Weekly Wrap: Sensex gains 4.5% on reforms hopes, strong global cues

Last Updated: Sat, Dec 01, 2012 08:17 hrs

​With investors going on a buying spree, amid rising expectations that the government will manage to push forward economic reforms, the Indian market recorded gains on all the four sessions - the market was closed on Wednesday (28 November 2012) for Guru Nanak Jayanti - , resulting in the key indices Sensex and the Nifty hitting their 19-month closing highs last week (26 - 30 November,2012).

A firm trend in global markets amid easing worries about the U.S. fiscal cliff, positive news out of Europe in the form of an agreement between the International Monetary Fund and the eurozone finance ministers regarding a bailout fund for Greece, a stable rating for India's sovereign credit from Moody's and an upward revision in the rating for Indian stocks from investment banker Goldman Sachs too aided sentiment to a significant extent.

A lower than expected surge in GDP raised hopes of a rate cut and triggered hectic buying in rate sensitives on the final session.

Heavy buying by foreign institutional investors almost right through the week, pushed up prices of several blue chip stocks from across various sectors. According to data available from the market regulator, FIIs were net buyers to the tune of over Rs 9500 crore in November (till 29 November).

While the Sensex ended the week with a gain of 833 points or 4.5% at 19,340, the Nifty closed stronger by 253 points or 4.5% at 5880. The BSE Midcap and Smallcap indices moved up 4.6% and 3.1%, respectively.

It was a slightly listless start for the market last week with stocks swinging between gains and losses in early traded on Monday. While positive cues from global markets aided sentiment early on, worries about slowing economic growth and concerns on the political front prompted investors to tread cautiously. However, the market managed to end the session on a positive note, with the Sensex gaining about 30 points and the Nifty edging higher by 9.30 points.

Activity was mostly stocks specific that day. Even as large cap stocks struggled, midcap and smallcap stocks had a fairly strong outing. Glaxo Smithkline Consumer Healthcare turned in a sparkling performance and hit the 20% upper circuit on reports about GlaxoSmithKline Plc's plans to raise its stake in the Indian entity to 75% from the current 43.16%, through an open offer.

Jet Airways ended stronger by nearly 11% amid reports that the company will sell a 24% stake to Abu Dhabi-based Eihad Airways for around US$400 million. However, the stock saw some selling later in the week after the company announced that there were no such plans. Another airliner SpiceJet flew higher as well on Monday, gaining nearly 13%, on reports that the company was in talks with AirAsia Bhd, the Malaysian firm, to sell a minority stake.

On Tuesday, stocks kept moving higher and higher with the bulls thronging several front line counters, amid expectations that the government will speed up reforms. A fairly steady trend in Asian markets and a strong start on the European bourses amid easing worries about Greek debt crisis following the eurozone finance ministers and the International Monetary Fund clinching a deal to reduce Greece's long term debt, aided sentiment to a significant extent.

The Sensex ended the day with a gain of 305 points, while the Nifty moved up by 92 points that day.

Realty, banking and automobile stocks led the gainers on Thursday. Stocks from capital goods stocks too had a pretty good outing. Firm global markets, rating upgrades for India's Sovereign credit and the stock market, and easing worries about the U.S. fiscal cliff triggered some hectic buying across the board. The Sensex ended more than 300 points up for the second successive day - gaining 329 points, to be precise - and the Nifty notched up a gain of 98 points.

Gains were relatively less pronounced on the final session, as compared to the previous two sessions, but were quite sharp nevertheless. Weak GDP data for the September quarter hurt a bit, but the market switched over to the buying mode after a mid morning setback, betting on hopes the central bank will resort to some monetary easing soon.

Data showing heavy buying by foreign institutional investors in recent sessions and the finance minister's statement about setting up of the National Investment Board aided sentiment. The Sensex ended the day with a gain of 169 points, while the Nifty closed 55 points up.

The mood was so bullish, that just a couple of stocks among the Sensex components ended on the negative side last week.

Sterlite Industries gained almost 13%. Telecom stock Bharti Airtel jumped more than 10%. The stock attracted strong buying after the company's subsidiary Bharti Infratel's prospectus with regard to an IPO was approved by the market regulator.

Cipla moved up by over 8.5% with a big order from the South African government aiding its surge. ICICI Bank, Wipro, Tata Motors, Bajaj Auto, Tata Steel (the company's restructuring plans lifted the stock), Larsen & Toubro, ITC and Reliance Industries also closed with strong gains.

DLF saw some bright spells during the week on reports the company is close to selling its international hotel chain, Aman Resorts, to a US-based investment company for $325 million (Rs 1,800 crore). A company spokesperson said the company will not comment on market speculation.

Cinemax and PVR Ltd shares attracted heavy buying following an announcement from PVR about an open offer to the shareholders of Cinemax India for acquisition of upto 72.80 lakh equity shares of face value of Rs 5 each at Rs 203.65 per share.

PVR's board of directors at meeting held on Thursday, 29 November 2012, approved the purchase of entire 69.27% stake from the promoters of Cinemax India at Rs 203.65 per share for a total consideration of Rs 394.97 crore.

Apollo Hospitals Enterprises shares had a few outings on reports Hong Kong based brokerage CLSA is selling its stake in the company. The stock ended lower amid a huge volume of over 10 million shares.

According to the data released by the government on Friday, the Indian economy grew by a lower than expected 5.3% in the July-September period of the current financial year, due largely to poor performance of manufacturing and agriculture sectors. The gross domestic product had expanded by 6.7% in the same period of last fiscal. In the first quarter of this fiscal it had grown 5.5%.

During the July-September quarter, the manufacturing sector grew marginally by 0.8%, against 2.9% growth in the same period of 2011-12. Farm sector output expanded by just 1.2% in the July-September period this fiscal against 3.1% in the same period last year.

Mining and quarrying sector recorded a growth of 1.9% during the quarter, as against a contraction of 5.4% in the second quarter of 2011-12.

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