crore for the quarter ended 30 June 2013. In the corresponding quarter last year, the IT major has posted a net profit of Rs 2289 crore.

Infosys left the financial year 2014 dollar revenue growth guidance unchanged, maintaining a forecast for 6-10% revenue growth. In rupee terms, Infosys expects revenue to grow at 13-17% in financial year 2014.

On a sequential basis, Infosys' net profit for the first quarter saw a marginal decline of 0.8% while the revenues witnessed a growth of 7.8%. The Earnings per share came in at Rs 41.54 for the quarter ended June 30, 2013, witnessing a y-o-y growth of 3.7%.

Infosys was the star performer last week, with better-than-expected quarterly numbers and fairly encouraging earnings guidance for the full-year, lifting the stock.

Tata Consultancy Services moved up by over 5% and Wipro ended with a gain of around 7%. HCL Technologies, Mphasis, Oracle Financial Services and Tech Mahindra all saw some brisk buying during the later part of the week and mostly ended on a firm note.

Pharma stock Sun Pharmaceutical Industries ended stronger by over 7%, hitting a new high in the process. An announcement from the company about an USFDA approval for its subsidiary's generic version of Prandin Repaglinide tablets lifted the stock. Dr Reddy's Laboratories gained more than 5%, due largely to an announcement about the launch of Decitabine, a generic version of Dacogen, in the U.S. market.

Capital goods heavyweights Larsen & Toubro and BHEL gained over 5% last week. ITC, Reliance Industries, Index heavyweight and cigarette maker ITC rose 2.25%. Tata Power, HDFC Bank and Sterlite Industries also ended on a high note

Weak sales data and high oil prices hurt automobile stocks. Mahindra & Mahindra and Maruti Suzuki lost over 6%. Tata Motors ended lower by around 1.5% and Bajaj Auto declined marginally, while Hero Motocorp bucked the trend and moved up by 3.75%.

ONGC, down more than 6%, was among the prominent losers last week. Hindustan Unilever and GAIL India also ended weak.

According to the data released by the government on Friday, India's merchandise exports declined 4.56% to $23.78 billion in June 2013 over June 2012. Imports rose 0.37% to $36.03 billion. Oil imports jumped 13.74% to $12.76 billion, while non-oil imports declined 6.71% to $23.26 billion.

The trade deficit rose to $12.24 billion in June 2013 from $11.24 billion in June 2012. The trade deficit declined on month-on-month basis. The trade deficit declined from May's $20.1 billion.

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