Heavy buying by foreign institutional investors amid hopes the government will soon start unveiling measures to bring down fiscal deficit lifted sentiment on the Indian bourses and drove stock prices up, sending the benchmark indices Sensex and Nifty up north for a second successive week.
The Reserve Bank of India, disappointing a section of investors and analysts, had left policy rates unchanged on 31 July 2012. Results from India Inc were mostly disappointing and global cues too were not any significantly encouraging due to some weak economic data from China and Europe.
But comments from finance minister P Chidambaram on Monday that the government will work towards achieving fiscal consolidation and that it will do all that is required to contain inflation prompted investors to indulge in some hectic buying during the week ended 10 August 2012.
While the BSE benchmark Sensex ended the week with a gain of 360 points or 2.1% at 17,558, the broader 50-stock Nifty index of the National Stock Exchange rose 105 points or 2% to 5320.
Even as large cap stocks remained in focus, midcap and smallcap stocks were subdued almost right through the week. The BSE Midcap index edged up by 0.45%, while the Smallcap index ended little changed from the previous week's closing mark.
According to the data from the exchanges, FIIs have bought shares worth a net Rs 9700 crore in the current calendar year.
It was a buoyant start for the market last week with investors going on a buying spree on Monday, tracking positive global cues. Though the market remained a bit rangebound after an early surge, it gained in strength as the session progressed with investors stepping up buying, after the finance minister assured that the government will do all that is required to beat inflation and revive the sagging economy.
His statement that the government will soon unveil path of fiscal consolidation and that investment level will be raised to 38.5% of Gross Domestic Product helped lift sentiment to a notable extent.
The Sensex ended the day with a gain of 215 points or 1.25%, while the Nifty moved up by 67 points or 1.3%. Reliance Industries
contributed significantly to the market's surge that day, gaining 5.7%, on the back of reports that the company had agreed to share its accounts with the Comptroller and Auditor General (CAG) of India.
The oil ministry had made the demand to the company to provide data for audit last month. The oil minister has assured the company that the government would speed up approvals for various proposals in four blocks, including KG-D6.
The market extended its gains on Tuesday on the back of good buying in IT, realty and auto stocks. The finance minister's positive comments and a firm trend in global markets aided sentiment. The Sensex suged 189 points and the Nifty gained 54 points that day.
On Wednesday, the Sensex spurted to a more than 20-week high and the Nifty hit its best level since 3 April 2012 intra-day, but in the end, both failed to hold their gains and finished on a flat note.
A firm trend in Asian markets and hopes of positive fiscal measures triggered some buying early on, but the market pared its gains after European bourses opened lower.
The market opened on a firm note on Thursday, but gave up early gains, hurt by highly disappointing industrial production data and some weak earnings reports from India Inc.
Despite rising hopes about some monetary easing from the central bank following a dismal industrial output data, investors were quite unwilling to build up positions. A downward revision on India's growth forecast by Moody's Analytics too weighed on sentiment to a significant extent. The Sensex ended the day with a loss of about 40 points, while the Nifty drifted down by 15 points.
According to the data released by the government, the index of industrial production for the month of June contracted at a shocking (-) 1.8% versus 2.4% in the month of May.
While the manufacturing sector of the economy contracted 3.2% in the month of June versus a growth of 2.5% in May, the mining sector exhibited a growth of 0.6%, as compared to a 0.9% decline in May.
The non-durable goods sector contracted 0.1% as compared to a rise of 0.1% in May, while the consumer-durable goods sector grew at 9.1%, slightly lower than a 9.3% surge in the previous month. The electricity sector grew at a robust 8.8% versus 5.9% in May.
On Friday, the market opened on a weak note, and despite some late buying, ended marginally down. Poor industrial production data for June, some highly disappointing quarterly results and worries about rating downgrades, all contributed to the market's choppy ride. Both Sensex and Nifty closed with small losses.
Among the Sensex stocks that posted gains last week, Sterlite Industries
was the top mover, gaining as much as 8.8%. Among other metal stocks in the Sensex, Hindalco
and Jindal Power surged 5.3% an 3.5%, respectively.
Shares of automobile maker Mahindra & Mahindra
advanced by 7.8% after the company reported healthy quarterly numbers. Tata Motors
moved by around 5%, thanks to strong results. Bajaj Auto
gained 4.2% and Maruti Suzuki
ended nearly 4% up. However, Hero Motocorp closed lower, recording a loss of 2.2%.
FMCG heavyweights ITC
and Hindustan Unilever
jumped 3.3% and 6.6%, respectively, with strong quarterly numbers posted by the companies prompting investors to indulge in some heavy buying.
Reliance Industries gained 5.3%. Infosys, Tata Consultancy Services
and Tata Power
also ended with strong gains last week.
Bharti Airtel plunged 13.7% on disappointing results following the telecom major seeing its net profit going down for the tenth successive quarter. State Bank of India
tumbled nearly 6% due to concerns about rising NPAs.