It has been a slow and steady climb to the top. While the fireworks have been missing and the retail frenzy has been conspicious by its absence, the markets have quietly touched new 2 1/2-year highs during the course of the week. The BSE Sensex rose 234 points to 18,401 and Nifty managed to end above the psychological 5500 mark at 5,530, a gain of 78 points. And has been the trend for some time, the broader indices outperformed the benchmark indices yet again. While the Sensex gained 1.2% and the Nifty added 1.4%, the mid-cap index moved up by 2.3% and small-cap index appreciated by 1.7%.
The markets had begun the week on a discouraging note. After closing almost flat in the previous week, the Sensex had heralded the new week with losses of more than 100 points on Monday in view of the Vedanta deal. The markets more than made up for the losses on Wednesday and positioned themselves for the next day's feat. There were no positive triggers in sight as the Dow had a listless session, the Asian markets were not going anywhere in a hurry and the Nifty had been unsuccessfully flirting with the 5500 mark for about a month due to the wave of selling pressure that inevitably accompanied any attempt at surpassing the important technical resistance at 5500. The only thing in our favour was the the force of momentum, given the healthy 100+ points rally witnessed on the previous day. And it was the follow-up buying that catapulted our markets on Thursday. The Nifty crossed the 5500 mark effortlessly at the very start of trade, something which it had previously done only on February 5, 2005 and the Sensex registered a new high of 18,475. From thereon, it was consolidation time till the weekend.
Meanwhile, there was a lot of cheer on the macro-economic front. The annual headline inflation slowed more sharply than expected to single digits after five months. The wholesale price index rose 9.97% from a year earlier compared with June's pace of 10.55%. And the food inflation was down 10.35% in the first weeek of August as prices of vegetables, specially potato and onion, declined. Food inflation, which was 11.4% for the week ended July 31, was in double digits for the second consecutive week, after it remained in single digits for a fortnight in mid-July. On a yearly basis, potato became cheaper by almost 50%, while vegetables saw a decline of 22.12%.
The leading gainers on the Sensex were Hindalco (strengthened by 7.1% at Rs 177), HDFC Bank (gained 6.9% at Rs 2231) and HDFC (added 6.6% at Rs 639). ITC, Jindal Steel and L&T were the other major gainers.
On the sectoral front, FMCG (up 2.9% at 3375) and banking (up 2.7% at 12527) sectors hogged the limelight during the week. In the FMCG sector, ITC raced ahead by 4.3% at Rs 162 and Hindustan Unilever added 1% at Rs 268. The banking space saw HDFC Bank appreciating by 6.9% at Rs 2231 and ICICI Bank gaining 1.9% at Rs 994. SBI, however, ended lower by 2.3% at Rs 2783. But more than heavyweights, the week belonged to the midcap and smallcap banks in the PSU space. State Bank of Mysore soared by 17.9% at Rs 921, UCO Bank zoomed by 10.9% at Rs 113, Vijaya Bank appreciated by 9.2% at Rs 84 and IDBI Bank raced ahead by 9.1% at Rs 131.
SKS Microfinance had a spectacular listing. The microfinance company ended the week at Rs 1211, stronger by around 23%, on the BSE. The stock had listed at Rs 1,040, a 6% premium to its issue price of Rs 985 and did not look back thereafter.
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Wockhardt was miles ahead of the rest in the broader market space. The pharma major appreciated by 53% during the week on the buzz that the company would soon resolve its foreign currency convertible bonds (FCCB) issues with the lenders. The company’s board had this week approved a preferential issue of up to $400 million of convertible or non-convertible redeemable preference shares and to also issue foreign currency mandatorily convertible bonds (FCMCBs) up to $74.09 million, in exchange of existing FCCBs of the same amount.
Jagatjit Industries surged 26% after the company, engaged in beverages, surpassed its entire previous financial year net profit of Rs 6.46 crore during the first three months of current fiscal. The company had reported twenty-six fold jumpe in net profit to Rs 33.92 crore for the quarter ended June 2010 against Rs 1.30 crore in the same quarter year ago.
Trent, a Tata group company hit a lifetime high, zooming by 23% to Rs 1,052 during the week, ahead of the closing of its right issue. The company proposed to raise Rs 490 crore through the issue of 4 cumulative compulsorily convertible preference shares (CCPS), comprising of 2 Series A CCPS and 2 Series B CCPS, for every 9 equity shares held on the Record date. The issue was closed on Friday, August 20.
Varun Industries too, gained 23% in past one week after the company entered into a memorandum of understanding (MOU) with Australia-based Cluff Resources Pacific NL, an Australian company for a joint venture for exploration and development of gold, platinum and gem stone projects on the highly prospective tenements in Southern Madagascar for which Varun Group holds mining licence.
The top Sensex losers during the week were RCom (weakened by 3.1% at Rs 162), Tata Power (shed 2.9% at Rs 1289) and SBI (lost 2.3% at Rs 2783)
And the power sector (down 0.8% at 3096) turned out to be the major weekly laggard on the sectoral front. Tata Power weakened by 2.9% at Rs 1289, JSW Energy shed 1.4% at Rs 123, NTPC lost 1.1% at Rs 193 and Reliance Power was down 1% at Rs 153 for the week. Index heavyweight Reliance Industries continued to languish below the four-figure mark, albeit higher by 0.8% at Rs 988 on a weekly basis.
Among the other losers, Cairn India shaved off as much as 6.3% on Monday to end at Rs 332 after the company announced the sale of a maximum 51% stake in Vedanta for a consideration of upto $8,480 million (Rs 39,656 crore). The oil exploration stock finally ended at Rs 343, lower by 3.3%, on the BSE. And Sesa Goa tumbled 7.3% to Rs 328 during the week after the company's board approved the acquisition of a 20% strategic stake in Cairn India for a total cash consideration of approximately $3 billion.
And Suzlon Energy slipped by 12.4% to Rs 49 after the company posted consolidated net loss of Rs 912 crore for the June 2010 quarter as against Rs 453 crore during the same quarter a year ago. The company's consolidated net sales declined 42% to Rs 2,399 crore (Rs 4,153 crore) on y-o-y basis during recently concluded quarter.