What a week it was for Indian equity markets! The BSE Sensex added 226 points (4.24 per cent) over the week to cross past the 5,500-point mark after 45 months. This is the fourth consecutive weeks, in which the Indian equity markets have moved up. And interestingly, in all these four weeks, the mid-cap stocks have done better than the large-caps. This week, while the S&P CNX Mid-cap 200 Index gained 5.26 per cent, the S&P CNX Nifty Index was up 4.7 per cent.
A robust FII inflow has played a key role in the recent upsurge in the equity markets. This week, FIIs pumped in Rs 1,021 crore in Indian equity markets, thus belying market expectations of a traditional slowdown in inflows in December. Mutual funds too returned to the market. After being net sellers to the tune of Rs 40 crore in the previous week, they bought Rs 321 crore worth of shares last week.
Indian equity markets opened the week on a positive note gaining 121 points in the first two trading sessions. All sector stocks participated in the rally, especially technology, FMCG and pharma. The capture of former Iraqi President Saddam Hussein triggered a feel-good factor among investors. However, the markets lost 19 points on Wednesday due to profit booking in select index stocks. But markets made a strong recovery in the last two trading sessions led by technology and PSU stocks. Market sentiment also improved after the international credit rating agency S&P revised India's long-term foreign currency rating from negative to stable.
The BSE PSU index gained 5.54 per cent over the week on the expectation of hefty dividend payouts by the public sector companies. Most gains came on Thursday after the government gave its clearance for ONGC, Indian Oil and GAIL to sell their cross-holdings in the market. These sales are expected to fetch heavy accruals for the government in terms of capital gains tax. ONGC gained 8.34 per cent, Indian Oil was up 6.61 per cent and GAIL ended the week up 8.35 per cent.
Technology shares attracted good buying interest on the expectation of a recovery in the US market. The BSE IT Index gained 4.36 per cent. Infy's new invasion in Australia also lifted the market sentiment for the sector. On Wednesday, Infosys acquired 100 per cent stake in Expert Information Services, a mid-sized Australian provider of infotech services. Infy was up 4.47 per cent over the week.
FMCG stocks came in limelight on the hopes of a better prospect in the sector. The BSE FMCG Index gained 5.6 per cent, with the index heavyweight, HLL gaining the most (7.4 per cent). According to the recent ET-Brand Equity Survey, HLL has put in its best top 10 performance ever, with as many as six brands opposed to only three in 2002. Indian pharma stocks also attracted some good buying interest. The BSE Healthcare Index was up nearly 5 per cent over the week. The major gainers include Cipla (7.8 per cent) and Ranbaxy (4.82 per cent).
Auto and cement shares also rose in later trading sessions on hopes of strong earnings. Bajaj Auto gained 8.58 per cent and Hero Honda was up 4.17 per cent. Among cement stocks, major gainers included L&T (14.12 per cent), Grasim (6.76 per cent) and ACC (1.61 per cent).
Private sector banks also came in the limelight after the finance minister said in the parliament that the government has taken an in-principle decision to raise FDI limits in private banks. ING Vysya Bank gained over 8 per cent. However, as most of other bank stocks failed to gain, the BSE Bankex ended the week flat. Among PSU Banks, Canara Bank (4.37 per cent) and State Bank of India (3.15 per cent) were among the big gainers.
A strong FII inflow has led the BSE Sensex to gain 64 per cent in 2003 so far. Though traditionally, December used to be a month of low FII participation, this trend has reversed with FIIs pumping in nearly Rs 4,000 crore in the first three weeks of December. In the coming weeks too, markets will largely take the cue from the extent of FII inflows.