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A New High

Barring the fall on Friday, it was a good week for Indian stock markets. The goodwill gesture shown by the Pakistan, a favourable election outcome and robust FII inflow led the Sensex to cross the 5,200-point mark.

Though the BSE Sensex crashed by 94 points on Friday, it ended the week with a gain of 1.7 per cent. A comfortable win by the BJP in three of the four state assembly elections early this week saw the BSE Sensex touch a 43-month high of 5,225.9 points on Thursday – the day results were declared. Prior to this, the BSE Sensex gained a hefty 116 points on Monday after Pakistan government lifted the ban on overflights from India. It was the second such peace declaration after the ceasefire across LOC announced last week. Both these peace agreements are expected to go a long way in maintaining stability in the region.

The goodwill gestures and favourable election outcome have helped in restoring FIIs' faith in the Indian market as they pumped in Rs 1,523 crore this week – the highest weekly net investment in the past four weeks. Among other major indices, the S&P CNX Nifty gained 1.9 per cent and the broader S&P CNX 500 was up 2.6 per cent over the week. But once again, it was the mid-cap stocks that stole the show. After gaining 5.72 per cent in the previous week, the CNX Midcap 200 Index gained another 5.6 per cent this week.

Interestingly, FMCG and healthcare stocks were among the biggest gainers this week. While BSE FMCG Index gained 6.51 per cent, the BSE Healthcare Index was up 6.21 per cent. ITC gained 6.3 per cent this week on the speculation that a 16-year-long tax dispute between the government and ITC could be in the company's favour. Among other FMCG majors, HLL was up 5 per cent and Nestle India gained 11 per cent. Nestle has declared a second interim divided of Rs 10 per share for the year 2003. Among pharma stocks, the major gainers include Divi's Lab (25 per cent), Glaxosmithkline Pharmaceuticals (9.8 per cent) and Sun Pharmaceutical (8.3 per cent).

Private sector bank shares came in the limelight this week after HSBC bought a major stake in UTI Bank, leading to expectations of more such deals. UTI Bank's share rose nearly 20 per cent on Tuesday – the deal day. HSBC will make an open offer to UTI Bank's shareholders in January at Rs 90 per share. Over the week, HDFC Bank gained 8.4 per cent – the highest gain among Sensex stocks, and ICICI Bank was up 4 per cent. However, the BSE Bankex just gained 2 per cent due to higher weightage of the PSU banks in the index, which largely remained out of favour.

Indian technology stocks lost their two-week long rally. Though the BSE IT Index ended the week flat, it fell over 3 per cent on Friday. Sentiment was spoiled due to a $600-million write off by Intel. This also led to a 1.14 per cent fall in the Nasdaq in the US, over the week.

Outlook
December started on a bullish note, but Friday's fall came as a complete surprise. However, with FII inflows once again starting to pour in, the last day dip could be assumed as a short-term correction. Thus, the outlook is favourable provided FIIs continue to pump in money in Indian markets.