With surging volumes, hectic buying at second rung IT stocks, profit booking at cement counters, Indian Shares recorded modest gains during the week as BSE Sensex and Nifty added 71 points and 24 points respectively to their last week's closing. The combined average volumes at both the indices surged above Rs 4000 crore. Although most of the buying came from FII buying of Rs 279 crore, their net investments during November has fallen to a mere Rs 114 crore against Rs 715 crore in October. On the contrary, the domestic fund houses off-loaded equities worth Rs 162 crore, which aggregates up to net sales of Rs 170 crore during current month.
The week started off with the Index heavyweight Reliance selling off its 10% stake in Larsen & Toubro to Grasim cements. This marks the consolidation of the cement sector as two key cement groups- Grasim-L&T and Gujarat Ambuja-ACC will now account for 50 percent market share. However, the cement stocks showed mixed reaction -- while ACC and Gujarat Ambuja went up, Grasim and L&T scrips remained listless. Buoyed by strong Nasdaq in the earlier part of the week, speculative buying at second IT stocks-HFCL, Global Tele system, SSI, Aftek and optimistic prospects of the Indian IT companies BSE IT Index surged 11 percent in 5 trading sessions. Besides, a host of individual stocks- Hughes Software, Castrol, Dr Reddy's Labs jittered due to buyback and drug approval controversies while Bluestar gained sharply by 46 percent after the buyback announcement.
Close on the heels of the two foreign rating agencies confirming their negative outlook on India due to fiscal negligence and slow pace of reforms, the standing committee recommendation of waiver of quantitative limits on the government's fiscal and revenue deficits defeats the objective of Fiscal Responsibility Act. However the ministry committed itself to the clearing of act without any elimination.
While the US markets traded in narrow range as Dow Jones and Nasdaq went hand in hand with less than one-percent gain, the positive sentiment has creeped in on the back of expected holiday spending, hopes of Afghan war coming to an end as well as early economic recovery.
The fact that Indian markets have rebounded by a robust 25 percent since its hit an 8-year low in September owes it to an optimistic sentiment, good corporate performance bolstered by a strong recovery in world indices. The positive uptrend should prevail subject to short-term triggers affecting the individual stocks.