Weekly roundup: Market gains for 3rd week in row; IT, pharma hog limelight

Tata Group firms, especially TCS, hogged attention after Chandrasekaran's promotion

The market rallied for the third consecutive week with the earnings season moving into full swing after IT giants Tata Consultancy Services (TCS) and Infosys reported their December quarter numbers. The mega event of the week – the elevation of TCS CEO N Chandrasekaran to the Tata Sons’ chairman post – shaved off significant gains in TCS stock, while unexpected surge in industrial production in November, and globally US President-elect Donald Trump’s first news conference after elections, hogged the limelight. 

During the week ended January 13, the S&P BSE Sensex added 1.8% or 479 points to settle at 27238, while Nifty50 gained 1.9% or 164 points to close the week at 8400.

Midcap and Smallcap stocks jumped. The BSE Midcap index rose 2.6%, while the BSE Smallcap index surged 2%. 

“We feel Nifty might consolidate around the current levels for a session or two before further up-move. However, stock specific moves will continue and traders should maintain buy on dips approach. We have seen decent up move in select stocks in this rebound so far and traders should focus more on stock selection now; considering the limited participation,” said Jayant Manglik, President, Retail Distribution, Religare Securities. 

Sectors and stocks 

The week saw BSE Metal index gaining 5.5%, followed by the BSE Power (4%), while BSE Bankex, BSE Capital Goods and Bank Nifty fut rallied 3.6% each. 

Pharma stocks were in focus with BSE Healthcare index (down 0.2%) being the top laggard for the week after Trump targeted drug companies world-over, saying they are ‘getting away with murder’. The remarks suggested pharma firms may face tougher business environment in US. 

Dr Reddy’s and Lupin featured among top five Sensex losers and shed 5.7%, and 1%, respectively. Other losers included Idea Cellular (down 5.6%), TCS (1.4%) and BPCL (dpwn 1.1%). 

Among gainers, Hindalco, Tata Steel and Indusind Bank surged 7.1%, 6.4% and 6.3%, respectively. YES Bank gained 5.7%, while HCL Tech and NTPC advanced 4.4% each.

Important events of the week

Tata Group companies, especially TCS, hogged attention after Chandrasekaran’s promotion to Tata Sons’ top post. Experts believe rocking the management boat at this juncture is not prudent as the sector is already facing multiple headwinds. 

On the macro front, consumer Price Index-based inflation fell to 3.4% in December versus 3.6% in the previous month, while industrial production belied all expectations of huge adverse impact of demonetisation by rising 13-month high of 5.7% in November against a contraction of 1.8% in the previous month. However, the sharp rise resulted due to lower base effect of November 2015 and a sharp reversal of a 12-month declining trend in capital goods.

Globally, Trump, in his presser, refrained from dropping any clarity on future economic policies, but spoke about scrapping Obamacare, calling for cheaper drugs and pledging higher job opportunities in United States.  

MARKET NEXT WEEK

The market will await wholesale price index-based inflation data due on Monday, along with key corporate results such as Reliance Industries, HPCL, LIC Housing Finance, Axis Bank, YES Bank and Delta Corp. Global markets will remain under radar as Trump will assume office on January 20. Investors will also react to China’s gloomy exports data, which fell 7.7% in 2016.European Central Bank’s policy meeting on Thursday and back home Goods and Services Tax (GST) Council meeting on Tuesday will also be under focus.