 "Blockbuster week: Monsoon outlook, global cues lift Sensex 953 points higher")
Benchmark indices posted stupendous gains in a holiday-shortened week with a rise of four per cent (in three trading sessions) supported by good monsoon forecast and favourable macroeconomic data.
Strength among the global peers amid rally in commodity and crude oil prices on reports of an Russia-Saudi Arabia agreement to freeze output further cheered investors’ sentiment.
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In the truncated trading week to April 13, the 30-share BSE Sensex ended up 953 points, or 3.86 per cent, at 25,627 and the National Stock Exchange’s Nifty50 ended up 295 points, or 3.9 per cent, at 7,850. The BSE Mid-cap Index gained three per cent, while the Small-cap Index surged 2.6 per cent, underperforming the benchmark indices.
Meanwhile, foreign investors were net buyers in equities to the tune of Rs 1,059 crore during the week, according to provisional stock exchange data.
“Markets rallied by three per cent in a holiday-shorted week on good monsoon forecast, encouraging economic data and signs of stability in the yen. Forecasts of return to normal monsoon have triggered a hope rally in two-wheelers, agri-inputs and agri-equipment companies. Infosys at the end of this week and from Tata Consultancy Services early next week will set the start to the results season. Results should drive stocks next week. Expectations of good earnings from IT companies seem to be factored in, given the good rally in the past few days. Traction on deal wins, employee cost inflation for FY17 and Visa costs will be key factors to watch out for,” adds Ravi Shenoy, vice-president (mid-cap research) at Motilal Oswal Securities.
Key events
Retail inflation measured by the Consumer Price Index (CPI) eased to a six-month low of 4.83 per cent in March from 5.26 per cent in February. Also, India’s industrial output rose by two per cent in February after falling continuously for three consecutive months, government data showed.
After two consecutive droughts, the India Meteorological Department (IMD) said the monsoon this year would be “above normal.” It forecast monsoon at 106 per cent of the long period average (LPA). This is the first time since 1999 that department has made an ‘above normal’ prediction. Monsoon is considered normal if rain during the June-September season is 96-104 per cent of the LPA.
On the global front, China reported exports rose 18.7 per cent in yuan terms in March, compared to a year earlier, while imports dipped only a slight 1.7 per cent. That was a huge improvement for the month of February as usually, the data at this time of year tend to be distorted by the New Year holidays.
Stocks in action
Auto stocks accelerated during the week with the Nifty Auto index touching a four-month high after ‘above average’ monsoon forecast by IMD raised expectations of higher demand going forward.
Tata Motors was the top gainer of the week, ending around 10 per cent higher on robust JLR sales. JLR's volumes grew 29 per cent year-on-year, with China sales up 43 per cent (half came from the China joint venture).
Maruti Suzuki surged nearly nine per cent on renewed buying interest after the sharp correction last week on concerns that the rising yen would hurt margins. Hero MotoCorp was up almost eight per cent. The two-wheeler major has submitted plans to begin production at its proposed plant in Chittoor district in the state of Andhra Pradesh.
The BSE Bankex surged almost five per cent during the week after the Index of Industrial Production growth of two per cent in February 2016 raised expectations of a pick-up in credit growth going forward.
ICICI Bank, Axis Bank, State Bank of India, Bank of Baroda and Punjab National Bank spurted between four per cent and nine per cent.
Axis Bank reduced the base rate by five basis points to 9.45 per cent from 9.5 per cent effective April 18. Axis Bank gained 4.5 per cent.
From the IT space, Infosys rose marginally ahead of the fourth quarter (March 2016) results on April 15. Wipro gained seven per cent after India's third-largest software exporter announced it would consider a proposal to buy back shares of the company on April 20.
Tata Steel inched up three per cent. Liberty House Group expects Tata Steel to set an end of May bid deadline for the sale of its UK steel assets and said his firm would not need financial backers to make an offer.
Bharti Airtel increased five per cent after the company announced it would pay Rs 3,500 crore to acquire rights to use 4G spectrum of Aircel in eight telecom circles.
Coal India slipped one per cent after its board of directors accorded its approval for giving up performance incentive for supply of higher grades of coal in the model fuel supply agreement for power and non-power sector with immediate effect with a view to improve lifting of coal.
The week ahead
Investments by foreign institutional investors and trends in global markets will be the key drivers of the market in the truncated week ahead. The markets will remain closed on Tuesday on account of Mahavir Jayanti.
TCS is scheduled to announce its fourth quarter earnings results on Monday. Wipro, HDFC Bank and IndusInd Bank will also unveil their Q4 numbers next week.
Among macroeconomic data, the wholesale price index for March is scheduled to be released by the government on Monday.
On the global front, the European Central Bank's monetary policy statement is scheduled to release on Thursday.
