It was the same story this week too. Thanks to technology and banking stocks, the stock market made merry for the seventh consecutive week. While the BSE Sensex gained 37 points, the S&P CNX Nifty was up 16.4 points. The results of the exit poll, which projected a BJP win in Gujarat, also added to the stock market's positive undertone.
The high point of the week was heavy purchases made by FIIs. After remaining net sellers the previous week, FIIs made net investment of Rs 275 crore. This was the highest weekly net-purchase in the last nine months. However, domestic fund houses continued to be net-sellers for the fourth consecutive week.
The stock market opened on a cautious note on Monday (down 37 points), since disinvestment minister Arun Shourie did not provide a time-frame for the privatisation of HPCL and BPCL. The share price of both oil majors moved in a narrow range. The market, however, made a recovery in the following four trading sessions after the government announced that it would complete the disinvestment of Shipping Corporation of India and Engineers India by the end of the financial year. As a result, PSU stocks attracted lot of buying interest. However, profit booking in these stocks ate into their initial gains.
The bank stocks once again stole the limelight. ICICI Bank zoomed up by 10.8 per cent, Corporation Bank gained 7.34 per cent. The highest gainer, however, was Punjab National Bank, which gained 22.4 per cent. The bank stocks have been on the upward move since the securitsation bill was passed in the parliament last month. This approval is likely to improve the asset quality of banks and may raise their earnings.
In an interesting move, the Finance Minster Jaswant Singh has said that the government is against the removal of tax incentives on home loans. Consequently, the share price of, HDFC surged by 6 per cent. The company has also announced a 1:1 bonus issue. The governments move is in contrast to the Kelkar committee's recommendation withdrawing tax incentives for housing finance. However, this coupled with a sharp reduction in interest rates, should further fuel the growth of housing sector. This sector has been growing at the rate of 25 per cent in the last three years.
The gain in large-cap technology stocks led to a 2.63 per cent rise in the BSE IT Index. Infosys attracted huge buying interest following a sharp surge in its ADR. However, most small and mid-caps remained in the red. While the BSE IT Index went up, the Nasdaq fell by 4.21 per cent.
Among index heavyweights, HLL and ITC gained 1.2 per cent and 2.3 per cent on renewed buying interest. Following reports that Tata Sons is planning to buyback shares upto 10 per cent of its equity capital, the share price of all Tata group companies moved up on Friday, However, over the week, TELCO lost 2.6 per cent while TISCO ended the week flat.
Outlook
The Cabinet Committee on Disinvestment is likely to meet in the coming week to decide the fate of HPCL and BPCL. This may give further direction to the market. Moreover, the stock markets are eagerly awaiting the results of the Gujarat elections. If the BJP gains a clear majority, then it would have a positive impact on the central government's economic decision making and hopefully on the markets.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
