 "Weekly: Sensex scales new all-time high of 21,294")
Aggressive buying by foreign institutional investors amid ample liquidity in wake of the US Fed postponing its monetary stimulus measures provided the perfect fuel to boost the Sensex to a new all-time high of 21,294 in the week ended November 1, 2013.
In the week to November 1, the 30-share Sensex gained 2.5% or 513 points to end at 21,197 and the Nifty ended up 2.6% or 163 points to end the week at 6,307.
On Friday, the last trading day of the week, the Sensex catapulted to a new intra-day high of 21,294 surpassing the previous record high of 21,206.77 on January 10, 2008.
After scaling down their holdings in Indian equities foreign institutional investors have turned aggressive buyers during the past two months (September & October) with an investment of over Rs 28,760 crore or $4.55 billion.
Market experts say that the rally has been driven by liquidity rather than earnings growth with few stocks in select sectors participating in the rally. Further, retail investors have mostly stood on the sidelines during the current rally.
In the second quarter review of the monetary policy held on Tuesday, RBI hiked the repo rate by 25 bps and has cut the Marginal Standing Facility (MSF) rate by an equal quantum. Besides that, RBI also increased the liquidity provided through term repos of 7-days and 14-days tenure to 0.50% of banks net demand and time liability from 0.25% earlier.
In early signs of industrial recovery, data for the eight core sector industries’ growth in September showed a year’s high of eight per cent, against 3.7 per cent in August. Signalling recovery in the infrastructure sector, this was aided by good performance in the electricity, cement and coal segments, which rose in double digits, showed the data issued by the Ministry of Commerce and Industry. In the same month last year, the core sector had recorded 8.3 per cent growth, the highest since January 2009-10.
Meanwhile, the mood on Dalal Street is cautious amid high valuations of stocks that have rallied. Further, the Finance Minister P Chidambaram on Friday cautioned investors against “excessive exuberance” about markets, but added rupee was still above appropriate exchange rate.
The gains during the week under review were led by Autos, Financials, Metals and Capital Goods.
Financials shares firmed after the central bank's policy decision on repo rate was in line with expectation and provision of liquidity. ICICI Bank zoomed nearly 11% after the private lender last weekend reported 20% growth in net profit to Rs 2,352 crore in the July-September quarter amid robust growth in retail advances. Healthy growth in fee income and higher margins have also helped the largest private sector lender in the country to beat analysts estimate for second quarter. SBI rose 9.4%, HDFC gained 5.6% and HDFC Bank ended 1.6% higher.
Auto shares firmed up after they released October sales data. Auto-maker Mahindra & Mahindra today reported 5.39% decline in its total sales at 50,558 units in October 2013. The auto major had sold 53,439 units in the same month last year, the company said in a statement. However, tractor sales in October rose 29% to 38,263 units in October. The company had sold a total of 29,565 units in October 2012, M&M said in a filing with the BSE. The stock ended up 6.6%.
Country's largest carmaker Maruti Suzuki India (MSI) reported 1.91% increase in total sales for October at 1,05,087 units as against 1,03,108 in the same month last year.Exports during the month rose by 27% to 9,025 units as compared to 7,106 units in October last year, the company said. The stock ended up 8.6%.
Other gainers in the auto pack include, Bajaj Auto up 2.1%, Hero MotoCorp up 3.3% while Tata Motors firmed up 2.2%.
Metals gained after manufacturing activity in Asia picked up in October led by China, after its factory output grew at its fastest pace in 18 months amid new orders. China is the world's largest consumer of copper and aluminium. Further, encouraging second quarter earnings also helped boost sentiment in the sector.
Sesa Sterlite, the company born out of the merger of Sesa Goa and Sterlite Industries, reported its first quarterly results. Higher volumes in the zinc and copper business, better realisations and benefits of rupee depreciation have led to better results. The consolidated entity reported total revenue of Rs 25,352 crore and net profit of Rs 2,394 crore. This is much higher than the average estimates of Rs 16,240 crore and Rs 1,930 crore, respectively, though it is close to the higher end of the analyst estimates. The Stock ended up 2.1%.
Among other metal shares, Hindalco gained 5.5%, Tata Steel and Jindal Steel gained over 4% each.
Capital Goods also witnessed renewed buying interest at lower levels on the back of core sector industries' growth in September. L&T ended up 3.6% and BHEL gained 4.6%.
Bharti Airtel's second-quarter (Q2) numbers suggests competitive headwinds are down, driving both consumer stickiness and margin expansion. Increased consumer stickiness and higher margins have helped it report a 4.4 per cent sequential and 20 per cent annual growth in its consolidated operating profit at Rs 6,830 crore. The stock ended up 6.6%
Week Ahead
The movement in the Indian rupee and foreign fund inflows is likely to dictate trend in the week ahead.
Stock exchanges will conduct a special live Muhurat trading session for Diwali on Sunday evening from 6:15PM to 7:30PM. Markets will be closed on Monday, November 4, on account of Diwali-Balipratipada.
Second quarter earnings of large corporates such as BHEL, Tata Motors and Punjab National Bank are due for release next week.
