Weekly Wrap: Sensex, Nifty scale new peaks as FIIs go on buying spree

Last Updated: Sat, Mar 08, 2014 09:15 hrs

With foreign institutional investors indulging in frenzied buying, betting on hopes the economy will soon be back on track, scores of front line stocks rallied sharply last week (March 3 - 7, 2014) driving the benchmark indices Sensex and Nifty to new life-time highs.

Global cues were mixed for most part of the week. But then, data showing a sharp decline in India's current account deficit in the October - December 2013 quarter, the rupee's impressive rise against the U.S. dollar and expectations that the BJP led United Democratic Alliance will come out victorious in the forthcoming Lok Sabha elections lifted the market to historic levels.

While the Sensex ended the week with a gain of almost 800 points or 3.79% at 21,919.79, the Nifty closed higher by about 250 points or 3.98% at 6525.65.

Midcap and smallcap stocks were a bit subdued on the final session, but saw some bright spells earlier in the week. The BSE Midcap index jumped nearly 3%, while the Smallcap barometer ended higher by about 2.6%.

It was a weak start for the market last week with concerns about political unrest in Ukraine and weak Chinese manufacturing data hurting sentiment. Weak Indian GDP data for the third quarter and widening fiscal deficit too contributed to the slide that day.

Snapping a five-session winning streak, the Sensex ended down 173.47 points on that session and the Nifty lost 55.50 points.

On Tuesday, the market rallied sharply, tracking cues from global markets which had switched over to the buying mode amid easing worries about the unrest in Ukraine following reports that the Russian President Vladimir Putin recalled some of his troops back to base. The Sensex ended the day with a gain of 263 points, while the Nifty moved up 76.50 points.

Shrugging of a fall from higher levels and a subsequent brief spell in negative territory around noon, the market moved up and ended on a firm note on Wednesday, on some strong buying in banking and capital goods sectors, despite a contraction in India's services sector activity. While the Sensex ended up 67 points, the Nifty gained 30.70 points that day.

The Indian stock market saw a historic session on Thursday, with the benchmark indices Sensex and the Nifty hitting new all-time closing highs, as investors indulged in some hectic buying at several counters, buoyed by a report showing a sharp drop in current account deficit in the quarter ended December 2013. The rupee's solid upmove against the U.S. dollar and data showing heavy buying by FIIs on Wednesday aided sentiment to a notable extent.

While the Sensex hit a new lifetime high of 21,525.14, the Nifty, which rose to 6406.60, missed out on that achievement by just a few points. The Nifty's all-time high is 6415.25 it had recorded on 9 December 2013. The Sensex ended the day at 21,513.87, recording a gain of 237.01 points or 1.11%, while the Nifty closed at 6401.15, gaining 72.50 points or 1.15%.

And then, stocks fared even better on the final session, with the bulls going on a rampage. The Sensex, surging higher and higher, looked well on course to breach the 22,000 mark in late afternoon trade as front line stocks, except those from IT and healthcare sectors, rallied on sustained buying interest. The barometer, which rose to 21,960.89, eventually ended the session at 21,919.79, recording a handsome gain of 405.92 points or 1.89%.

The Nifty, which narrowly missed a landmark on Thursday, swifty caught up with that figure and then moved further ahead to a new peak of 6537.80 before finally settling down at 6526.65, netting an impressive gain of 125.50 points or 1.96% for the day.

Encouraging current account data, heavy buying by FIIs and a stronger rupee lifted sentiment.

In the forex market, the rupee rose to 60.94 against the U.S. dollar after opening at 61. However, in late afternoon trades, the rupee gave up some ground and was seen quoting at 61.12 a dollar.

Reliance Industries notced up a gain of 8.8% for the week. Earlier in the week, Reliance Industries' subsidiary Reliance Jio Infocomm and Bharti Infratel signed a Master Services Agreement, under which Reliance Jio would utilize the telecom tower infrastructure of Bharti Infratel to launch its services across the country. Bharti Airtel ended nearly 5% up, with a rating upgrade contributing significantly to some hectic buying at the counter.

ONGC gained about 8.2%. Coal India ended nearly 8.5%. GAIL India moved up by almost 5%. Housing finance stock HDFC, FMCG major ITC and power stock NTPC gained 3% - 4%.

Capital goods stocks saw some bright spells during the latter part of the week. Sector heavyweights Larsen & Toubro and BHEL gained around 8% and 10%, respectively.

Automobile stocks were sluggish for most part of the week, amid mixed sales reports for the month of February. Maruti Suzuki shot up by nearly 9.5%, despite the company reporting a near 10% decline in production in February 2014.

Bajaj Auto and Mahindra & Mahindra ended modestly higher and Hero Motocorp ended nearly 2% up, while and Tata Motors lost nearly 2%.

Bank stocks, led by heavyweights ICICI Bank (15%), Axis Bank (11.2%), State Bank of India (7.7%) and HDFC Bank (6.6%), had a pretty good week. Bank of India, Bank of Baroda, Canara Bank, Yes Bank, Federal Bank and Punjab National Bank were among the prominent gainers.

Among metal stocks, Hindalco vaulted more than 18.5%, Tata Steel spurted 7.7% andSesa Sterlite climbed nearly 5%.

A stronger rupee triggered a sell-off in pharmaceuticals and information technology sectors. Pharma majors Dr Reddy's Laboratories and Sun Pharmaceutical Industries and IT stocks Infosys, Tata Consultancy Services and Wipro ended sharply lower.

At the start of the week, investors reacted to the data released by the government in the previous week that showed the country's GDP growth for October - December 2013 quarter, came in at 4.7%. In the September 2013 quarter, GDP grew at 4.8%, up from 4.4% in the preceding quarter.

According to a report from Markit Economics on Monday, India's manufacturing activity expanded at the fastest pace in one year in February, according to a survey result from Markit Economics and HSBC Bank. The HSBC Purchasing Managers' Index advanced to a one-year high of 52.5 in February from 51.4 in January.

On Wednesday Markit Economics said India's services sector contracted for the eighth straight month in February. However, the downturn in the output eased in February, coming in at 48.4 points, as compared to 48.3 points in January. A reading below 50 points indicates contraction.

According to a report released by the Reserve Bank of India, the country's current account deficit for the quarter ended December 2013 declined to a four-year low, coming in at $4.2 billion, or 0.9% of the gross domestic product, down sharply from $31.9 billion (6.5%) in the year-ago period. The sharp drop in the deficit is due to a pick-up in exports and moderation in imports, especially of gold.

In political news, the Lok Sabha elections will be held between 7 April 2014 and 12 May 2014 in nine phases, the Election Commission announced. The counting of votes will be take place on 16 May 2014.

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