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 Market Commentary 

Budget week boosts Indian indices; Markets up 2%

In the third week of February 2014 auto, capital goods shares gained on favorable announcements in interim budget. The Sensex shut shop 1.64% higher while the Nifty rose 1.77% for the week ended February 21, 2014

Major Headlines for the week:

• Vote on Account 2014: Full coverage
• Vote on Account 2014-15: High on intent, as expected
• Cement Q3 review: Cost inflation dents earnings
• Q3FY2014 Capital Goods & Engineering earnings review 
• Q3FY2014 Banking earnings review

Indian indices:

Welcome to the 'Weekly Market Wrap' for February 21, 2014 where key benchmark indices edged higher in the week as gains were triggered by the Finance Minister P Chidambaram saying that the fiscal deficit will be contained at 4.6% of GDP for the year ending 31 March 2014 (2013-14) and will be pruned further to 4.1% of GDP in 2014-15 and that the current account deficit (CAD) will be contained at $45 billion in 2013-14 at the time of presenting Interim Budget for 2014-15 on Monday, February 17, 2014. The market gained in four out of five trading sessions in the week just gone by.

The S&P BSE Mid-Cap index rose 110.17 points or 1.75% to 6,422.05 and the S&P BSE Small-Cap index gained 113.64 points or 1.81% to 6,393.33. Both these indices outperformed the Sensex.

The S&P BSE Sensex rose 333.93 points to 20,700.75. The 50-unit CNX Nifty gained 107.10 points to 6,155.45.

Major events for the week: 

After being disrupted by shouting parliamentarians, the finance minister P. Chidambaram was finally able to make the interim-budget speech in the lower house on Monday.

The key highlights of the interim budget include, Excise cut on capital goods cut from 12% to 10%, Excise duty cut on small cars and two wheelers reduced from 12% to 8%, Excise duty for SUVs cut from 30% to 24%, Excise duty for large and mid-segment cars cut to 20%, Excise duty on consumer durables cut from 12% to 10%.

As per the proposals presented in the interim budget today, net borrowings of the government in 2014-15 are pegged at Rs4.57 lakh crore against Rs4.68 lakh crore for the 2013-14 fiscal.

According to the interim Budget proposals, subsidy bill on food, petroleum and fertilisers is estimated at Rs2,46,397 crore for 2014-15 fiscal against Rs2,45,452 crore in the revised estimates for this fiscal.

The Finance Minister also said that merchandise exports are projected to rise 6.3% to $326 billion in FY14. For FY15, he said that the government will provide capital infusion on Rs11,200 crore to public sector banks and total spending on food, fertiliser and fuel subsidies will be at Rs2.5 lakh crore.

Weekly market trend from February 17, 2014 - February 21, 2014:

Feb 17- Indian shares ended higher on Monday as the government announces a package of indirect tax cuts to breathe life into spending and investment, and trumpets its record of growth and reform over the past decade in its last budget before an election it looks set to lose. The BSE Sensex rose 0.48% and NSE Nifty was up by 0.41%. Benchmarks gained in late trades to end higher after the Finance Minister P Chidambaram forecasted GDP growth rate of atleast 5.2% in the last two quarters of the current fiscal. The Sensex closed at 20464.06, up by 97.24 points, while the Nifty was up 24.95 points to close at 6073.30

Feb 18- Indian shares ended higher on Tuesday after Finance Minister yesterday announced a fiscal deficit target of 4.1% of the GDP, and a gross market borrowing of 5.97 trillion rupees, below market expectations. The BSE Sensex rose 0.83% and NSE Nifty was up by 0.89%. High growth forecast in the last two quarters of the current fiscal, fiscal deficit target at an 8-year low of 4.1% and reduction in net borrowing for FY15 lifted markets to their three-week intra-day highs on Tuesday. The Sensex closed at 20634.21, up by 170.15 points, while the Nifty was up 53.80 points to close at 6127.10

Feb 19- Indian shares rose for a fourth consecutive session on Wednesday to mark their highest close in nearly four weeks, although amid low volumes, after software exporters such as Infosys gained on continued optimism about U.S. business. The BSE Sensex rose 0.43% and NSE Nifty was up by 0.42%. Benchmark share indices surged in late trades to end near their day's high after remaining rangebound for most part of the trading session with IT majors leading the gains. The Sensex closed at 20722.97, up by 88.76 points, while the Nifty was up 25.65 points to close at 6152.75

Feb 20- Indian shares fell on Thursday to snap four consecutive sessions of gains as blue-chips including ICICI Bank were hit by profit-taking after regional markets were hit by a survey painting a grim picture of China's manufacturing sector. The BSE Sensex fell 0.90% and NSE Nifty was down by 1.00%. Falling global markets also weighed on the investor sentiment after Fed minutes released late Wednesday signaled continuation of trimming its bond buying program at the usual pace of $10bn-a-month unless economy surprises significantly. The Sensex closed at 20536.64, down by 186.33 points, while the Nifty fell 61.30 points to close at 6091.45

Feb 21- Indian shares rose for a fifth time in six sessions on Friday as a recovery in global markets allowed blue chips such as ITC to recover from falls in the previous session, while cement makers such as ACC surged on speculation of price hikes. The BSE Sensex rose 0.80% and NSE Nifty was up by 1.05%. Benchmark indices recouped most of yesterday's losses to end higher on Friday helped by a rebound in bank shares while encouraging data from the US boosted sentiment for IT shares. The Sensex closed at 20700.75, up by 164.11 points, while the Nifty rose 64.00 points to close at 6155.45

Global indices:
Looking at Global Markets: Gainers were- Nikkei up 3.86%, FTSE 100 up 2.24% and Hang Seng up 1.21%, Losers were- Dax 100 down 0.45%, Dow Jones down 0.13% and Shanghai Composite down 0.10%

Sectoral and stock screening:
Among the 13 sectoral indices five sectors closed in the red zone while others ended in green in the week gone by. Top Gainers - S&P BSE CG surged 4.66%, followed by S&P BSE Bankex which rose 3.36%, S&P BSE Power up 2.83% and S&P BSE IT gained 2.19%. Top Losers - S&P BSE Metal down 0.92%, S&P BSE PSU fell 0.57% and S&P BSE Oil & Gas slipped 0.42%.

Looking at the 'A' group stocks, the top three gainers of the week were - Financial Technologies up by 19.39%, ABB rose 16.81% and Adani Ports & Special Economic Zone up by 13.99%. The top three losers of the week were - Muthoot Finance fell by 11.39%, Cipla slipped by 10.54% and Tata Communications dipped by 10.41%.

FII activity:
The foreign institutional investors (FIIs) have been the net buyers of the Indian stocks to the tune of Rs1224.30 crore as on February 18, 2014.