In a broad-based rally, Indian equity markets continue to make merry for the third straight week. The BSE Sensex gained 3.6 per cent to cross the psychological 5,300-point mark for the first time in 44 months. Once again, like last two weeks, mid-cap stocks did better than large-caps. While the S&P CNX Mid-cap 200 Index was up 4.86 per cent, the S&P CNX Nifty gained 3.23 per cent. The broader S&P CNX 500 ended the week up 4.76 per cent.
Foreign institutional investors (FIIs) continued with their faith in the Indian markets and bought Rs 1,409 crore worth of Indian shares this week. FIIs have started investing heavily in the Indian market expecting a greater stability in the region (read: ceasefire across LOC and resumption of overflights from Indian over Pakistan). Last week, they pumped in Rs 1,523 crore. Domestic mutual funds, on the other hand, turned net sellers this week. In the past three weeks, they have been buying aggressively in the market, but the sudden upsurge in equity prices has forced them to book profits.
Barring a minor blip on Monday, the Sensex rose on each trading session. Initially, pharma stocks came in the limelight following Ranbaxy getting the US FDA approval to market a generic chewable tablet form of GlaxoSmithKline's Augmentin antibiotic. But, due to profit booking in later trading sessions, the BSE Healcthcare Index just managed to gain 2.71 per cent over the week. Ranbaxy ended the week flat. In the second half of the week, it was PSU, banking, technology and cement stocks, which dominated the rally.
The BSE PSU Index gained the most in the week's rally (up 6.23 per cent) on the expectation of dividend announcements by public sector companies. Last month, the government has asked PSUs to pay interim dividends in order to meet the shortfall in revenues due to the slowdown in the disinvestment process. Thus, the market is expecting aggressive dividend payouts from the PSUs. ONGC was up 12 per cent, Indian Oil gained 6.4 per cent and GAIL ended the week up 5.4 per cent.
The rally in private sector bank stocks continued this week too. HDFC Bank gained nearly 10 per cent and ICICI Bank was up 7.6 per cent. Private sector banks came in the limelight last week after HSBC bought a major stake in UTI Bank. Interestingly, PSU banks, which were on the losing side last week, joined the rally this week. Thus, the BSE Bankex gained 5.8 per cent over the week. Major gainers among PSU banks were Oriental Bank of Commerce (7.9 per cent), Union Bank of India (6 per cent) and State Bank of India (3.2 per cent).
After a dismal performance in the previous week, technology stocks attracted good buying interest this week. The BSE IT Index gained 4.9 per cent. Wipro gained 6.67 per cent, Satyam Computer was up 4 per cent and Infosys was up 2.42 per cent.
Cement stocks gained on the reports that cement prices are expected to rise next week. Gujarat Ambuja was up 7.7 per cent and Grasim Industries gained 5.7 per cent.
Last week's biggest gainer, BSE FMCG Index failed to sustain its strong gains and ended the week up just 1.7 per cent. The FMCG major HLL ended the week flat, while ITC gained 6.26 per cent. Auto stocks too failed to gain investors' attention. Both Tata Motors and Bajaj Auto gained about one per cent over the week.
Outlook
The Sensex has gained over 57 per cent in 2003 so far, largely driven by strong FII inflows. Following increasing stability in the region, FIIs are expected to pump in more money in Indian markets. Thus, the future course of the market movement will be guided by the extent of FII inflows in the coming week.
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