Markets surge 6% after 5-week fall

The Indian markets had a good time this week as investors went bargain hunting. The Sensex was outperformer of the week

Major news for the week

Q1FY12 GDP at 7.7% versus 9.3% yoy

RBI may hike rates as food inflation hits double digits

Exports rise 82% in July

RBI issues guidelines for new bank licences

India’s PMI falls to 52.6 in August



Indian indices

Markets bounced back in this short trading week as investors picked up stocks that were beaten the most in recent days. Tremendous buying interest throughout the week helped the markets to rise after five consecutive week of losses. The sentiment got a boost after fears of recession in the world's biggest economy receded following an optimistic assessment of the US economy from Federal Reserve Chairman Ben Bernanke on August 26, 2011. The political impasse came into an end after the government gave in to the demands of anti corruption activist Anna Hazare; this was also cheered by investors.

Further, Q1FY2012 GDP data came in line with Street estimates, which boosted investor confidence. The markets advanced in all the three sessions of the week. The markets were shut on August 31, 2011 on account of Ramzan and September 01, 2011 due to Ganesh Chaturthi.

The Sensex swung 921 points between a weekly high of 16990 and a weekly low of 16069 and closed 973 points or 6% higher at 16821. The Nifty oscillated 308 points between a weekly high of 5114 and a weekly low of 4806 and closed 292 points or 6% higher at 5040.

Sectoral and stock screening

All the sectoral indices closed the week on a positive note. BSE Metal was the top performer of the week rising by 11.52%, BSE Realty advanced by 10.09% and BSE Bankex surged by 6.87%. Rest of the sectors closed higher by 2.44-6.50%.

Coming to 'A' group stocks, top winners - Manappuram Finance shot up by 29.03%, JSW Steel up by 18.50% and DLF surged by 18.28%. Top losers - ONGC fell by 5.07%, SKS Microfinance went down by 4.41% and Apollo Hospitals Enterprise lost by 3.51%.

FII/MF activity

The foreign institutional investors (FIIs) switched to buying mode after four straight week of selling. The FIIs bought Indian shares worth a net of Rs1,066.8 crore this week as compared to net sell of Rs4,370.8 crore seen in the previous week. The domestic institutional investors (DIIs) purchased Indian shares worth a net of Rs315 crore this week as compared to net buy of Rs554 crore seen in the previous week.

Global signals

Except Shanghai Composite down by 3.22% and Dow Jones down by 0.39%, all the global indices ended the week in the green zone. The biggest gainer of the week was Sensex, up by 6%, following that Hang Seng up by 3.22% and FTSE 100 rose by 3.16%.

Outlook

In the upcoming week, the Indian markets will take cues from the global equities. On Monday (September 05, 2011), the markets will react to the US employment report for August 2011. Inflation numbers will continue to remain in focus, which may have some bearing on the Reserve Bank of India’s policy review on September 16, 2011. FII activity and global cues may drive the market sentiments.