With rain Gods finally showing some mercy the markets responded heartily. The Sensex ended its losing streak, for five consecutive weeks, by moving up 90 points (3%). The NSE Nifty gained 17 points (1.8%). For a short while though the market relapsed owing to profit booking in some technology and old economy stocks. However, soon it bounced back in the last trading session, led by FMCG major, Hindustan Lever. This was well supported by good economic data released by the government on Monday, showing a 4% jump in IIP this quarter (April-June). This was mainly on account of better growth in the manufacturing and mining sectors.
Despite the rise in the indices, the confidence level was really low during the week. The lack of interest among both retail and institutional investors was amply reflected in the sluggish average turnover at both the exchanges, which fell by almost 21% this week. Initially, the FIIs sold out heavily, returning to buying mid-week. Overall, they remained net-sellers for the week, dumping equities worth just about Rs 0.9 crore. However, domestic fund houses showed some interest in the market and bought equities worth Rs 15 crore.
The biggest gainers this week were FMCG stocks. The BSE FMCG Index ended the week up 5.5% largely on account of a 9.7% rise in the share price of HLL thanks to the monsoon. Cigarette major ITC gained 3.7%. However, the gain was mostly spread across mid-cap FMCG stocks. The other majors like Britannia, Tata Tea and Cadbury remained in the red.
The BSE IT Index though, which rebounded last week with a 4.5% rise, ended the week flat. On the contrary, the Nasdaq gained 4.2% on the back of impressive second-quarter performance by Dell. This also led to a rise in the share price of some Indian tech majors like Infosys (1.52%) and Satyam Computers (4.2%). However, Wipro's lower Q-1 profits – its medical equipment joint venture, Wipro-GE Medical Systems, reported a higher loss for the period -- saw the scrip lose 2.8%. This was due to its joint venture.
That apart, renewed buying in old economy stocks saw TELCO zoom up 5.3% while Reliance Industries was up 3.6%. Riding high on better sales in the quarter, the auto major is expecting a 10% sales growth over the year. Among PSU stocks, IOC gained the most (9.8%), ahead of its AGM, to be held next month, in which the company will decide the dividend. The company has announced September 7-30 as the book closure period. The other newsmaker this week was ONGC, which gained 5.7%. The Cabinet is likely to approve the petroleum ministry's proposal for canceling a tripartite agreement between Aditya Birla group, HPCL and the Centre, paving the way for a smooth take over of MRPL by ONGC. The two biggest divestment candidates – HPCL and BPCL – lost ground this week following rumours about a possible litigation over the withdrawal of rights to run allocated fuel stations will delay the divestment process. On the pharma front, Dr Reddy's Labs suffered a setback when the US court asked it to withhold the launch of its Ciprofloxacin in that market till the end of next year. The patent for the same is currently held by Bayer and is scheduled to expire in December 2003. Consequently, DRL's share dipped 3.4%. Overall, there wasn't much activity in the sector and the BSE Healthcare Index closed the week unchanged.
Outlook
A good monsoon will continue to provide the much-needed impetus to the markets and FMCG stocks. With a sharp turnaround in the Nasdaq in the last couple of weeks and robust economic fundamentals, the market is poised for a sustainable range-bound rally, if not a bull-run.
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