ShareKhan Newsletter Blog

 Market Commentary 

Bulls victorious for 3rd straight Week; Markets end 1% higher

Indian equities witness third sharp rally in the week gone by owing to optimism coming from Q4 earnings season amid global support. The Sensex rose 1.5% and the Nifty was up by 1.24% for the week ended May 03, 2013.

Major Headlines for the week:

• RBI cuts Repo Rate by 25 bps; CRR unchanged
• Ambuja Cements Q1 net profit up 56% (YoY)
• HUL FY13 net profit up 41% (YoY); stk up 5%
• Godrej Consumer Q4 consolidated net profit up 73%

Indian indices:

Welcome to the 'Weekly Market Wrap' for May 03, 2013. This was the eighteenth trading week of 2013 for the Indian markets which witnessed sharp rally for the entire week owing to inflow of funds by foreign institutional investors (FIIs) backed by firm global cues which boosted sentiment. However, gains were capped after the Reserve Bank of India (RBI) after a monetary policy review on Friday said that the balance of risks stemming from its assessment of the growth-inflation dynamic provides little space for further monetary easing. The key indices traded in a broad range throughout the week. Mid Quarter Review of Monetary Policy 2013-14 remained key focus of investors. The benchmark indices gained in holiday shortened week as the corporate results by top notch companies was the key factor which further boosted the sentiments. Markets rose in three out of four trading sessions. Sensex crossed 19,700 mark while Nifty moved above 6050 levels decisively hitting a three-month high on sustained buying interest.

The Q4 March 2014 results announced so far showed that the combined net profit of 367 companies rose 11.5% to Rs39115 crore on 7.7% growth in sales to Rs353982 crore in Q4 March 2013 over Q4 March 2012.

The BSE Sensex rose 288.92 points to 19,575.64, while the NSE Nifty rose 72.55 points to 5,944.00.

Major Events:
RBI's rate cut was in line with expectations, but its cautious stance about further easing disappointed markets today. Losses in banking and auto stocks weighed heavily on the markets. The RBI trimmed the repo rate to 7.25%, its lowest since May 2011, and kept the cash reserve ratio (CRR) for banks unchanged at 4%, also in line with expectations. RBI has warned that the risk of inflationary pressure persists despite a recent sharp decline in wholesale price index (WPI) inflation, and said a high current account deficit poses the biggest risk "by far" to the Indian economy.

Weekly market trend from April 22 - April 26, 2013:

• Indian stock indices ended near day's high on Monday (April 29, 2013), led by buying in CD, FMCG, Realty and Power stocks. Sensex rose 0.52% while the Nifty shut shop 0.56% higher. Markets posted modest gains after starting the day on a soft note post announcement of Q4 numbers by FMCG major HUL and maintained the same trend till the end. The S&P BSE Sensex wrapped trade at 19387.50, up by 100.78 points while the NSE Nifty rose 32.65 points to settle at 5904.10.

• On Tuesday (April 30, 2013), the Indian stock indices ended in green led by buying in FMCG stocks after Hindustan Unilever surged on open offer from its parent company. Sensex rose 0.60% while the Nifty shut shop 0.44% higher. The Indian bourses witnessed gap up opening, tracking gains in the global markets amid rate cut hopes by RBI which continued to boost rate-sensitive sectors. The S&P BSE Sensex wrapped trade at 19504.18, up by 116.68 points while the NSE Nifty rose 26.10 points to settle at 5930.20.

• The Indian stock markets remained closed on Wednesday, (May 01, 2013), on account of Maharashtra Day. 

• On Thursday (May 02, 2013), the Indian stock indices ended near day's high led by buying in IT, TECk and CG stocks ahead of the central bank's policy review on Friday. Sensex rose 232 points while the Nifty shut shop 69 points higher. NSE Nifty traded above the 6,000 level for the first time since February 4 on the back of buying in D Street biggies like HDFC, Reliance Industries, HDFC Bank and TCS. Key benchmarks further extended gains in the late morning session led by buying witnessed in software makers and financial stocks. The S&P BSE Sensex wrapped trade at 19735.77, up by 231.59 points while the NSE Nifty rose 69.15 points to settle at 5999.35.

• May 03, 2013 was not a very good day for Indian markets as the Sensex lost 0.81% and Nifty fell 0.92% on RBI's hawkish stance which pushed the markets to end near day's low backed by selling pressure in rate-sensitive sectors. The Indian shares fell on Friday, with 50-share Nifty slipping below key resistance level of 5,900 while the S&P BSE Sensex ended below the key 19300 level led by selling pressure in majority of the sectors. Markets had recovered from the post-rate-cut fall but have again lost ground in the last one hour. Rate-sensitive stocks were the big losers, with banking and realty indexes sitting at the bottom of sectoral pack. The Sensex closed at 19575.64, down by 160.13 points while the Nifty fell by 55.35 points to close at 5944.00.

Global indices:
All the global markets closed the week on a positive note baring Nikkei which was down by 1.37%. DAX100 rose by 3.94%, followed by Nasdaq which surged by 3.03%, CAC40 advanced by 2.70% and Dow Jones up by 1.78%

Sectoral and stock screening:
Among the 13 sectoral indices, top gainers- BSE FMCG up by 7.53%, BSE IT rose 4.74%, BSE TECk gained by 4.39%. Top losers: BSE Bankex fell by 1.11%, BSE PSU slipped 0.43% and BSE Auto was down by 0.16%.

Looking at the 'A' group stocks, the top three gainers of the week were - Hindustan Unilever up by 19.32%, Idea Cellular up by 17.24% and TTK Prestige up by 17.03%. The top three losers of the week were - Essar Oil fell by 13.87%, Canara Bank fell by 9.64% and Oriental Bank of Commerce fell by 8.59%.

FII/MF activity
The foreign institutional investors (FIIs) have been net buyer of the Indian stocks worth a net of Rs1653.8 crore, while the domestic investors were net sellers of Indian stocks to the tune of Rs251.5 crore till April 30, 2013.