Buoyed by healthy quarterly results, the stock markets made a strong recovery during the week. Recouping previous week's sharp losses, the key indices just fell short of the multi-year high level reached on October 17. While BSE Sensex gained 2.18 per cent (104 points), S&P CNX Nifty was up 2.23 per cent (34 points). The mid-cap stocks took the lead as CNX Mid Cap Index rose a sharp 3.38 per cent while S&P CNX 500 gained 1.62 per cent. With trading volumes of Rs 6,000 crore, the week started with declining shares outpacing advancing shares. But towards the end, as trading volumes crossed Rs 8,000 crore, the gainers outpaced losers.
Foreign institutional investors were slow buyers this week—pouring in funds worth Rs 1,041 crore as compared to Rs 2,000 crore in each of the past three weeks. The mutual funds turned net buyers -- they bought equities worth Rs 74 crore over the week.
In contrast to a bullish end, the markets had started on weak note so much so that the one trading day's losses were as severe as the previous week's losses. Players unwound long positions across large-cap stocks across technology, FMCG and PSU stocks.
As the quarterly results from FMCG, steel, auto, banking and pharma sector companies started rolling out, the buyers gradually speeded up their buying by end of the week. However, technology stocks took the lead, as a sharp rise in NASDAQ saw the BSE IT Index gain the most -- 3.61 per cent while the NASDAQ surged 3.56 per cent. BSE Healthcare Index was the second gainer at 3.56 per cent despite unimpressive results from Cipla and Dr Reddy's.
Banking stocks were the next big gainers, as the Bankex rose 2.56 per cent. ICICI Bank's robust 41 per cent growth in bottomline beat market expectations and the stock rose 9 per cent over the week. The second big contributor was Oriental Bank of Commerce, which surged 8 per cent. The bank is reported to have zero NPA levels. On the contrary, SBI's net profit growth of 21 per cent was in line with expectations but the stock lost 2.79 per cent.
The rise in steel prices earlier this year got reflected in the improved bottomline of steel majors. SAIL reported a robust net profit of Rs 505 crore against a loss of Rs 158 crore in the corresponding quarter last fiscal. Tisco's net profit jumped 101 per cent during the quarter.
The big disappointment came from FMCG major Hindustan Lever, which reported a net profit growth of a mere 2.9 per cent which was below market forecast. The stock was a drag on the Sensex as well as BSE FMCG Index as it fell a sharp 7 per cent. Even ITC's net profit growth of 16 per cent was uninspiring, with sluggish volume growth in cigarettes. The stock ended the week with marginal losses. As a result, the BSE FMCG Index lost 3.75 per cent over the week.
Outlook
Now that the results season is almost over, stock markets are likely to look for fresh triggers to sustain last week's momentum. Ahead of the monetary policy early next week, banking stocks will be in focus.
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