Earnings power Dalal Street
Impressive earnings reports continued to drive the markets forward. IT heavyweights kicked off the earnings season with a bang and other index majors followed suit. Apart from Wipro and Reliance, Siemens, Reliance Energy, Ranbaxy and Tech Mahindra all registered strong growth aiding the key indices to post their fourth straight weekly gains. Quite a few mid-cap companies, particularly in the cement pack, came out with good results.
However, a slight disappointment from Satyam brought the markets lower on Friday. Capital Goods, select FMCG, Small Cap, Oil & Gas and Banking stocks were in momentum.
The BSE 30-share Sensex added 126 points or 0.9% during the week to close at 14,183 while the NSE Nifty closed at 4090, down 38 points. L&T, Reliance, Bharti Airtel and ACC were the major gainers.
Oil & Gas stocks continued to be in the limelight, as crude oil prices fell under US$50 per barrel before rising above that level. Oil futures in New York fell as low as $49.90, the lowest intraday price since May 25, 2005. As a result, HPCL, BPCL and IOC advanced. HPCL surged by nearly 6% to Rs321.
There were also reports that Lakshmi Niwas Mittal may take stake in the company's proposed refinery project in Bhatinda. Reports also said that HPCL could offer a stake to Total SA of France in its Vizag refinery. IOC was also in the news. Reports said that it was interested in refinery projects in Nigeria. Also, Saudi Aramco might pick up a stake in its Paradip refinery. .
Cement stocks rose amid speculation that prices may rise further. Also, mid-cap firms like JK Lakshmi Cement and Shree Cement announced strong results. Prism Cement surged by over 20% to close at Rs43, Gujarat Ambuja added 5% to Rs149 and India Cements was up by over 4% to Rs248. ACC, Kesoram and Grasim were among the other major gainers.
Value buying was also seen in mid-cap stocks. With frontline stocks appearing overvalued, investors are slowly shifting their attention to mid-cap stocks. 3i Infotech rallied by over 23% to Rs296 amid reports that ICICI will sell its stake as part of RBI regulation. The company also declared good set of numbers. ABG Shipyard advanced by over 16% to Rs360 after the company received a big order from Pacific First Shipping of Singapore.
Banking stocks extended last week's rally on optimism that a rule change allowing the RBI to lower the limit on SLR holdings will free up more cash to meet demand for loans from companies and individuals. ICICI Bank gained 2% to Rs986 and Kotak Bank was up by over 6% to Rs446.
FMCG stocks recorded smart gains ahead of their results. HLL advanced by over 1% to Rs220. The company, which recently raised prices of its products, has outperformed the Sensex this week. ITC climbed nearly 3% to Rs175 and Dabur added over 10% to close at Rs168.
Reliance beat the street by a long way by posting a whopping 58% rise in profit on strong refining margins and a low base owing to the shutdown in the year-ago period. Net income rose to Rs27.99bn from Rs17.76bn a year ago. The scrip was also certainly in thick of action itself by recording gains of nearly 3% to close at Rs1380.