Monday, Dec 01, 2003
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INDIAN STOCK markets ended the week on a buoyant note on the back of sustained buying in index pivotals. Old economy stocks kept the undertone firm with buying in cement, auto and power counters helping the BSE Sensex close the week above the 5000-mark at 5045.
A strong broad-based rally pushed the market into the bull orbit on hectic buying by foreign institutional investors and domestic funds besides retail investors. The announcement of a ceasefire between India and Pakistan along the Line of Control aided the positive sentiment.
Buying was witnessed in PSE, technology, automobile, auto ancillary, power, pharma and shipping stocks. A number of mid-cap side counters were also active.
Domestic mutual funds were consistent net buyers and made net purchases of Rs. 429 crores from November 17 including Rs. 364 crores in the first three sessions of the week. FIIs, which had slowed down their activity and were expected to maintain a low profile, ahead of the year-end, made net investments of Rs. 571 crores in the initial three sessions, particularly in the cash market. Their net purchases on Thursday were Rs. 437 crores.
The BSE benchmark 30-share index cut short a string of two weekly losses and soared to close the week under review at 5044.82 against the previous weekend close of 4838.54, for a net rise of 206.28 points. The markets remained closed on Wednesday for Id-ul-Fitr.
During the week, IT and PSE sectors were in the limelight. IT stocks such as Infosys, Satyam Computer and Wipro scored impressive gains. The BSE-IT index spurted by 111.88 points or 6.59 per cent to 1804.42.
PSE stocks such as HPCL, BHEL, BEL, GAIL, ONGC, SCI and IOC recorded sharp rises on heavy buying. HPCL led the gains on talk that a special dividend was on the cards. The BSE-PSE index gained 147.58 points or 4.93 per cent to end the week at 3141.20.
Private sector banks did well in a subdued segment following the announcement that the Government was committed to raising the FDI limit in these to 74 per cent from 49 per cent. Among gainers in this sector were UTI Bank, IndusInd Bank and Global Trust Bank. Automobile stocks remained strong. The top gainers here were Escorts, Eicher Motors and Tata Motors. Hindustan Motors continued to witness huge volumes of business. Auto-ancillary stocks also hogged the limelight.
Among pharma scrips, Cipla, Ranbaxy and Dr. Reddy's gained further ground. Maruti Udyog moved up after the company said it would take a decision on raising the prices of its cars by the end of December.
Tata group stocks were in favour. The biggest gainer was Tata Infotech, which closed 19 per cent higher on spectacular September quarter results, wherein the company registered a bottomline growth of over 300 per cent year-on-year.
Cement pivotals such as L & T, ACC, Gujarat Ambuja and Grasim gained further. The market is anticipating a rise in cement prices.
Steel stocks were buoyed by reports that steel prices were likely to be raised by the month-end. Gainers in this sector included Tisco, SAIL, Essar Steel, Ispat Industries and Jindal Vijaynagar. Tata Steel rallied on reports that the company expects to sell two lakh tonnes of the higher value auto-grade steel against one lakh tonnes in 2002-03. Shares of aluminium producers rallied on expectations that strong demand could lead to a hike in product prices in December. Hindalco and Nalco led the upside.
Shipping stocks were in favour. The top gainers were GE Shipping and Shipping Corporation. SCI continued its dream run on the bourses to touch an all time high of Rs. 173. A steep rise in dry bulk freight rates could be one of the main reasons.
Media stocks had a good run. Balaji Tele, Padmalaya Tele, Sri Adhikari and Adlabs were among those that gained over 8 per cent on Friday.
Textile shares rose further during the week on sustained buying. Among other stocks, PSL gained ground after the company announced that the Gujarat Water Supply and Sewerage Board had accepted its bid for procurement of mild steel pipes of varying sizes for S$27 million.
J. B. Chemicals remained firm on sustained interest after the company announced that its state-of-the-art manufacturing facility at Panoli had received approval from the Colombian Drug Regulatory Authority to supply pharmaceutical specialties in Colombia.
The undertone remained bullish on the bourses. Analysts expect the positive trend to continue on the back of warehousing of stocks ahead of the allocation season that will begin in January 2004.
Rupee softens further
The rupee-dollar trading continued to be volatile. With the U.S. economy showing more signs of revival, the dollar is expected to rebound against major currencies. The rupee-dollar equation however does not fit into conventional patterns as supply and demand factors continue to predominate in what is still a controlled exchange regime.
The dollar has been in abundant supply thanks to export realisations as well as portfolio inflows. Opening the week at 45.76 a dollar, the Indian currency closed 10 paise lower at 45.86 after touching a low of 45.9350. Analysts expect continued volatility and lack of firm direction even over the near term.
Interest rates marginally up
There was a marginal increase in interest rates last week mainly due to the higher inflation rate. The ten-year government security yield was at 5.14 per cent and the five year security at 4.85 per cent. The year-on-year inflation has moved up to 5.12 per cent as on November 15.
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