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Northward Bound

Impressive corporate results helped the stock markets head northward. The BSE Sensex closed the week above the 3700-mark, gaining 2.16 per cent over the week, while the Nifty managed a 2 per cent gain.

The stock markets responded positively to the quarterly results posted by India Inc. While the indices lost on the first two trading days, impressive corporate results not only helped markets recover initial losses, but end the week in positive territory. The BSE Sensex and the Nifty gained 2.16 per cent and 2 per cent respectively over the week. The broader S&P 500 – gained 1.61 per cent and the S&P Mid Cap Index was up 1.63 per cent. On the international front, Nasdaq gained 1.32 per cent while the Dow moved up by a per cent.

The BSE IT index gained 3.8 per cent over the week. IT major Satyam Computer posted a net profit of Rs 121.5 crore – a rise of 12 per cent over corresponding quarter last year. The stock gained a massive 11.4 per cent over the week. Digital Globalsoft saw its net profits rise by 9 per cent over previous corresponding quarter and touched Rs 30 crore. The heavyweight Infosys also gained 3.73 per cent.

The BSE FMCG Index was the top gainer among the sector indices. The index rose 4.7 per cent over the week. The FMCG major HLL gained 11.3 per cent over the week, pulling the index up. The BSE PSU clocked a gain of 0.42 per cent. On the disinvestment front, the Punjab State government has finalised the disinvestment of Punjab Tractors to UK-based institution Commonwealth Development Corporation (CDC) at Rs 153 a share. The stock closed the week at Rs 158.4.

The relatively new Bankex moved up 0.6 per cent due to impressive results by State Bank of India. SBI saw its net profit rise by 19.7 per cent to Rs 913.5 crore compared to Rs 763.3 in the corresponding period last year. The stock gained 2.1 per cent. The only index that remained in the red was BSE Healthcare. The index lost 0.56 per cent.

Meanwhile the turnover in the derivative segment at the NSE hit new highs this week. On Friday the turnover in the F&O segment touched its all-time high of Rs 5,848 crore. This indicates increasing popularity of derivatives as financial instruments.

Among other corporate results, Tata Motors (earlier TELCO) posted a net profit of Rs 100 crore as against Rs 21 crore in Q1 last year. The steel giant TISCO posted a net profit of Rs 267 crore – a 316 per cent increase over the same quarter last year. Automobile giant Maruti Udyog saw its profits rise ten fold to Rs 123 crore.

Within institutions, mutual funds unlike previous week turned buyers in the equity market. They bought equities worth Rs 44.7 crore. Foreign institutional investors were buyers to the tune of Rs 350 crore for the week – over three times their previous week's inflows.

Outlook
The March quarter results have provided the trigger to the markets. Whether this rally will continue or not depends on broader market sentiment. The stock markets are likely to be driven more by corporate results. FII inflows will also help sustain the rally.