Well it's a long way up and we won't come down tonight
… cause tonight will be mine - up on cloud number nine
The bulls were on a rampage this week crossing the 15k mark in style. However, they failed to settle above the psychological milestone as profit booking set in at higher levels. A sudden push from the bulls in afternoon trade on Friday lifted the Sensex past the 15,000 mark. The volatile week witnessed the listing of realty major DLF. ACC, HLL, Tata Motors, L&T and Bharti Airtel were among the major gainers. Higher crude oil prices and a stronger rupee failed to have any kind of impact on the bulls. Banking, Capital Goods, Cement and Auto shares were the big movers .
Pick up in FII investment has fueled the rally in recent days after the Nifty breached the key levels of 4300 last week. The tremendous response to the recent public issues, both in local and overseas markets have made investors more confident over the growth of the Indian economy. The Sensex rose 313 points or 2.14% to close the week at a lifetime high of 14964. the NSE Nifty advanced by 1.52% or 66 points to end at 4384. The Sensex has now gained 800 points in three consecutive weeks.
IT stocks, which were underperformers in recent times saw value buying ahead of Q1 results. However, refinery stocks witnessed profit booking as crude oil price hit a 10-month high of $72 per barrel. Many frontline stocks like L&T, BHEL, ABB, SBI closed at an all time high. Impressive auto monthly numbers, hike in cement price, rally in the global market and continued FII buying boosted market sentiment.
The results will start next week with Infosys kicking off the earnings season on 11th July. Infosys results and its guidance will be a key factor to determine the market trend. Others like Hindalco, HDFC Bank, Bajaj Auto and UTI Bank will announce Q1 results next week. We are bullish on the market but some profit booking is not ruled out. Our top sectors are banking and cement. Our top picks for investment are IOB, Andhra Bank, Kesoram, Mangalam Cement and Balrampur Chini. Other stock ideas are Bharti Airtel, ONGC, HCL Tech, M&M and Maruti.
Gains were also seen across telecom stocks. Bharti Airtel rose by over 3.5% to Rs866 after the company said that India's monthly user addition would cross 7mn. It also announced that Temasek would pick up 4.99% stake in the company and signed an outsourcing pact with Nokia Siemens for US$900mn. The scrip hit week’s high of Rs882 and a low of Rs835. Reliance Communications surged 6% to Rs550. The second largest wireless operator added 1.4mn new mobile users last month. It also announced that it was in talks with Alcatel-Lucent and Huawei to buy equipment for GSM expansion worth Rs30bn. The scrip hit week’s high of Rs565 and a low of Rs519.
The BSE Capital Goods index was the top gainer, rising by 3.9%. L&T was the second biggest gainer in the of Sensex. The scrip rose over 7.5% to Rs2364. L&T announced it would set up three units for railways, power and ship building. It also declared a special dividend of Rs2 per share. The company's US$1bn infrastructure fund is expected to be operational in the next couple of months, according to Chairman and Managing Director, AM Naik.
Auto stocks made a smart comeback this week on the back of value buying. Four-wheeler makers such as Maruti and M&M clocked strong monthly sales figures. The BSE Auto index gained 3.5%. The biggest gainer among was M&M. The scrip rose by 9% to Rs787. Tata Motors paced ahead by 6% to Rs711, Maruti surged by 7% to Rs791.
IT stocks came back into the focus ahead of the announcement of their results. Barring Friday software stocks were under pressure due to nagging concerns about margin compression from rupee appreciation. The Indian rupee gained for the fourth straight week, rising 0.6% to 40.55 per dollar. The BSE IT index was up 1.6% during the week. Satyam advanced by 4.6% to Rs489. Infosys gained 2.1% to Rs1971 and Wipro climbed 0.3% to Rs519.
Cement stocks, which have been underperforming the market for the past few months, had a week to remember amid reports that cement producers hiked prices by Rs3-5 per 50-kg bag across the country. Last week, cement shares had gone up after Finance Minister P. Chidambaram said the government had not asked cement companies to freeze prices and it would not interfere in setting cement prices. ACC jumped over 11% to Rs1040. Grasim spurred by over 5% to Rs2773 and Gujarat Ambuja added 5% to Rs131.
Good start to the monsoon had a positive effect on FMCG and Agri stocks. Talks of new fertilizer policy have also been doing the rounds. The BSE FMCG index gained 1.4% during the week. HLL rose by over 5.5% to Rs199, Colgate advanced by overt 4% to Rs385 and Britannia rallied by over 8% to Rs1709.