Sensex outperforms its peers

Major news for the week:

Food inflation rises to 11.47%

Reliance Industries plans to raise its stake in EIH

Israel Supreme Court rules in favour of Sun Pharma

Vodafone loses tax case against income tax department

Direct tax mop-up rises 13.9% in April-August



Weekly report

The short week clearly belonged to the bulls, as the Indian markets gained in all the four trading sessions of the week. The markets expanded its winning run on the second consecutive week by posting significant gains of 3%. The domestic markets joined the global markets rally post better than expected US employment data, which eased concerns about the world's largest economy facing a double-dip recession. Sustained buying of Indian stocks by foreign institutional investors (FIIs) and good monsoon also lifted investor sentiment. Tremendous buying in metal and banking stocks helped the Indian indices to hit the new 31-month high during the week. India’s food inflation rose to 11.47% for the week ended August 28, 2010 compared to 10.86% seen in the previous week.

During the week, the Sensex swung 699 points and the Nifty by 168 points. On its way, the Sensex and Nifty hit new 31-month high at 18823 and 5647 respectively. To close the week, the Sensex shut higher by 578 points or 3.17%, at 18800 and the Nifty close above the significant levels of 5600 at 5640, 161 points or 2.93% higher.

On the global front, it was total reverse trend from the previous week. The Sensex outperformed all the other major indices across the globe by gaining 3.17%. Rising yen weighed on Japan’s Nikkei index during the week while, renewed concerns about the European Bank’s health weighed on the European markets. The Sensex gained on continuous inflow of foreign funds.

With the bulls charging ahead all through the week, it was all in the green on the sectoral indices' front. The BSE Metal was the best performer, gained by 5.11%, followed by the BSE Bankex that surged by 4.11% and the BSE Information Technology (IT) that rose by 3.73%. Rest of the indices posted gains in the range of 0.31%-3.43%.

Looking in to 'A' group stocks, Godrej Industries put up a good show by rising 15.79%, followed by Ultratech Cements that surged by 11.15% after a hike in the cement prices in southern India and KSK Energy Venture surged by 10.17%. On the other hand, EIH was the worst performer, fell by 6.53%, followed by Ashok Leylend that declined by 4.17% and Indian Oil Corporation slipped by 3.47% after turning ex-dividend.

The FIIs have been active all through the week and continued their strong buying activity. The FIIs have bought Indian stocks worth a net of Rs2,189.60 crore as compared to net buy of Rs1,453 crore seen in the previous week. The domestic investors turned buyers for the first two trading sessions of the week, as they bought Indian shares worth a net of Rs385.70 crore. The domestic investors sold Rs1,162.10 crore in the previous week.

In the upcoming week, index of industrial production for July, inflation data for August and advanced tax numbers for the second quarter of Indian companies may decide the future path of the domestic markets. Investor will also focus on the mid-term monetary policy review by the Reserve Bank of India, scheduled on Thursday (September 16, 2010). FIIs fund flow along with the performance of the global indices may also have an impact on the domestic markets.