Further, the monthly survey on India's services sector performance for October is scheduled for release on Tuesday.
In the week to November 1, the 30-share Sensex gained 2.5% or 513 points to end at 21,197 and the Nifty ended up 2.6% or 163 points to end the week at 6,307.
On Friday, the last trading day of the week, the Sensex catapulted to a new intra-day high of 21,294 surpassing the previous record high of 21,206.77 on January 10, 2008.
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Meanwhile, data shows that investors have shifted their focus to fundamentally sound midcaps. The BSE Mid-cap index rose 3.6% while the Small-cap index ended 2% during the week.
After scaling down their holdings in Indian equities foreign institutional investors have turned aggressive buyers during the past two months (September & October) with an investment of over Rs 28,760 crore or $4.55 billion.
Market experts say that the rally has been driven by liquidity rather than earnings growth with few stocks in select sectors participating in the rally. Further, retail investors have mostly stood on the sidelines during the current rally.
In the second quarter review of the monetary policy held on Tuesday, RBI hiked the repo rate by 25 bps and has cut the Marginal Standing Facility (MSF) rate by an equal quantum. Besides that, RBI also increased the liquidity provided through term repos of 7-days and 14-days tenure to 0.50% of banks net demand and time liability from 0.25% earlier.
In early signs of industrial recovery, data for the eight core sector industries’ growth in September showed a year’s high of eight per cent, against 3.7 per cent in August. Signalling recovery in the infrastructure sector, this was aided by good performance in the electricity, cement and coal segments, which rose in double digits, showed the data issued by the Ministry of Commerce and Industry. In the same month last year, the core sector had recorded 8.3 per cent growth, the highest since January 2009-10.
Meanwhile, the mood on Dalal Street is cautious amid high valuations of stocks that have rallied. Further, the Finance Minister P Chidambaram on Friday cautioned investors against “excessive exuberance” about markets, but added rupee was still above appropriate exchange rate.
The gains during the week under review were led by Autos, Financials, Metals and Capital Goods.
Financials shares firmed after the central bank's policy decision on repo rate was in line with expectation and provision of liquidity. ICICI Bank zoomed nearly 11% after the private lender last weekend reported 20% growth in net profit to Rs 2,352 crore in the July-September quarter amid robust growth in retail advances. Healthy growth in fee income and higher margins have also helped the largest private sector lender in the country to beat analysts estimate for second quarter. SBI rose 9.4%, HDFC gained 5.6% and HDFC Bank ended 1.6% higher.
Auto shares firmed up after they released October sales data. Auto-maker Mahindra & Mahindra today reported 5.39% decline in its total sales at 50,558 units in October 2013. The auto major had sold 53,439 units in the same month last year, the company said in a statement. However, tractor sales in October rose 29% to 38,263 units in October. The company had sold a total of 29,565 units in October 2012, M&M said in a filing with the BSE. The stock ended up 6.6%.
Country's largest carmaker Maruti Suzuki India (MSI) reported 1.91% increase in total sales for October at 1,05,087 units as against 1,03,108 in the same month last year.Exports during the month rose by 27% to 9,025 units as compared to 7,106 units in October last year, the company said. The stock ended up 8.6%.
Other gainers in the auto pack include, Bajaj Auto up 2.1%, Hero MotoCorp up 3.3% while Tata Motors firmed up 2.2%.
Metals gained after manufacturing activity in Asia picked up in October led by China, after its factory output grew at its fastest pace in 18 months amid new orders. China is the world's largest consumer of copper and aluminium. Further, encouraging second quarter earnings also helped boost sentiment in the sector.
Sesa Sterlite, the company born out of the merger of Sesa Goa and Sterlite Industries, reported its first quarterly results. Higher volumes in the zinc and copper business, better realisations and benefits of rupee depreciation have led to better results. The consolidated entity reported total revenue of Rs 25,352 crore and net profit of Rs 2,394 crore. This is much higher than the average estimates of Rs 16,240 crore and Rs 1,930 crore, respectively, though it is close to the higher end of the analyst estimates. The Stock ended up 2.1%.
Among other metal shares, Hindalco gained 5.5%, Tata Steel and Jindal Steel gained over 4% each.
Capital Goods also witnessed renewed buying interest at lower levels on the back of core sector industries' growth in September. L&T ended up 3.6% and BHEL gained 4.6%.
Bharti Airtel's second-quarter (Q2) numbers suggests competitive headwinds are down, driving both consumer stickiness and margin expansion. Increased consumer stickiness and higher margins have helped it report a 4.4 per cent sequential and 20 per cent annual growth in its consolidated operating profit at Rs 6,830 crore. The stock ended up 6.6%
Week Ahead
The movement in the Indian rupee and foreign fund inflows is likely to dictate trend in the week ahead.
Stock exchanges will conduct a special live Muhurat trading session for Diwali on Sunday evening from 6:15PM to 7:30PM. Markets will be closed on Monday, November 4, on account of Diwali-Balipratipada.
Second quarter earnings of large corporates such as BHEL, Tata Motors and Punjab National Bank are due for release next week.
Further, the monthly survey on India's services sector performance for October is scheduled for release on Tuesday.