Monday, Sep 08, 2003
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THE BOURSES closed on a buoyant note last week, thanks to sustained buying by institutions and retail investors. Strong economic fundamentals with low inflation, high forex reserves and good monsoons were contributory factors. Index heavyweights such as Reliance, Hindustan Lever, ITC and State Bank of India accounted for most gains in the Sensex.
FII investments in equities in the last four trading sessions amounted to Rs. 845 crores. The cumulative FII inflow in calendar 2003 has touched Rs. 15,315 crores.
The 30-share BSE sensitive index, which became a free float index since Monday gained 124.44 points, or 2.93 per cent during the week to end at its over 30-month closing high of 4,369.17. (Free float is the proportion of shares issued by a company, that are readily available for trading).
FMCG heavyweight, HLL, ended higher after reports that a foreign brokerage house had assigned an `outperformer' rating to the stock.
Refinery stocks were in the limelight. The Supreme Court on Friday reserved its order on a petition challenging the Government's decision to privatise public sector oil majors Hindustan Petroleum Corporation and Bharat Petroleum Corporation.
Technology stocks led by Infosys were in favour following an upsurge in IT stocks in the U.S. IT stocks gained after a report by Credit Suisse First Boston predicted that software spending would increase and Cisco Systems said that its August orders were better than expected. Satyam, Wipro and Polaris were also major gainers. Second-line technical stocks too continued to attract buying and investors were seen accumulating these IT stocks. Infotech Enterprises ended higher on fresh buying support after the company announced the inauguration of a new development centre in Puerto Rico.
Hughes Software also closed higher on reports that the company had bagged a $100-million order for supplying software and services to 3G mobile equipment of Lucent Technologies of the U.S.
Bank stocks rose in the early part of the week after the international rating agency, Standard and Poor's raised the outlook for the Indian banking sector to stable from negative. Bank of Baroda, Bank of India, Canara Bank and Oriental Bank of Commerce ended with modest gains on fresh buying.
Union Bank of India has received permission from the RBI for opening representative offices in Dubai (UAE) and Doha (Qatar). The maiden public issue (at a price of Rs. 12 per equity share) of UCO Bank and the second public offer (Rs. 24 per share) of IOB opened for public subscription during the week.
Pharma shares such as Cipla declined on selling pressure while Ranbaxy ruled firm. Mid-cap companies in the pharma sector were in the limelight on sustained institutional buying. Divi's Lab, Aurobindo Pharma, Lupin and Ipca Laboratories closed higher. Ranbaxy Laboratories has received approval from the U.S. Food and Drug Administration to manufacture and commercialise its Ofloxacin tablets 200 mg, 300 mg, and 400 mg.
In the automobile section, Maruti Udyog slipped after the company said it sold 32,127 vehicles in August compared with 33,537 units a year ago and on reports that its production was affected due to a strike at its major vendor, although alternative arrangements were being made.
Tata Motor (Telco) remained firm after the company said its sales rose 37 per cent in August. The stock bounced back on speculation on a large export order.
Cement scrips lost steam with the expected hike in cement prices from September not materialising.
Fertilizer stocks were in the limelight. Stocks of GNFC, Nagarjuna Fertilizers, SPIC, Madras Fertilizers and Oswal Chemicals recorded substantial gains.
Among others, EIH, India's largest hotel chain, gained after it announced that it was allying with Hilton Group plc. Overall, the undertone of the market remained bullish.
The rupee is expected to trade in a range against the dollar. As against generally positive economic news from the U.S. (which is good for the dollar) the factors underpinning the recent rupee appreciation remain valid. In volatile trade at the inter-bank foreign exchange market during the week, the rupee tumbled to lows of 45.94/95 a dollar in intraday deals on Friday, before rallying smartly to end at 45.8700/8750 a dollar, still a nearly two paise fall from the previous weekend levels of 45.8550/8600.
For most of the week, the Indian currency showed a steady declining trend, driven down by persistent light dollar demand from corporates and importers, possibly in anticipation of a weaker rupee in the near to medium term due to redemption fears of the Resurgent India Bonds (RIB's) in early October.
Debt market steady
The debt market was steady last week. Interest rates remained low during the week. The 10-year government security was trading at 5.28 per cent and the 5-year security at 4.89 per cent. The year-on-year inflation moved down to 3.71 per cent for the week ended August 16. The overnight interest rate was around 4.50 per cent. During the week, the Government borrowed Rs. 6,000 crores through a 20-year security at a yield of 6 per cent. The RBI has announced the sale of securities for Rs. 5,000 crores through its open market window. As the expectation of a repo rate cut has been fulfilled by the RBI, the market is waiting for some other trigger for further movement.
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