Saturday, October 15, 2011

Stock Markets Weekly Wrap Up - 14th Sep 2011

Indian Stock Markets clocked the best weekly gains in six weeks, up 5%, buoyed by rally in the IT shares after Infosys reported better than expected results.

The Sensex commenced the weak on an upbeat note after Germany and France pledged to recapitalize banks and prevent the sovereign debt crisis from spreading. The index took a breather mid-week, ahead of Infosys results which kick started the earnings season. The IT bellwether surprised the street with 9.7% rise in profit for the July to September quarter, spurring the rally in IT stocks. The Sensex reclaimed 17k in style and touched a high of 17,113 on Friday and finally ended at 17,083, up 199 points. The Nifty closed at 5,132, up 54 points.

For the week, both the indices advanced over 5% each. Indian markets were the best performing markets among regional peers. The Japan’s Nikkei Stock Average was up 1.7%, the Hong Kong’s Hang Seng gained 4.5% and the South Korea’s Kospi Composite surged 4.3% for the week.

In United States, the Dow gained 5% and Nasdaq advanced 8%, clocking its biggest weekly rise since March 2009.
Back in India, industrial production for August was reported at 4.1%, below economists’ expectation of 5%, raising concerns of downside risks to GDP growth. SMC Global in the weekly note said, "Industrial production accounts for close to 20% in GDP and in the two months of this quarter it has recorded mere growth of 4%. The tepid growth in the intermediate goods suggests that the weakness in the overall industrial growth would continue."

Additionally, Inflation for the month of September came in at 9.72% girding expectations that the Reserve Bank of India will raise rates by another 25 bps during the October end policy. The inflation has been recorded above 9% for the tenth consecutive month. Sharp appreciation in the Rupee has wiped out gains from easing crude prices and there are little signs of decline in core inflation, according to CRISIL Research.

On Monday, the Indian markets may open on a positive note following rally on Wall Street. Signs of growth were seen in the US economy after retail sales soared 1.1% in September, highest since February and Google Inc. reported positive results.

Markets will take cues from Reliance Industries second quarter results which will be out on Saturday. Analysts expect 13-17% growth in the net profit year-on-year; however sequential performance may be muted due to sluggish production from the KG D6 basin.

Technical Analysts said, the positive momentum may continue if Nifty holds above 5,050. According to PINC Research, "Market trend is positive as long as Nifty stays above 5,050 in the short term, but 5,250 level remains a key resistance."

All the sectoral indices ended in the green. BSE IT shares rallied 9%; the prominent gainers were Infosys, up 9%, TCS surged 8% ahead of second quarter results which will be out on Monday and Tech Mahindra advanced 6%
Buying interest continued in the banking shares. BSE Bankex index advanced 7%; midcap banks were the major gainers. Federal Bank, Union Bank and Yes Bank rallied between 8-10%.

Among individual stocks Maruti Suzuki dipped 8% to Rs 1,028. The shares slipped to 52-week low of Rs 1,022 as investors dumped the stock on concerns that ongoing strike at various plants may hamper production.

Cable service providers rallied during the week on digitization of cable network news which will increase the channel carrying capacity. Hathway Cable rallied 45%, Wire & Wireless surged 40% and Den Networks gained 30%.
From the midcap space - Jubilant Foods surged 24%, Prestige Estates and Amtek Auto gained 17% each.

From the smallcap space - Lloyds Metals surged 21%, Gravita India gained 29% and BL Kashyap added 25%.

Top gainers on the Sensex were Tata Motors, up 13%, Jindal Steel and Wipro surged over 8% each. Only two stocks on the Sensex ended in the red – Maruti Suzuki slipped 8% and Coal India lost 4% respectively.

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