Sensex gains more than 2% in year-end rally

The market witnessed a decent rally during the last week of 2010 on the back of firm global stocks. Foreign funds stepped up buying at the fag end of the month and the year to boost year-end values of their portfolios. The market shrugged off data showing a surge in inflation in mid-December 2010.



The BSE Sensex rose 435.43 points or 2.17% to 20,509.09 in the week ended Friday, 31 December 2010. The 50-unit S&P CNX Nifty rose 122.90 points or 2.04% to 6,134.50. The BSE Mid-Cap index rose 2.30% and the BSE Small-Cap index rose 3.38%.

In the calender year 2010, the BSE Sensex rose 3,044.28 points or 17.43%. The S&P CNX Nifty rose 933.45 points or 17.94%. The BSE Mid-Cap index rose 16.15% and the BSE Small-Cap index rose 15.71%.

FII inflow in the calendar year 2010 totaled Rs 130913.30 crore (till 29 December 2010). In dollar terms, the inflow in 2010 reached a record $28.83 billion (till 29 December 2010) and much higher than $17.45 billion in 2009.

Inflation in the food articles group climbed to 14.44% in the week ended 18 December 2010 from 12.13% in the previous week, the latest government data showed. This was the fourth instance of an increase in food inflation after easing for seven consecutive weeks. Inflation in the Primary Articles group jumped to 17.24% in the week under review from 15.35% in the week ended 11 December 2010, the latest data showed. Inflation in the Fuel & Power group inched higher to 11.63% in the week ended 18 December from 10.74% in the week ended 11 December.

The output of six key infrastructure sectors grew 2.3% in November 2010 from a year ago, the slowest pace in the last 21 months, raising the prospects of a drop in industrial growth for the month. The six core industries -- crude oil, petroleum refining, coal, electricity, cement and finished steel, have a combined weight of 26.7% in the index of industrial production and are considered an advance indicator of industrial activity. These sectors had grown an upwardly revised 8.6% in October 2010.

The fiscal deficit from April to November was Rs 1,86,000 crore ($41.6 billion), or 48.9% of the full-year target, the government said in a statement on Friday. In February 2010, the government had forecast a fiscal deficit of Rs 3,81,000 crore, or 5.5% of gross domestic product, for the current financial year.

The Reserve Bank of India (RBI) on Thursday, 30 December 2010, warned that sudden reversal of overseas portfolio investments that have been flooding in this year could create problems for the economy. "A potentially worrying feature of capital flows to India has been the dominance of portfolio flows which are prone to sudden stops and reversals," the RBI said in a report on assessment of the health of financial sector.

The second financial stability report by the central bank also warned that "at present, stressed liquidity conditions warrant caution and a watchful management in the coming months". With both financial and real sectors still under stress in advanced economies, the report said, "India will have to guard against vulnerabilities arising from risks to global growth and financial stability."

The report said that the other soft spots in the financial sector include widening current account deficit, deteriorating external sector ratios and tight liquidity position, in addition to inflationary pressures.

The combined advance tax payment by top 100 corporate taxpayers rose 18.7% to Rs 27,531 crore in Q3 December 2010 over Q3 December 2009, indicating better corporate performance in the third quarter this year. Advance tax is paid in four installments in June, September, December and March and is based on taxpayers' projected earnings, thus giving an indication of industry's performance in the months to come.

The key benchmark indices declined marginally on low volumes on Monday, 27 December 2010, tracking weakness in European and Chinese stocks. Chinese stocks tumbled after a weekend interest rate hike. A surge in crude oil price to 26-month high near $92 a barrel, stoked macroeconomic worries, which also weighed on sentiment. The BSE 30-share Sensex was down 44.73 points or 0.22% to 20,028.93. The S&P CNX Nifty was down 13.50 points or 0.22% to 5,998.10.

The key benchmark indices had a flat closing on Tuesday, 28 December 2010. Volumes were thin as participation was low from institutional investors ahead of year ending. The BSE 30-share Sensex fell 3.51 points or 0.02% at 20,025.42. The S&P CNX Nifty lost 2.10 points or 0.04% at 5996.

The key benchmark indices surged on Wednesday, 29 December 2010, a day ahead of the expiry of the near-month derivatives contracts, helped by firm global stocks. The barometer index BSE Sensex and the 50-unit S&P Nifty, both, attained 1-1/2-month closing highs. The Nifty regained the psychological 6,000 mark. The BSE 30-share Sensex jumped 230.61 points or 1.15% to 20,256.03. The S&P CNX Nifty rose 64.35 points or 1.07% to 6,060.35.

The key benchmark scaled 1-1/2-month closing highs on Thursday, 30 December 2010, on expiry of the December 2010 derivatives contracts. The market shrugged off data showing a surge in inflation in mid-December 2010. The BSE 30-share Sensex was up 133.04 points or 0.66% to 20,389.07. The S&P CNX Nifty was up 41.50 points or 0.68% to 6,101.85.

The key benchmark indices posted modest gains on the last day of 2010 as auto and bank stocks rose. The BSE 30-share Sensex rose 120.02 points or 0.59% to 20,509.09. The S&P CNX Nifty was up 32.65 points or 0.54% to 6,134.50.

Among the 30 Sensex shares, 28 rose and just 2 stocks declined. India's second largest motorcycle maker by sales Bajaj Auto was the top Sensex gainer last week. The stock rose 6.64% to Rs 1541.50.

HDFC Bank spurted 5.89% to Rs 2346.50. It was the second biggest Sensex gainer. FMCG major Hindustan Unilever climbed 5.76% to Rs 312.30. It was the second biggest Sensex gainer.

Tata Power Company (up 4.99%), HDFC (up 4.15%), Reliance Infrastructure (up 3.34%), Jaiprakash Associates (up 3.22%) and DLF (up 3%), were the other major Sensex gainers.

India's largest aluminium maker by sales Hindalco Industries rose 2.78% to Rs 246. The stock hit a record high of Rs 246.90 on 31 December 2010.

Anil Ambani-controlled Reliance Communications rose 2.26% to Rs 145.10 on reports the company can restart providing video calls in the new year as part of its 3G services. The government has reportedly approved telecom operators' video calls facility after operators gave an undertaking that within the next six months, they would start providing real-time interception of video calls. Video calls are interactive calls where the callers can view each another on mobile phones or computer displays.

India's biggest commercial bank in terms of branch network State Bank of India rose 2.04% to Rs 2811.05 after the bank said it plans to raise Rs 10,000 crore through public issue of subordinated bonds to fund its business growth.

India's largest engineering and construction company by revenue Larsen & Toubro rose 1.13% to Rs 1979.05. The company secured orders aggregating Rs 2503 crore for transmission, substation & railway construction projects in domestic & international markets during Q3 December 2010. Meanwhile, the company's construction division also won orders worth Rs 1164 crore.

Index heavyweight Reliance Industries (RIL) fell 0.12% to Rs 1058.25. It was the biggest Sensex loser last week. RIL's advance tax payment reportedly surged 42.8% to Rs 1191 crore in Q3 December 2010 over Q3 December 2009.