Sensex bucks the trend, outperforms its peers

Major news for the week:

June index of industrial production at 7.1%

Food inflation rises to 11.4%

State Bank of India hits 52-week high on robust Q1 results

Tata Motors hits an all-time high on robust Q1 numbers

Reserve Bank of India unveils discussion paper on new bank licenses



Weekly report

Indian indices extended its winning streak on the second straight week on account of strong earnings posted by the heavyweights like State Bank of India, Tata Motors, Tata Steel and sustained buying by the foreign funds. However, gains were marginal owing to lower than expected India’s index of industrial production (IIP) for June, which came in at 7.1% and food inflation rose to 11.4% for the week ended July 31, 2010. Federal Reserve’s comments that the US economic growth will be more modest than anticipated weighed on the domestic markets. During the week, the government approved its stake sale in the State Bank of India. The midcap (up 1.43%) and the smallcap (up 1.32%) indices outperformed the Sensex during the week.

The Sensex swung 394 points and the Nifty by 120 points. During the week, the Sensex and the Nifty hit the fresh 2-1/2 year high. The Sensex signed off the week higher by 23 points or 0.13%, at 18167 and the Nifty shut at 5452, 13 points or 0.24% higher.

On the global front, domestic markets bucked the trend to close the week marginally higher. All the other major indices ended the week in the negative territory. Nasdaq and Japan’s Nikkei indices slid over 4% each during the week. While, other indices ended the week lower in the range of 1.24-3.13%.

The BSE Realty surged by 6.58% outperforming other sectoral indices with quite ease. The sectors like BSE consumer durables (CD) and BSE Bankex rose by 4.44% and 3.42% respectively. On the flip side, BSE information technology (IT) declined the most with losses of 2.22%, followed by BSE TECk that slid by 1.71%.

Among 'A' group stocks; Tata Communications surged the most with gains of 20.12%, followed by Indiabulls Real Estate that advanced by 14.43% and Tata Motors jumped by 13.71% after posting turnaround Q1 results. Among the losers, MMTC slid by 11.45%, followed by Sterlite Industries that declined by 8.93% and Aban Offshore fell by 8.16%.

Despite of concerns on global economic recovery, foreign institutional investors (FIIs) continued its buying activity, purchased stocks worth Rs2,026.40 crore during the week. On the other hand, domestic institutional investors (DIIs) continued to be the net sellers, sold Rs288.70 crore shares during the week.

As the earnings season comes to an end, the domestic markets may focus on the monthly inflation numbers for the month of June, which will be declared on August 16, 2010. Fund flows may decide the markets movement in the coming days. On the global front, lot of macro data in the US and Japan may impact the domestic markets in the coming week.