Weekly: Uptrend continues, broader markets outperform

The Indian stock markets maintained their winning spree for the sixth straight week driven by liquidity on the back of strong inflows from foreign institutional investors.

The inflows from foreign funds into Indian equities was on the back of monetary easing policies by the European Central Bank, strengthening of the rupee against the US dollar and easing concerns over inflation.

For the week ended February 10, the 30-share Sensex edged higher by 144 points or 0.8% to end at 17,749 and the 50-share Nifty gained 56 points or 1% to end at 5,382.

Meanwhile, the broader markets outperformed the benchmark index for the week with the smallcap and the midcap indices posting gains of over 3% each.

FII inflows remained steady through the week. In the month of February so far they have bought equity shares worth Rs 7892.67 crore, according to the data from the stock exchange.

On the macro economic front, the major disappointment for the week was the lower-than-expected industrial production for December 2011.Factory output growth, as measured by the Index of Industrial Production (IIP), was at 8.1% in December 2011. Output of the manufacturing sector, which constitutes over 75% of the index, rose at a low rate of 1.8% in December, compared to growth of 8.7% during the same period previous year, according to the official data. According to Madan Sabnavis, Chief economist, Care Ratings, Mumbai, "The numbers are far below our expectations. The major concern is whether we can recoup this loss in the next three months to meet the fiscal year target, given that we will be encountering a high base effect in January to March. "

Meanwhile, the exports for the month of January rose 10.1% to $25.4 billion while imports rose 20.3% to $40.1 billion. This leaves a trade deficit of $14.7 billion announced Trade Secretary Rahul Khullar.

On the GDP front, according to a government forecast Indian economy is expected to grow 6.9% in the current fiscal. This is much lower than the 8.4% growth reported last year. The annual budget for the year 2012-13 will be presented by Finance Minister Pranab Mukherjee on 16 March 2012. The railway budget is scheduled to be presented on 14 March 2012.

Among the sectoral indices, beaten down spaces like Realty and Consumer Durables, were the top picks among the buyers for the week. Both the indices surged 6% each. The movers in the realty space were D B Realty, HDIL, Prestige, Unitech and Phoenix Mills which surged 10-25%.

In the IT pack, TCS and Wipro were the top gainers, up 5% each. Earlier in the week TCS announced a joint venture (JV) with Mitsubishi Corporation, to increase penetration in Japan, the world’s second largest IT market.

From the Auto space, Bajaj Auto and Apollo Tyres zoomed 7% each.

In the metal segment, JSW Steel and Bhushan Steel rose 10-15%. This was on hopes about a dozen proposals getting fresh allotment of captive mines.

Among the banks, Union Bank, Canara Bank and Bank of Baroda up 8-9% were the top gainers. Index banking major, State Bank of India gained 3%.

Heath Care index was the only ones to close in the negative. The draggers were Orchid Chemicals, Aurob Pharma down 8-12%. Orchid Chemicals plunged on reporting a consolidated net loss of Rs 11.06 crore for the third quarter ended December 2011, compared with a net profit of Rs 56.62 crore in a year earlier.

Among the Sensex stocks, 21 stocks closed in the green.

Bharti Airtel which slumped 10% on weaker than expected third quarter numbers followed by HUL and Mahindra & Mahindra down 3% each were the top losers among the Sensex-30.