Gaining Breadth

Even before the trading week had started it became clear that banking stocks would be in the limelight when the RBI declared a moratorium on GTB deposits during the weekend. That there would be another blockbuster news for this sector was perhaps not anticipated that of the merger of IDBI Bank with IDBI. However, the headline-hogging news as far as the equity markets were concerned had to be the start of the TCS IPO subscription period which is sure to keep Indian IT stocks in focus for the coming few weeks. It has been one of the most eagerly awaited IPOs in recent times and one that has got all the institutional buyers vying for a share of the pie.

To wrap up the market news for the week, both the benchmark indices registered increases during the week's trading. The Nifty increased by 1.92 per cent while the Sensex mirrored this – increasing by 1.91 per cent. While the movements on Monday and Tuesday largely neutralised each other, Thursday's gain of around 1.5 per cent was the driving force behind the week's increase. The increase was quite broad-based as well with the S&P CNX 500 registering a rise of 1.64 per cent. However, there was some noticeable slack in the pace of mid-cap stocks with the CNX Mid-Cap 200 unable to keep pace with the overall movement and registering only an increase of 0.73 per cent over the week.

Since the Finance Minister clarified the issue of transaction tax, the market seems to have got its momentum back. The real enthusiasm was seen among the FIIs who increased their net exposure in the Indian equity market by a whopping Rs 448.3 crore last week. Mutual funds on the other hand were net sellers to the tune of Rs 323.7 crore.

Among sectoral indices, the BSE IT Index was up a phenomenal 3.7 per cent. The TCS IPO has brought the IT stocks back in favour with investors. Pharma stocks continued to show weakness as heavyweights like Dr Reddy's and Ranbaxy struggle to recreate their magic of the past few years. The BSE Healthcare Index showed no major movements and remained static in the overall analysis. The BSE FMCG Index declined by 0.08 per cent but the fall could have been much more had it not been cushioned to a large extent by the good showing of index heavyweight ITC. HLL's "cup of woes" seems to be spilling over with both net profit and sales declining. Moreover, the FMCG sector as a whole is in for some tough times, especially with a poorer than usual monsoon becoming a reality with each passing day. However, the one bright spot in all this has been ITC, which has posted yet another strong quarterly performance. Of course, it has been aided to an extent by the government's decision to spare taxing cigarettes further.

The BSE PSU Index increased by 2.13 per cent during the week mainly due to the performance of the oil refining and marketing PSUs like ONGC and HPCL. Moreover, SAIL has also registered handsome gains in recent weeks with steel stocks being in favour with the investing community. However, with the GTB crisis coming to the notice of investors, stocks of private sector banks took a beating earlier in the week. But the merger of IDBI Bank with IDBI infused fresh life in banking stocks that they recovered some of their earlier losses. However, the BSE Bankex on the whole fell by 1.29% over the week. Another concern seems to be taking shape at the back of investors' mind and that is with weak monsoon lowering rural income and banks increasing their rural sector lending, it might just lead to higher non-performing loans.

Outlook
Market activity seems to have recovered pretty well after the solution to the problems over the imposition of the securities transaction tax. The average combined turnover on both NSE and BSE soared 9.4 per cent on a week-on-week basis. Even corporate results for the first quarter of this fiscal have been somewhat encouraging with few exceptions. And the return of FIIs in the Indian market in the last two weeks is a positive signal.

But the biggest worry for now is the scanty rainfall in most part of the northern India. This could have an impact on the monsoon sensitive stocks especially FMCG. Technology stocks are expected to remain favourable following the ongoing IPO of TCS. Auto stocks are also likely to be in demand owing to good corporate numbers from key auto companies. Overall, there are a lot of positives, and equity markets should do well this week.

as far as the equity markets were concerned had to be the start of the TCS IPO subscription period which is sure to keep Indian IT stocks in focus for the coming few weeks. It has been one of the most eagerly awaited IPOs in recent times and one that has got all the institutional buyers vying for a share of the pie.

To wrap up the market news for the week, both the benchmark indices registered increases during the week's trading. The Nifty increased by 1.88 per cent while the Sensex mirrored this – increasing by 1.91 per cent. While the movements on Monday and Tuesday largely neutralised each other, Thursday's gain of around 1.5 per cent was the driving force behind the week's increase. The increase was quite broad-based as well with the S&P CNX 500 registering a rise of 1.64 per cent. However, there was some noticeable slack in the pace of mid-cap stocks with the CNX Mid-Cap 200 unable to keep pace with the overall movement and registering only an increase of 0.73 per cent over the week.

Since the Finance Minister clarified the issue of transaction tax, the market seems to have got its momentum back. The real enthusiasm was seen among the FIIs who increased their net exposure in the Indian equity market by a whopping Rs 448.3 crore last week. Mutual funds on the other hand were net sellers to the tune of Rs 323.7 crore.

Among sectoral indices, the BSE IT Index was up a phenomenal 3.7 per cent. The TCS IPO has brought the IT stocks back in favour with investors. Pharma stocks continued to show weakness as heavyweights like Dr Reddy's and Ranbaxy struggle to recreate their magic of the past few years. The BSE Healthcare Index showed no major movements and remained static in the overall analysis. The BSE FMCG Index declined by 0.08 per cent but the fall could have been much more had it not been cushioned to a large extent by the good showing of index heavyweight ITC. HLL's "cup of woes" seems to be spilling over with both net profit and sales declining. Moreover, the FMCG sector as a whole is in for some tough times, especially with a poorer than usual monsoon becoming a reality with each passing day. However, the one bright spot in all this has been ITC, which has posted yet another strong quarterly performance. Of course, it has been aided to an extent by the government's decision to spare taxing cigarettes further.

The BSE PSU Index increased by 2.13 per cent during the week mainly due to the performance of the oil refining and marketing PSUs like ONGC and HPCL. Moreover, SAIL has also registered handsome gains in recent weeks with steel stocks being in favour with the investing community. However, with the GTB crisis coming to the notice of investors, stocks of private sector banks took a beating earlier in the week. But the merger of IDBI Bank with IDBI infused fresh life in banking stocks that they recovered some of their earlier losses. However, the BSE Bankex on the whole fell by 1.29% over the week. Another concern seems to be taking shape at the back of investors' mind and that is with weak monsoon lowering rural income and banks increasing their rural sector lending, it might just lead to higher non-performing loans.

Outlook
Market activity seems to have recovered pretty well after the solution to the problems over the imposition of the securities transaction tax. The average combined turnover on both NSE and BSE soared 9.4 per cent on a week-on-week basis. Even corporate results for the first quarter of this fiscal have been somewhat encouraging with few exceptions. And the return of FIIs in the Indian market in the last two weeks is a positive signal.

But the biggest worry for now is the scanty rainfall in most part of the northern India. This could have an impact on the monsoon sensitive stocks especially FMCG. Technology stocks are expected to remain favourable following the ongoing IPO of TCS. Auto stocks are also likely to be in demand owing to good corporate numbers from key auto companies. Overall, there are a lot of positives, and equity markets should do well this week.