Weekly Wrap: Sensex, Nifty gain 2%

Last Updated: Sat, Mar 01, 2014 06:42 hrs

Strong buying by foreign institutional investors resulted in some bright spells for the Indian stock market during the truncated week ended 28 February 2014 and lifted the key indices Sensex and the Nifty to their best closing levels since end January  2014.

Movements were a bit volatile at times during the earlier part of the week due to expiry of February series derivatives contracts on Wednesday (26 February 2014), but the market was rarely seen trading in negative territory.

Recording gains on all the four sessions (the market was closed on Thursday (27 February) for Maha Shivratri), the BSE benchmark Sensex ended the week with a gain of 419.37 points or 2.02% at 21,120.12. The Nifty index of the National Stock Exchange closed up 121.50 points or 1.97% at 6,276.95. Despite staying subdued at times, several midcap and smallcap stocks too ended the week on a firm note, lifting the BSE Midcap and Smallcap indices up by 1.2% and 0.8%, respectively.

Shrugging off a weak start, the market edged higher on Monday, with a firm trend in Europe and some stock specific stories aiding sentiment. The Sensex ended the session with a gain of about 111 points and the Nifty moved up by 31 points.

On Tuesday, the market closed with modest gains after moving in a tight range almost right through the session. The Sensex advanced by about 41 points, while the Nifty ended up 14 points.

Sustained buying by FIIs lifted the market on Wednesday. The Sensex surged up 135 points and the Nifty gained nearly 39 points, with key pharmaceutical stocks contributing significantly to the market's gains.

Despite seeing some volatility during the fag end of the session, the Indian stock market ended notably higher on Friday, with key stocks from capital goods, healthcare, information technology and automobile sectors recording impressive gains.

The market opened on a firm note, tracking positive global cues, but retreated and shed some gains with investors soon turning a bit cautious, choosing to wait for the third quarter GDP data due after trading hours. And then, after moving in a tight band till sometime past mid afternoon, the market saw some brisk buying in the final hour before paring some gains during the final minutes. The Sensex ended the day with a gain of around 133 points and the Nifty moved up 38 points.

Reliance Industries declined by 1.5%, following Arun Kejriwal's Aam Aadmi Parti intensifying its attack on RIL and its CMD Mukesh Ambani, accusing him of being involved in a Rs 6530-crore money-laundering operation.

Reliance Industries has stated that allegations that foreign direct investments in certain Indian companies by Biometrix, a Singapore-based company, are "laundered monies" invested in India are completely false. These false and baseless allegations are being repeatedly made in the media and in judicial proceedings and have been already responded to, RIL said. The allegations made by Prashant Bhushan are highly defamatory, false, irresponsible and devoid of any merit or substance whatsoever, RIL said.

The investments by Biometrix were open, transparent and perfectly legitimate transactions in full compliance with the extant regulations, RIL said. These investments in the Indian companies were made by Biometrix out of loans raised from ICICI Bank, Singapore branch, it added. Further, ICICI Bank has confirmed this fact to the regulators and regulatory authorities have fully investigated the matter and have found no substance in the allegations of money laundering, RIL said.

Among healthcare stocks, Dr Reddy's Laboratories gained 6.3%, with an announcement about the launch of Sumatriptan Injection USP in the U.S. market triggering some hectic buying at the counter. Sun Pharmaceutical Industries moved up by over 4.5% and Cipla gained a little over 4%.

Metal stocks were mostly seen weak last week due to recent disappointing economic data from China. Tata Steel ended nearly 8% down and Sesa Sterlite lost around 4.5%. However, Hindalco traded firm and ended the week stronger by over 7.5%.

FMCG heavyweight ITC gained over 3%. Information technology stocks Wipro (up nearly 4.5%), Tata Consultancy Services (3.1%) and Infosys (1.9%) had a good outing last week. Other key stocks like Tech Mahindra, Oracle Financial Services and HCL Technologies too saw some bright spells last week.

Capital goods stocks attracted buyers. Sector heavyweights Larsen & Toubro (5.4%) and BHEL (11%) rose sharply, with reports of some big order wins wooing investors to the counters.

In the automobile space, Mahindra & Mahindra ended 4.8% up despite seeing some weakness in the final session following the company reporting a near 2% decline in consolidated net profit for the quarter ended December 2013. Tata Motors gained 5.4%. Hero Motocorp and Bajaj Auto ended higher by 2.5% and 4.6%, respectively.

Maruti Suzuki lost over 5% Maruti Suzuki India Limited clarified on Wednesday that Suzuki Motor Corporation's subsidiary in Gujarat would operate on the basis that while it would not make any losses, it would also not accumulate any cash surpluses.

"The cost of production of vehicles, produced by the subsidiary, would be calculated in an identical manner to that followed by Maruti Suzuki India Limited in Haryana, and as would have been done if the Gujarat project had been executed by a 100 per cent subsidiary of MSIL. This cost may be called 'C', and would not include return on investment and profits," the company said.

Among banking sector heavyweights, State Bank of India and ICICI Bank gained nearly 2%, while HDFC Bank ended modestly higher. Bank of Baroda, Axis Bank, Federal Bank, Punjab National Bank and Bank of India also closed with impressive gains.

Tata Power (up marginally) saw some hectic buying in the earlier part of the week after the company announced that the Central Electricity Regulatory Commission has asked electricity procurers to pay Rs 329.45 crore as compensatory tariff for its Mundra Ultra Mega Power Project to partly offset escalation in the price of imported coal. CERC has asked Gujarat, Rajasthan, Punjab, Haryana and Maharashtra Electricity boards to pay this extra amount for the period 1 April 2012 to 31 March 2013.

NTPC declined sharply and ended the week with a hefty loss of 14.8%, with the revised CERC regulations on tariff hurting the stock. The revised regulations shall come into force from 1 April 2014 and shall remain in force for a period of 5 years from the date of commencement. As per the revised CERC regulations, the rate of return has been retained at 15.5% which will be grossed up with effective tax rate as per Regulation 25 of the regulations. The new regulations also state that additional RoE of 0.5% will be allowed subject to certain conditions.

Pfizer had a bright outing on Monday following the company announcing an internal corporate restructuring plan. Under the plan, Pfizer East India B.V. Netherlands will acquire 60.94% stake which is collectively held by Pfizer Corporation (31.42%) and Pfizer Investments Netherlands B V (29.52%), Pfizer said in filing to the stock exchanges.

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