Bulls bid cheerful good buy to 2006
The markets recovered well from last week's fall to close higher, led by gains in Wipro, TCS, ACC, Grasim and HDFC Bank. Despite churning of portfolios on account of December F&O expiry and overall choppiness in the market, the indices closed the last trading week of the year with gains. The rally could be attributed to a smooth roll over in the derivate segment of the market and short covering. Nifty rollover was to the tune of around 75.84%, while market wide rollover to January F&O series was around 83.65%. Buying was seen across-the-board, but counters like Auto, Capital Goods, Cement, Bank, IT and select mid-cap stocks stood out. The benchmark BSE Sensex closed 2006 at 13787, recording a weekly gain of 2.34% or 315 points and the NSE Nifty added 2.46% or 95 points to close at 3966.4. Both the indexes recorded their fifth yearly advances.
Capital Goods stocks rose on the back of value buying. L&T rose over 3% to Rs1442, while Siemens gained 1.2% to Rs1134. Punj Lloyd surged over 4% to Rs1029 after the company won contract by Horizon Terminals worth Singapore US $49.7mn and BHEL was up by 0.9% to Rs2289.
Auto stocks were in top gear during the week ahead of the proposed price increases in January. Hero Honda raced ahead by over 4.5% to Rs762, Tata Motors rose by over 4% to Rs900. Bajaj Auto was up 2.3% to Rs2618 and Maruti edged higher by 0.2% to Rs927.
Short covering boosted IT stocks ahead of their results. Index heavy weights led from the front, with Wipro adding over 8% to Rs604, TCS climbed over 7% to Rs1218. Satyam was up 3.8% to Rs483 and Infosys added 3.6% to Rs2240. Among the Mid-Cap stocks i-flex rallied over 10% to Rs1947 and Mphasis BFL was up 4.6% to Rs303.
Banking stocks were in the limelight with frontline stocks leading the way. HDFC Bank rose 5.8% to Rs1069, ICICI Bank advanced 4.1% to Rs890 and SBI gained 2.8% to Rs1245.
Select sugar stocks advanced after the Government allowed companies to export sugar as production reached peak. Shree Renuka Sugar was up by over 5.5% to Rs446, Bajaj Hindusthan advanced by over 2.6%. The company reported a 36% increase in net profit at Rs1.91bn for the financial year ended Sept 30, 2006. Total revenue stood at Rs14.87bn for the year 2005-06 versus Rs8.55bn in the previous year. However, Simbhaoli Sugar lost over 5% to Rs58 and Sakhti Sugar fell 3.3% to Rs98.
Value buying was also seen in mid-cap stocks. These set of shares have lagged the large caps in recovering from the lows seen in May and June. Now with frontline stocks appearing overvalued, investors are slowly shifting their attention towards the mid-cap stocks. Indiabulls rallied over 13% to Rs659, Polaris rose 4.9% to Rs172, BEML jumped over 9% to Rs1015 and Thermax was up 6.5% to Rs387.