Weekly Report: Markets continue the good run

The markets continued their momentum into the last trading week of the year to end at a seven-week high, aided by stable global indices and a hassle-free derivatives expiry week. The Sensex ended the week above the 20,500 mark at 20,509, higher by 435 points or 2.1% and the Nifty registered similar gains to end comfortably above the 6100 mark at 6134. The volumes were on the lower side, though, on account of the festive season.

In fact, the BSE benchmark has risen more than 17% during the year to emerge among the best performing major Asian markets this year. Record foreign fund inflows of $28.7 billion powered the annual gains in the main index, which rose to its highest close in about seven weeks, and market participants were optimistic a rapidly growing economy would continue to attract money into local equities.

 

The markets began the week on a rather restrained note against the backdrop of a pre-mature 25-basis point rate hike by China's central bank on Christmas Day and a surge in crude oil price to a 26-month high near $92 a barrel. The indices sprung to life midway through the week, thanks to resurgence across Asia and smooth rollovers into the January F&O series. Asian stocks rose, sending the MSCI Asia Pacific Index to a 2 1/2-year high as increased oil and gold prices boosted commodities companies.  The Dow was in an uptrend on the back of a positive set of economic data. But the FTSE and DAX ended lower. And the expiry week saw the Nifty and marketwide rollovers at a healthy 60% and 80% respectively.

On the macro-economic front, the food inflation surged to a 10-week high of 14.44% for the week ended December 18 from 12.13% in the previous week due to the escalating prices of onions, fruits, cereals and protein-based products. This is the fifth consecutive weekly rise in food prices. And on the policy front, the government deferred a decision on a possible increase in fuel prices in an attempt to fend off additional inflationary pressures and mass discontent. Meanwhile, the RBI deputy governor KC Chakrabarty said that inflation was always a concern and a pause in rate hikes does not mean a halt.

All the sectoral indices on the BSE ended the week in the green, with the sole exception of the oil and gas space. Banking came back into the reckoning after a period of consolidation; the bankex surged by 2.8% at 13379. FMCG and IT were the other leading sectoral gainers on the BSE.

In the banking space, Yes Bank soared by 6.8% at Rs 312 and Union Bank gained 5.9% at Rs 347. And among the heavyweights, SBI added 5.8% at Rs 2811, HDFC Bank added 1.2% at Rs 2346 and ICICI Bank added 1.5% at Rs 1144. In the FMCG space, ITC surged by 2% at Rs 169 and Hindustan Unilever added 1.7% at Rs 312. And the IT index consolidated its position at all-time highs, with Wipro racing ahead by 5.8% at Rs 490 and TCS strengthening by 5.7% at Rs 1165.

 

In the midcap space, Gammon Infra zoomed by 21% atv Rs 25, Hindustan Oil Exploration soared by 175 at Rs 236 and Ruchi Soya spiked by 17% at Rs 120. And in the smallcap space, Zylog Systems soared by 39% at Rs 421, Zodiac Clothing zoomed by 36% at Rs 403 and Zensar Technologies jumped by 29% at Rs 166.

 

The Reliance Anil Dhirubhai Ambani Group shares stole the limelight on the last trading day on reports that the group was rebranding all its businesses as 'Reliance group' rather than maintaining individual identities. RCom spurted by 2.7% to end the week at Rs 145 and Reliance Infra spiked by 2.9% at Rs 842 and Reliance Power zoomed by 1.7% at Rs 158.

Sugar stocks had a decent time after the relaunch of sugar futures on NCDEX. Balrampur Chini Mills gained 2.8% at Rs 85 and Bajaj Hindusthan added 1.1% at Rs 119. The government had banned sugar futures in May 2009 in an attempt to control the shortages and spiralling prices.

And fertilizer stocks strengthened on reports that a Group of Ministers will meet on January 5 to discuss a possible decontrol of urea prices. Among individual fertilizer stocks, Chambal Fertilisers soared by 5.8% at Rs 85, National Fertilisers jumped by 5.5% at Rs 113 and Nagarjuna Fertilisers added 3.4% at Rs 34.

Punjab & Sind Bank (PSB) had a decent debut on the bourses to end the week at Rs 128 against the issue price of Rs 120 a share on the Bombay Stock Exchange (BSE). The shares had listed at a premium of 22% at Rs 146.10. The bank had fixed the issue price at the higher end of price band of Rs 113-120 a share. 

On the other hand, ACC and Bharti Airtel ended flat, with a negative bias, at Rs 1075 and Rs 358 respectively.

According to Shrikant Chouhan, Senior Vice President (Technical Research), Kotak Securities, the market broke out of the narrowest trading range by closing above the level of 6025 this week. The market conquered the level of 6090, which fuelled further momentum and bullishness. For the starting year of decade 2020, Nifty is expected to remain in consolidation and range bound trading phase for the first half year, second half to witness increased momentum. Traders and investors should look for opportunity to buy in index heavyweights at each major support juncture  -5750 and 5550. Breakout buying should not be pursued aggressively.