Weekly Review: Broader markets outperform

Sensex gained 91 points for the week

The broader markets outperformed the benchmark indices during the week ended July 6 on the back of bargain hunting by investors in fundamentally sound mid-cap and small-cap shares.

For the week ended July 6 the 30-share Sensex gained 91 points or 0.5% to 17,521 while the 50-share S&P CNX Nifty rose 38 points or 0.7% to close at 5,317. The BSE Mid-cap index surged 2.6% while the BSE Small-cap index jumped 4.3%.

The broader markets had outperformed the benchmark indices on Monday, as focus shifted to value buying in mid-cap and small-cap shares after the sharp gains in the previous week. The Sensex was down 31 points at 17,399 and the Nifty closed flat at 5,278. In the broader markets, the midcap and the smallcap indices both ended up nearly 1% each.

On the macro front, India's factories in June stepped up production and hired workers at the fastest rate in more than two years, but sagging demand abroad took a toll on growth in new export orders, a survey showed on Monday. The HSBC manufacturing Purchasing Managers' Index (PMI) rose to 55.0 in June, a four-month high, from 54.8 in May. It has kept above the 50 mark that divides growth and contraction for more than three years.

Meanwhile, India's exports fell 4.16 percent year-on-year to $25.68 billion in May, while imports fell 7.36 percent year-on-year to $41.9 billion, government data showed on Monday. May's trade deficit was $16.3 billion.

Amid a volatile trading session, shares ended flat on Tuesday, as gains in financials and telecom shares were erased by losses in FMCG and IT stocks. The 30-share Sensex ended up 27 points at 17,426 and the Nifty added nine points at 5,288. The broader markets, yet again, outperformed the benchmarks with the BSE midcap index having ended up 0.5% and smallcap index having advanced 0.8%.

Benchmark indices closed marginally higher, on Wednesday, amidst volatile trades with the Sensex closing up 37 points at 17,463 and the Nifty added 15 points to end the day at 5,302. The ones leading the gains were banks and metal scrips. Meanwhile, the broader markets managed to hold on to its gains with the midcap and the smallcap indices up 0.8%, each, as compared to the Sensex, up 0.2%.

Country's services sector in June expanded for the eighth straight month although at a slower clip, but new orders picked up and firms hired workers at the fastest pace in a year, a business survey showed on Wednesday. HSBC's services purchasing managers' index, which gauges the activity of around 400 firms in India, dropped to 54.3 in June from 54.7 in May. However, it has kept above the 50 mark that signifies growth since November.

Key benchmark indices ended Thursday's trading session on a positive note with the BSE Sensex having ended 76 points higher at 17,539 and the Nifty closing higher by 25 points at 5,327. The broader markets continued to outperform with the midcap and the small cap indices having advanced 1-2% each, as compared to the Sensex which added 0.4%.

On Friday, markets ended a negative session of trade on a flat note, after an attempt to recover in late noon deals. The Sensex, after touching a low of 17,425 briefly recovered to a high of 17,555. The index finally ended lower by 18 points at 17,521. Nifty ended at 5,317 - down 10 points.

On the sectoral front, BSE IT and FMCG indices led the losses, having shed nearly 2% each.

IT index closed lower after a foreign brokerage downgraded the sector. Macquarie Equities Research has downgraded IT services sector to "underweight" from "overweight" citing demand concerns as Infosys , which already has 30 percent of staff on the bench, delays joining dates for new hires. Notable losers from the space were Hexaware Technology, TCS, Infosys and Wipro, down 2-5% each.

FMCG stocks continued to witness profit booking after recent gains on concerns that weak monsoon  may give rise to commodity inflation leading to higher input costs thereby hurting margins. From the space, ITC, Colgate, Nestle India, HUL and United Breweries were the prominent losers, down nearly 2% each.

BSE Realty, Consumer Durables, Bankex and Metal indices ended higher by 2-5% each. PSU, Capital Goods, Power and Healthcare shares also ended positive, up 1-2% each.

Auto index ended marginally higher on mixed June sales figures. Country's second largest two-wheeler maker Bajaj Auto reported a 1.38% decrease in its motorcycle sales in June at 318,377 units on a y-o-y basis. However, Maruti Suzuki India reported a 20% y-o-y jump in its total sales in June 2012, on back of robust sales growth in Swift, Estillo, Ritz and DZire. Country's second-largest carmaker Hyundai Motor India Ltd  today reported a 3.49% rise in its total sales at 54,354 units in June.

Among the Sensex 30 stocks, Bharti Airtel was the top gainer, up 5.4% at Rs 322 after the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) gave a split verdict on a challenge by mobile phone operators seeking to overturn a government order requiring them to stop offering 3G services beyond their licensed zones through mutual roaming pacts, lawyers said. Among other telecom shares, Reliance Comm gained 8% and Idea Cellular surged 12.7%

Other gainers included Sterlite Industries, HDFC, Maruti Suzuki, ICICI Bank and Cipla, up 4-5% each.

The losers from the space were Jindal Steel, Hero MotoCorp, TCS, ITC and Infosys, down 2-3% each.

Investors would be looking forward to the corporate results that will be announced next week onwards. The result season kicks off with HDFC on July 11, 2012.