Bull run leads market to a new high

Major news for the week:

Tata Motors July global sales grow 36%

Vedanta to buy 51-60% of Cairn

Inflation eases to 9.97% in July

Food inflation softens to 10.35%

Bharat Petroleum Corporation gains on buying Australian shale gas asset



Weekly report

Bulls continued its northward march for the third straight week, with benchmark indices hitting a new 2-1/2 year high. The investor sentiment remained upbeat on account of continuous fund flows from the foreign institutional investors (FIIs), easing inflation worries after India’s July inflation softened to 9.97% as compared to 10.55% seen in June and also weekly food inflation dropped to 10.35% for the week ended August 07, 2010 against 11.4% seen in the previous week. However, recent string of weak economic data in the US, resurfaced concerns over global economic recovery, which capped some gains at the fag end of the week. Mid cap (up 2.34%) and Small cap (up 1.7%) indices outperformed the Sensex for the second week in a row.

During the week, the Sensex swung 478 points and the Nifty by 149 points. The Sensex and Nifty hit fresh 2-1/2 year high at 18475 and 5546 respectively. Wrapping off the week, the Sensex shut the week higher by 235 points or 1.29%, at 18402 and the Nifty closed at 5531, 79 points or 1.44% higher.

On the global front, series of weak economic data in the US dampened the market sentiment across the globe as most of the major indices ended the week lower. However, Shanghai Composite and the Sensex outperformed other peers posting significant gains of over 1% each. Nasdaq closed with marginal gains. On the other hand, European indices declined with CAC 40 losing the most by 2.35%.

All the sectors performed well in this week, however, BSE Power, BSE TECk, and BSE consumer durables (CD) were exceptional, that fell by 0.82%, 0.33% and 0.25% respectively. BSE fast moving consumer goods (FMCG) outperformed the other sectors, gained by 2.92%, and followed by the BSE Bankex that surged by 2.72%, as most of the banks hiked their rates in this week. The BSE Bankex has been gaining over 2% for the third consecutive week. The remaining gaining indices ended higher in the range of 0.05% to 1.70%.

Among 'A' group stocks, Bhushan Steel surged the most with gains of 14.23%, followed by Jet Airways that advanced by 11.62% after the company sought approval from the Reserve Bank of India to raise fund through external commercial borrowings (ECB) and Grasim Industries jumped by 11.43%. Among the losers, Suzlon Energy slid by 12.49% after reporting disappointing Q1FY2011 results, followed by Hindustan Construction Company that declined by 10.81% and National Aluminum Company that fell by 8.65%.

The sustained buying across the board helped the Indian indices to touch the 30-month highs this week. The FIIs have been the net buyers of Rs4,446.8 crore this week, as compared to Rs2,026.4 crore in the previous week. The rally was also led by FIIs as in this week they have purchased Indian stocks almost double of what they had bought in the previous week. The domestic funds dumped shares worth a net of Rs553.7 crore in this week, as compared to Rs307.1 crore in the previous week.

In coming week, the market may witness volatility, as the traders will rollover positions in the derivatives segment from the August 2010 series to the September 2010 series ahead of the expiry of the near-month August 2010 contracts on Thursday, August 26, 2010. The FIIs flows may decide the future path of the market. Economic data across the globe may also determine the market’s course in the coming week.