Markets ended higher for the third straight week, but fell for the fourth consecutive day as traders turned to the sidelines on back of rising crude prices fanning Inflation and strengthening Rupee weighing on IT shares.
Markets commenced the week on an upbeat note; the S&P CNX Nifty touched a high of 5908 in the beginning of the week, but slipped into the negative there after posting marginal losses mid week. The S&P CNX Nifty touched a low of 5822 on Friday, down 86 points from the week’s high. The Nifty finally closed at 5842, down 44 points and Sensex ended at 19,451, down 139 points. However, markets managed to end in the green for the week; both the Sensex and Nifty were up 0.2% each.
Markets may continue to swing between gains and losses going forward on account of holiday thin week and results season which will kick start on Friday.
Markets have rallied 9.5% in March led by strong FII (Foreign Institutional Investors) buying, but post the rally fund flows have waned. Yogesh Radke, Senior Manager (Institutional Equities - Quantitative Research Desk) from Edelweiss Capital said that there was huge buying by FIIs in the last 10 days of March as they pumped in Rs 8,584 crore, but post March end the fund flows have cooled off and an average of Rs 500 crore have come in April.
During the week broader markets outperformed the benchmark Sensex. The midcap and small cap indices were up 5% and 2.7% each. Sanjeev Zarbade, Vice President (Private Client Group Research), Kotak Securities said, small and mid caps may continue to outperform the frontlines in the upcoming week. This is because the rally generally begins with frontline stocks and percolates into broader markets as it progresses.
In the small-cap space, Zandu Realty, at Rs 2,802, added 41% to its price over the week. PI Industries rallied 24% to end at Rs 725 for the week ended April 8, as the company, due to release its Q4FY11 results, will consider declaring a dividend during its board meeting to be held on April 14. AP Paper, which recently received an offer for a stake buy of 21.5% by US0-based International Paper, advanced 23% over the week under review to close at Rs 383 at the end of the trading week. Rising paper costs also make the stock attractive, because it will contribute to the revenue margins of the firm. The deal, if it comes through, will bode positively for AP Paper, as the entry of a major international paper manufacturer in the domestic market will enhance competition, and improve production practices and operations for the company. Hospitality and luxury hotels company Taj GVK Hotels moved up 12%, and ended at Rs 104 as the company expects revenue growth to the tune of 15%-20% over the next fiscal.
Realty stocks were in the limelight, and the index, after a buoyant week, eventually pared gains on Friday to end up nearly 3%. According to industry analysts, the sector is emerging as a value-buy. Realty stocks, which performed poorly amidst the othe setors, also took a severe hit during the February correction. However, pointing at the cheap valuations on the realty counter, an equity head of a fund house averred, "As the government is learnt to be considering taking measures to keep a check on malpractices in the sector, I believe it may see further investor interest.” Sunteck Realty gained 29% in the last five trading sessions, and the scrip closed at Rs 381 in a weak market on Friday. Unitech, currently under the scanner for the 2G scam, ended up 11% at Rs 47, while Anant Raj Industries added 8% to its price at Rs 93. Phoenix Mills at Rs 197, Indiabulls Realty at Rs 140 and Ackruti City at Rs 237 added 7% and 6% respectively.
Auto stocks performed relatively better than the benchmark, with the index ganing 0.4% over the past five trading sessions. The index touched a high of 9,650 on April 6 and a low of 9,368 on April 8, but performed flat despite auto-makers hiking prices in order to partially offset rising fuel, commodity and input costs. Significant stocks in this sector were Amtek Auto up 6% for the week at Rs 162. Hero Honda gained 4% at Rs 1,664 as the country's largest two-wheeler manufacturer, by sales, reported record monthly sales figures of 5.15 lakh units in MArch 2011, up 24.4% from the year-ago period. Mahindra & Mahindra closed at Rs 728 up 2.5% as the company raised vehicle prices between Rs 7,000 - Rs 15,000, while Tata Motors at Rs 1,255 up 1% also gained as the auto major announced a price hike effective April 1.
Increasing concerns over increasing oil prices saw energy stocks decling over the week under review. Zarbade said the crude oil prices which inched higher to $122/bbl (Brent Crude) and the reluctance of policy makers to pass on the prices to consumers will result in fiscal strain on the economy. “Investors are advised to be cautious at these levels and wait for declines to make fresh buying. Staggered buying is advised at these levels," added Zarbade.
The Oil & Gas index was the only sectoral index to lodge a loss over the past trading week, with the index slipping 1%. Rising crude prices - Brent crude touched $122, which threaten to impact margins of oil manufacturing companies, already reeling under heavy under-recoveries to the tune of Rs 78,000 crore, affected the index. Cairn India declined over the past week to Rs 346 down 2%. ONGC slipped 1.5% to Rs 288, while Sensex heavyweight Reliance Industries shed 1% to Rs 1,024, as the company announced it would be facing production cuts due to a decrease in gas output from its KG-D6 basin.
