The Hindu : Stocks buoyant on results, FII buying

Online edition of India's National Newspaper
Monday, Nov 03, 2003

Business

Business

Stocks buoyant on results, FII buying

SUSTAINED BUYING by foreign institutional investors and speculators aided by impressive quarterly results from major old economy blue chip companies restored buoyancy to the stock market last week. The expiry of October futures and options on Thursday also triggered sentiment on Friday. Equities, after an initial downslide, recovered and rallied continuously on persistent buying support and posted impressive gains during the week. Frenzied buying fuelled rallies in pivotals. Across-the-board buying on Friday lifted the market sharply by over 126 points in a single session. Old economy stocks were in the limelight on improved results.

The Sensex rallied to cross the 4900 mark, with stocks closing the week on an extremely bullish note. Had it not been for sharp losses in select heavyweights such as HLL, SBI, MTNL, ITC, Zee Telefilms, Tata Motors and HPCL, the BSE barometer would have closed near the 5000 mark.

The FIIs, once again, stepped up their activity and made a net investment of Rs. 918 crores in the first four sessions, taking the net inflows to Rs. 6,540 crores in October (till October 30), the highest ever for a single month.

The BSE benchmark 30-share index which had fallen on Monday, bounced back later and ended the week at 4906.87 against the previous weekend close of 4802.28, netting a rise of 104.59 points.

The volume of business on the BSE and the NSE during the week was fairly good at Rs. 11,259 crores and Rs. 25,226 crores respectively.

In the early part of the week, the market continued to exhibit high volatility as the indices moved through the plus and minus columns in an 80-point range. The high open interest in the futures & options (F&O) segment and talks that exchanges may raise F&O margins put marketmen on tenterhooks. On Wednesday, the markets recovered from the lower levels as buying interest resumed.

Power stocks such as BSES and Tata Power ended with sizable gains on institutional support. Pharma stocks too closed firm. While Cipla was a top performer, Dr. Reddy's also attracted buying attention. Aurobindo Pharma gained ground on impressive results. Tech stocks ended firm on sustained buying interest. Auto and auto-ancillary stocks were in keen demand after M&M and Telco reported better than expected results. Hero Honda, M&M, Maruti Udyog, Telco, Ashok Leyland, LML and Bajaj Auto recorded smart gains. Maruti gained further ground to touch a new 52-week high after the company announced its quarterly results. A strong surge in two-wheeler sales for October lifted Hero Honda's shares to impressive levels on Friday.

Cement majors Grasim Industries, ACC, L & T and Gujarat Ambuja surged ahead.

The market internals are positive on good volumes.

Rupee scales new high

There have been more positive news regarding the U.S. economy which translate into a stronger dollar. Yet the factors favouring further rupee appreciation remain as here it is more a question of supply and demand. Unless the forthcoming monetary policy review (on November 3) comes out with something drastic, the FII sentiment towards the Indian capital market will remain strong, which means the rupee will trade in a narrow band against the dollar. The Indian currency closed the week at 45.28/29 a dollar against the previous week's close of 45.33.

Interest rates volatile

Interest rates were volatile last week following speculation on the rate cuts that might be announced in the monetary policy on November 3. The yield on ten-year security was 5.08 per cent and on the five-year security at 4.82 per cent. The year-on-year inflation as on October 18 was 5.01 per cent.

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