As corporates continued to pour out strong quarterly results, buyers strengthened their grip on the markets. With a surge in trading volumes to above Rs 5,000 crore a day and a positive market breadth on all trading sessions, the BSE Sensex and Nifty rose by 2.38 per cent and 2.84 per cent respectively. A combination of factors like a normal monsoon, strong FII inflows and improving bottomlines of companies go on to indicate that India could perhaps achieve the GDP growth targets of 6-6.5 per cent. And this is what is being factored into stock prices now. Mid-cap stocks once again outperformed large-caps as CNX Mid Cap Index rose 3.58 per cent.
During the week, not only did FIIs purchases double to Rs 717 crore over previous week, the otherwise perennial sellers—domestic mutual funds were also net buyers to the tune of Rs 90 crore. Surprisingly, the FII inflows of Rs 5,163 crore during June and July have surpassed the total inflows of Rs 3,151 crore during the whole of 2002.
The week started on a bullish note as index heavyweights Bajaj Auto and Grasim Industries announced their results, which were both impressive. Bajaj Auto gained 14.42 per cent over the week. As cement prices seem to have to have stabilised, cement majors—Gujarat Ambuja, Grasim and L&T—have witnessed solid growth in their bottomlines.
Though the Sensex closed up on every trading day, the market breadth turned negative on Thursday, as the expiry of futures contract saw sell-off in some stocks. Nonetheless, markets took a cue from healthy numbers reported by the largest index constituents—HLL and Reliance Industries. Strong sales growth in HLL's power brands enthused the markets as the stock rose to an intra-day high of Rs 174. But the company's overall sales grew by 3.5 per cent only. Thus the stock closed the week at Rs 167--a loss of 1.26 per cent. As a result, the BSE FMCG Index lost marginally over the week. Even Reliance Industries could not sustain the euphoria over a 23 per cent net profit growth reported by the company. After the impressive results, the stock did rise to a new high of Rs 361, but closed the week at Rs 354.
But pharma major Dr Reddy's Laboratories disappointed, as its net profit fell 34 per cent during the quarter, though it was higher R&D and general expenses which contributed to the decline. But the results are in contrast to double-digit bottomline growth registered by other pharma majors like Glaxosmithkline Pharma and Sun Pharmaceuticals. Thus, while Dr Reddy's lost 3.37 per cent, Glaxosmithkline Pharma's 12 per cent surge saw the BSE Pharma Index gain 3.36 per cent over the week. Besides pharma, BSE IT Index was up 4.69 per cent with major gains coming from the Infosys ADS listing in the US. BSE PSU Index also managed to gain 2.24 per cent but BSE Bankex lagged behind with a mere 0.21 per cent gain.
In the US markets, the bulls took a break as the Dow Jones and Nasdaq were down 1.41 per cent and 0.87 per cent respectively over the week.
With most corporate results being declared, the earnings season has almost come to an end. Markets are likely to hunt for new triggers now. However, intermittent corrections cannot be ruled out.