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Stocks forge ahead to scale new highs

IT WAS another momentous week for Indian bourses as the year comes to a close. There was no let up in buying by foreign funds which kept trading lively throughout the week.

The Sensex crossed the 5700-mark in intraday trading on Friday and closed at 5,699.24, a 46-month high. The Nifty closed at 1837.05, a lifetime high.

Sentiment was boosted thanks to buying support from domestic and foreign institutional investors. Buying was seen across all counters while cement and steel sectors were in the limelight on the last day of the week. Heavyweights such as State Bank of India, Hindustan Lever and ITC gained on continued buying. Fresh positions were taken by operators in January contracts following the smooth expiry of December futures on Wednesday.

In the massive five-week price upsurge, the BSE barometer has gained 17.79 per cent or 860.70 points since November 21 with increasing investor confidence that the Sensex would break all previous records in the new year.

During the week under review, the BSE benchmark 30-share index surpassed the 5700-mark to a high of 5705.30 before closing at 5699.24 against the previous weekend close of 5541.35, a net rise of 157.89 points. (The Sensex is 450 points the all-time high of 6150.69 recorded in early 2000 when technology stocks led the frenetic rally.)

In the first three sessions of the week, foreign institutional investors had made net investments of Rs. 815 crores.

The BSE reshuffled stocks in the T (trade-to-trade) segment. As a consequence, many stocks that were moved out soared while those that moved in fell. Stocks that soared included Global Trust Bank, Aftek Infosys, GTL and SSI. Kopran gained 10 per cent to close at Rs. 86.

These stocks will move out of the trade-to-trade segment with effect from December 30. They had been shifted to the T segment in September to check undue speculation.

Sentiment was aided by the market after the Government announcement on residual stake sales in IPCL, VSNL, IBP and CMC, hiked FDI limit in telecom sector from 49 per cent to 74 per cent and rumours of price hikes for cement and steel.

Shares of Indraprastha Gas promoted by Gail India and BPCL, made their debut on bourses on the Friday with a premium of almost 150 per cent at Rs. 119.50 against the offer price of Rs. 48 a share.

PSE pivotals such as Gail, HPCL, MTNL and Nalco attracted buying after the Government's decision to sell 10 per cent each in ONGC and Gail.

Telecom stocks were in demand after the Government announced a new package for the industry that included a reduction in existing revenue-sharing licence fees to the tune of Rs. 968 crores a year. Bharti Tele-Ventures touched Rs. 109, a lifetime high. It has been witnessing a sharp rise over the past few months on the back of strong growth in its cellular subscriber base. MTNL was another big gainer among telecom stocks.

Steel stocks surged ahead on expectations of a price hike in January. Tisco got a boost on expectations of strong Q3 results. SAIL too flared up followed by National Steel, Mukand, Nippon Denro, Jindal Steel and Jindal Iron.

In cement, ACC was the biggest gainer. Gujarat Ambuja and Grasim recorded handsome gains. Buying interest was seen in L&T following news of a big order from National Hydroelectric Power Corporation.

Led by State Bank of India, bank stocks hogged the limelight on strong expectations of better prospects, higher treasury income and bad debts recovery.

The FIIs have stepped up their purchases after the Government decided, in-principle, to hike the FDI limit to at least 74 per cent in the sector. Selective buying was seen with major gainers being public sector banks such as Bank of Baroda, Punjab National Bank and Canara Bank. The BSE Bankex spurted by 5.11 per cent or 131.95 points to end the week at the record high of 2714.13.

Bajaj Auto and Hero Honda touched all-time highs on expectations of strong vehicle sales in December. It is expected that the bountiful monsoon this year will be reflected in two-wheeler sales in the coming months.

On the NSE, S&P CNX Nifty and S&P CNX Defty jumped by 58.50 points and 42.70 points to close at 1837.05 and 1396.55. The volume of business on BSE and NSE was Rs. 9,801 crores and Rs. 19,377 crores as compared to Rs. 12,207 crores and Rs. 25,170 crores respectively.

Rupee moves in narrow range

As expected, the rupee moved in a narrow band with the year-end holiday season ruling out major trade transactions. Signals from the U.S. give conflicting news about the scale of its economic recovery. Within India, the stock markets have continued their upward march largely due to FII inflows. Next year will continue to see the same phenomenon. So even as dollar supplies are maintained, the demand will emanate largely from the domestic economic recovery. Last week, the rupee opened at 45.52 to a dollar and closed at 45.5850, a miniscule change even by the standards of the forex interbank markets.

Interest rates easy

Interest rates fell marginally during the week, despite a higher inflation rates. The ten year government security was traded at 5.12 per cent and the five year security at 4.73 per cent. The year-on-year inflation rate moved up to 5.57 per cent as on December 13.

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