Weekly Wrap: Sensex jumps over 4.5% on rate cut hopes

Last Updated: Sat, Apr 20, 2013 07:53 hrs

Amid expectations of a rate cut following a substantial fall in wholesale price inflation, investors indulged in some hectic buying on the Indian bourses last week, a truncated one due to a holiday on Friday (18 April) on account of Shri Ram Navmi. Easing gold prices and falling crude oil too aided sentiment to a notable extent.

With as many as 24 stocks out of the 30-stock benchmark index moving higher, the Sensex ended the week with a big gain of nearly 775 points or 4.2% at 19,017. The broader 50-stock Nifty index of the National Stock Exchange closed higher by 255 points or 4.6% at 5783. With several midcap and smallcap stocks surging higher, the BSE Midcap and Smallcap indices moved up 1.9% and 1.8%, respectively.

On Monday, the market ended on a firm note with the data on inflation triggered hopes of a rate cut and prompted investors to pick up stocks. The Sensex gained 115 points on that session.

On Tuesday, the market saw one of its best sessions in recent months as investors went on a buying spree, betting on hopes of a rate cut following a substantial decline in inflation. So bullish was the mood that investors shrugged off weak economic data out of the U.S. and China and kept picking up stocks all through the session. A steep fall in gold prices too aided sentiment. The Sensex spurted as much as 387 points that day.

After declining marginally on Wednesday due to profit taking, the market rallied on Thursday. The Sensex ended 285 points up on Thursday, with a firm trend in European markets keeping sentiment upbeat.

Reliance Industries ended just marginally up despite the company's net profit jumping 32% in the January - March 2013 quarter. However, on a sequential basis, its earnings remained flat in the January - March 2013 quarter. Its gross refining margin edged up to $10.1 a barrel in the March 2013 quarter, from $9.6 a barrel in the previous quarter.

FMCG heavyweight ITC spurted more than 7.5%, even as Hindustan Unilever closed with a modest gain of about 1%.

Amid expectations the central bank will announce a rate cut following a significant drop in wholesale price inflation, shares from rate sensitive banking, automobile and realty sectors saw some bright spells last week.

Banking sector heavyweight State Bank of India vaulted more than 10%. ICICI Bank ended nearly 7.5% up and HDFC Bank notched up a gain of a little over 4.5%.

Mahindra & Mahindra (9.5%) was the top gainer in the automobile space, with Mahindra USA's record retail sales in the U.S. aiding sentiment to a notable extent. Maruti Suzuki jumped nearly 8.5% and Tata Motors gained around 2.5%. Hero Motocorp (3.3%) and Bajaj Auto (4.2%) also ended sharply higher.

The rupee's recovery against the U.S. dollar dragged down IT stocks. Tata Consultancy Services ended 4% down. The company reported a near 2% surge in consolidated net profit for the quarter ended March 2013, at Rs 3616 crore. For the year ended 31 March 2013, it posted a net profit of Rs 13,917 crore, up 33.6% from the previous year.

Wipro ended nearly 4% down with investors treading cautiously ahead of its results. Infosys, which suffered a severe setback in the previous week after it came out with a tepid earnings forecast, found some support at times last week and ended almost flat.

Telecom stock Bharti Airtel gained nearly 10%. Capital goods heavyweights Larsen & Toubro (up nearly 8.5%) and BHEL (up 3.5%) posted strong gains. Metal stocks Jindal Steel & Power and Hindalco ended notably higher. Tata Steel, Sterlite Industries closed modestly up.

Tata Power saw some strong buying earlier in the week after the Central Electricity Regulatory Commission allowed the company to raise electricity tariffs on temporary basis at its Mundra power plant.

A sharp decline in crude oil prices triggered some strong buying in the PSU oil stocks. However, a cut in petrol prices limited their gains..

Among healthcare stocks, Sun Pharmaceutical Industries gained 5.3%. The company announced last week that the USFDA has granted its subsidiary, two tentative approvals for its Abbreviated New Drug Applications for generic version of Januvia, Sitagliptin Tablets and generic version of Glumetza, Metformin HCl Extended-release tablets. Cipla ended modestly lowe and Dr Reddy's Laboratories edged up marginally.

According to the data released by the government on Tuesday (16 April), India's headline inflation dropped to 5.96% in March, its lowest in 40 months, and much below expected level. In February, inflation stood at 6.84%. Meanwhile, the primary articles inflation came in at 7.60% in March.

While Food inflation stood at 8.73% in March against 11.38% in February, prices of non-food articles was down by 8.95% in March.

According to the data released by the Commerce and Industry Ministry on Thursday, India's exports declined 1.76% to $300.6 billion in the year ended 31 March 2013, falling short of a target of $360 billion. As a result, the trade deficit during fiscal 2013 rose to $190.91 billion from $183.4 billion in fiscal year 2012.

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