Weekly Wrap: Sensex gains nearly 1% on reforms announcements

Last Updated: Sat, Oct 06, 2012 04:57 hrs

The market saw some thick action during the truncated week ended 5 October 2012, the most dramatic one being the sharp plunge of the Nifty on the final session following some erroneous trades that resulted in the benchmark hitting the lower circuit and forcing the authorities to halt trading for about 15 minutes.

The Sensex , despite some strong rounds of selling in several blue chip stocks, ended the week with a gain of 176 points or 0.94%, while the Nifty closed 44 points or 0.77% up. Mirroring strong buying in midcap and smallcap stocks, the BSE Midcap and Smallcap indices surged 1.1% and 1.8%, respectively.

A fairly steady trend in global markets amid slightly easing worries about the economic situation in Europe, some encouraging economic data from the U.S., sustained inflow of funds thanks to heavy buying by foreign institutional investors, and last but not the least, the government's decisive actions on the reforms front, helped keep investor sentiment upbeat right through the week.

It was a modestly positive start for the market last week, with investors indulging in some selective buying, betting on hopes the government will push forward economic reforms. A firm trend in European marketts and expectations of some monetary easing by the central bank too contributed to the market's upmove that day.

While the Sensex ended the session with a gain of around 61 points, the Nifty closed higher by about 16 points.

On Wednesday (the market was closed on Tuesday for Gandhi Jayanti), the market edged higher, as sentiment remained bullish on the back of data showing some heavy buying by FIIs on Monday. The Sensex moved up by 46 points that day, while the Nifty gained around 12 points.

With the bulls turning up at the stroke of the opening bell and staying at the ring right through the session, stocks had a good outing on Thursday. Though global cues were not positive, the mood was upbeat on the Indian bourses amid rising expectations that the government will keep its promise and push forward reforms.

The Sensex, which sped past the 19,000 mark and went on to touch 19,107 during the day, ended the session with a gain of 188 points or 1% at 19,058.15. The Nifty shot up to 5807.25 before signing off with a gain of 56 points or almost 1% at 5787.60.

After opening on a firm note on the back of the government's decision to allow 49% FDI in insurance sector and to open up FDI in the pension sector as well, equities drifted lower on the Indian bourses on Friday, with investors switching over to the selling mode, choosing to take some profits after recent sharp gains.

As stocks tumbled, the key indices Sensex and Nifty plunged sharply - the latter went crashing down by over 900 points and triggered the lower circuit following some erroneous orders - and despite a fairly strong recovery in late afternoon trade thanks to a firm trend in European markets, ended the session with notable losses.

The Sensex, which declined to 18,757.34, losing over 300 points in the process, ended the day with a loss of around 120 points or 0.6%, while the Nifty, which faltered to 4888.20 following some freak orders, closed at 5746.95, recording a loss of 41 points or 0.7%. On Thursday evening, the government approved 49% foreign direct investment in the insurance sector and opened up the pension sector as well, to overseas investors, allowing them to invest up to 26% in that space.

FIIs have now bought shares worth a net 85,700 crore in the calendar year, contributing substantially to the market's splendid upmove over the past few months.

According to a business survey released on Monday (1 October 2012), India's manufacturing activity growth in September held steady compared with August, supported by a pick up in export orders and output. The HSBC manufacturing purchasing managers' index, which gauges the business activity of India's factories but not its utilities, held steady at 52.8 in September from 52.8 in August, which was a nine-month low.

The export orders sub-index jumped to 53.8 last month from 49.2 in August, its biggest rise in almost two years and the first reading above 50 in three months.

BHEL turned in a fine performance, extending previous week's gains. The PSU power equipment maker ended with a strong gain of 6.6% last week. Larsen & Toubro, the other capital goods sector heavyweight in the Sensex, closed 3.2% up.

Automobile stocks had a mixed week. Tata Motors moved up nearly 5% despite the comany reporting a drop in vehicles sales in the month of September 2012. Maruti Suzuki gained almost 3%, with higher sales and a hike in vehicle prices lifting the stock. Bajaj Auto declined by around 4.4% following a significant drop in sales. Hero Motocorp too ended on a weak note, losing 3.6%, on the back of a decline in sales.

Though several bank stocks turned easy on Friday and gave up gains posted earlier in the week, State Bank of India ended higher by over 4.5%.

FMCG majors Hindustan Unilever, ITC and Dabur India, oil & gas major Reliance Industries (the company announced on Wednesday about the 15-year pact it had signed with Venezuelan oil major Petroleos de Venezuela SA for oil supply) and metal stock Sterlite Industries posted notable gains.

Information technology stocks saw some weak spells during the week as the rupee rose to a six-month high against the U.S. dollar. While Infosys and Wipro drifted lower, Tata Consultancy Services ended the week with a modest gain.

HDFC tumbled on Friday on heavy selling. According to reports, Carlyle Group sold its entire 3.7% stake in the company, contributing to the stock's plunge. The housing finance stock ended the week with a loss of around 3%. Cipla, Tata Power and Jindal Steel & Power were among the other losers in the Sensex.

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