Hat-trick for Sensex

Major news for the week:

Food inflation softens to 12.47%

Bharat Heavy Electricals Q1 net profit jumps 42% yoy

Wipro posts good Q1 nos

Sharekhan's global market round up

HDFC Bank Q1 net profit rises 34% yoy



Weekly Report:

After a lackluster start, the Sensex ended in the green for the third straight week, registering gains of 0.98% over the previous week's close. On the domestic front, the India Inc's Q1 earnings continued to flow even in this week with major companies like HDFC Bank, Wipro, ITC, Bharat Heavy Electricals and many others, which announced decent earnings. The softening of food inflation eased some concerns over the interest rate hike in the upcoming Reserve Bank of India (RBI) meet on July 27, 2010. On the global front, encouraging economic data from the European markets, the US Federal Reserve Chairman Ben Bernanke suggesting that there is a safety net in place and upbeat corporate earnings announced on Thursday (July 22, 2010) boosted the investors' confidence globally lifting all the major indices. Such a series of delightful doses across the globe helped the Sensex to end the week with good health.

The significant psychological levels of 18000 for the Sensex and 5400 for the Nifty were attained, which failed to sustain in the previous week. The indices managed to hold and close well above their crucial levels in this week owing to the strong economic and earnings data flowing from across the globe. On the last day of the week, the Sensex and the Nifty managed to hit the 30-month high levels of 18238 and 5478 respectively.

The Sensex swung 389 points and the Nifty by 124 points in the week amid heavy buying and short covering at the fag end of the week. The volumes jumped sharply in the last two trading sessions of the week, which otherwise remained dull for the first three days. The Sensex ended the week higher, up by 175 points or 0.98%, at 18131 and the Nifty rose to 5449, 55 points or 1.02% higher.

The rally in the metal stocks led the BSE Metal to surge by little over 4% helping it outshine other sectoral indices with quite ease. The sectors like BSE consumer goods (CG) and BSE consumer durables (CD) rose by 2.14% and 1.69% respectively. The defensive sectors like BSE health care (HC) and BSE fast moving consumer goods (FMCG) were the only indices that closed in the red with the losses of over 1.75% and 0.25% respectively. The remaining eight sectoral indices closed in the green in the range of 0.26-1.46%.

Coming on to the stocks who were major movers and shakers in this week included the list of companies that announced their earnings, either good or bad. Amongst the 'A' group stocks, one with Q1 good numbers and helped by order winning as well was Alstom Projects that surged by over 10%, followed by JSW Steel that rose by 8.41% on the news that the company is considering a share sale of around 14% for Rs4,000 crore to a strategic investor to raise long-term funds. Crompton Greaves gained 6.97% on upbeat Q1 earnings. While on the losers list, Dr Reddy's Laboratories fell by over 7.25% due to disappointing Q1 numbers, while Zee Entertainment and GTL lost by 5.8% each despite good Q1 numbers.

After outperforming the global counterparts in the previous week, the Indian markets this week gained nearly by 1%, the second lowest gainer was Japan's Nikkei that rose by mere 0.24%. It seemed that the domestic indices were playing a cat and mouse game with the global peers from the past few weeks, as one outperforms other every alternate week. During the week, China's Shanghai Composite surged the most by 6.10%, aided by improving liquidity on the country's money market and expectations of easing the government curbs on the property market. The Bernanke's downbeat assessment of the US economic outlook shook the global markets, though the latest statement of his regarding the 'safety net being in place' and the European services and manufacturing PMI data beating the forecasts and that remained well above 50 showing that expansion rate is not decelerating, helped the US and European stocks ended 2-3% each higher.

As the Sensex managed to sustain its crucial levels, it signifies that the sentiments are becoming a bit optimistic for the coming week. The positive statements by C Rangarajan, Economic Advisory Council to the Prime Minister Manmohan Singh that the economy is likely to grow at 8.5% in 2010-11 and the global economic recovery is expected to be slow and modest, and he does not expect a double-dip recession may provide a support. On the global front, the US earnings of big corporate like Ford, Honeywell, McDonald's and Verizon along with the European banks' stress test results, which will set a tone for the domestic market opening on Monday (July 26, 2010). However, with raft of earnings by big companies like NTPC, Tech Mahindra, Sterlite Industries, MRPL, Hindustan Unilever, Larsen & Toubro, Titan Industries and many more slated to be announced in the coming week. It is expected that the next week will be full of action at least on the individual stocks front. To get the update on the list of companies that will be announcing their results kindly log on to Sharekhan.com. While the RBI's quarterly monetary policy will be announced on July 27, 2010 along with the F&O expiry on July 29, 2010 may keep the markets edgy and volatile.