After two weeks of correction, the stock markets bounced back with a vengeance. The S&P CNX Nifty zoomed up 4.9 per cent while the BSE Sensex shot up 3.92 per cent. The recovery was widespread and was reflected in the 5.37 per cent and 5.14 per cent gain by the S&P CNX 500 and the CNX Mid cap 200 Index respectively.
FIIs continued to buy Indian equities with vigour. Net purchases over the week stood at Rs 580 crore. For the month of September 2003, FIIs have invested Rs 3534 crore as on Friday 26 September and this is the largest monthly inflow of 2003. In fact, net FII inflows in September exceed that of the full financial year 2003 too. The combined turnover of both exchanges at Rs 6165.85 crore was, however, nearly 12 per cent less than previous week. The advance-decline ratio at 1.69 was also in the black as compared to the previous week.
This week's rally encompassed all but the pharma sector. The BSE Healthcare Index was down 0.64 per cent and this was the only sectoral benchmark, which was in the red. Though most pharma stocks gained over the week, weakness in Ranbaxy (-5.24 per cent) and Dr. Reddy's (-3.42 per cent) kept the index down. FMCG stocks though in the black (BSE FMCG index up 1.31 per cent) were also the laggards in the rally.
The week started on a weak note with low volumes. A government announcement that it had asked steel producers to keep a lid on steel prices saw both SAIL and Tisco lose more than 4 per cent each. Other index heavyweights such as SBI and HLL also fell by 3.8 and 2.7 per cent respectively. The Sensex thus lost 65.4 points on Monday.
In subsequent trading sessions (except for Thursday), the markets moved up strongly and PSU stocks led the rally. These stocks gained strength in spite of the government's decision to halt the disinvestment of its residual stake in Balco, IBP, CMC and IPCL. Oil stocks were at the centre of this rally. IOC and ONGC gained 7.28 and 5.58 per cent respectively. BPCL was also up 8.37 per cent but disinvestment major HPCL could not recover its losses of the previous week and inched up 1.76 per cent. The BSE PSU index gained 6.69 per cent.
Though the NASDAQ continued to correct losing 6.15 per cent, IT stocks rallied in India. Expectations of good quarterly results were said to be behind this. The trio of Wipro, Infosys and Satyam gained 7.06, 4.77 and 3.36 per cent respectively propelling the BSE IT Index up by over 5 per cent. The other sectoral index to gain over 5 per cent was the BSE Bankex. All but two Bankex constituents gained with ICICI Bank and Oriental Bank of Commerce leading the way with gains of 16.15 per cent and 17.05 per cent respectively.
Telecom stocks also looked up by the weekend on news that the government had hiked foreign investment limits in the telecom sector, allowed intra-circle mergers of service providers and had replaced the existing licenses with nationwide unified licenses. In the US, the Dow Jones lost 3.15 per cent last week.
Outlook
With the results season around the corner, all eyes will be trained on quarterly numbers. As FIIs continue to repose faith in India, the long-term outlook for equities remains favourable.
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