Market extends rally for 5th week in a row

The market jumped last week on strong inflows from foreign institutional investors (FIIs). Data released during trading hours on Wednesday, 1 February 2012, showing strong manufacturing sector growth in January 2012 underpinned sentiment. A private survey showing that the services sector grew at its fastest pace in six months in January 2012, further boosted market.

The BSE Sensex rose 370.98 points or 2.15% to 17,604.96 in the week ended Friday, 3 February 2012. The S&P CNX Nifty rose 121.15 points or 2.33% to 5,325.85.

The BSE Mid-Cap index rose 2.96% and the BSE Small-Cap index rose 3%. Both these indices outperformed the Sensex.



Foreign funds stepped up buying of Indian stocks, with a net inflow of a massive Rs 1941.23 crore on Thursday, 2 February 2012, as per provisional data from the stock exchanges. FIIs had mopped up shares worth a net Rs 1676.49 crore on Wednesday, 1 February 2012, as per provisional data from the stock exchanges. FIIs made substantial purchases of Indian stocks last month. FIIs bought shares worth a net Rs 10357.70 crore in January 2012, as per data from Securities & Exchange Board of India (Sebi).

India's services sector grew at its fastest pace in six months during January 2012 as new business swelled, extending the previous couple of months' positive trend into the new calendar year, a survey showed on Friday, 3 February 2012. The HSBC Business Activity Index, compiled by Markit and based on a survey of around 400 firms, bounced to 58 in January from 54.2 in December. That was the third month the index has been above the 50-mark separating growth from contraction.

India's manufacturing sector grew at its fastest pace in eight months in January 2012 as factory output surged the most on record on increased domestic and foreign demand, a survey showed on Wednesday. The HSBC manufacturing purchasing managers' index (PMI), compiled by Markit, jumped to 57.5 from 54.2 in December. The factory output sub-index jumped to 62.9 in January from 55.8 in December, the biggest rise from one month to the next on record. Both the output and the new orders indexes rose to their highest level since May last year.

India's trade deficit widened to $12.7 billion in December from $8.0 billion a year earlier as export growth slowed due to falling global demand. But imports, specially in the non-oil segments, continued to grow. For the April-December period, the trade gap was $133.2 billion, compared with $96.2 billion a year earlier. India's merchandise exports in December grew 6.7% from a year earlier to $25.0 billion while imports rose 19.8% to $37.7 billion.

The government on Tuesday, 31 January 2012, slightly lowered its estimate of the country's growth in gross domestic product for the last fiscal year ended 31 March 2011, to 8.4% from 8.5%.

Trading for the week began on weak note. Weakness in global equity markets pulled Indian stocks lower on Monday, 30 January 2012. The barometer index, BSE Sensex, snapped a 6-day rally to end below the psychological 17,000 mark. The BSE Sensex fell 370.68 points or 2.15% to settle at 16,863.30. The S&P CNX Nifty fell 117.40 points or 2.26% to settle at 5,087.30.

Key benchmark indices surged on Tuesday, 31 January 2012, as firm global stocks lifted sentiment. The barometer index, BSE Sensex, regained the psychological 17,000 mark that day. World stocks rose that day after European Union (EU) leaders on Monday, 30 January 2012, signed a fiscal pact aimed at ending huge deficits in the region as part of efforts to control the region's sovereign-debt crisis. The BSE Sensex rose 330.25 points or 1.96% to settle at 17,193.55. The S&P CNX Nifty rose 111.95 points or 2.20% to settle at 5,199.25.

Strong cues from European market aided rally in Indian stocks on Wednesday, 1 February 2012. Good auto sales in January 2012 and data showing strong manufacturing sector growth in the month just gone by boosted sentiment. The BSE Sensex rose 107.03 points or 0.62% to 17,300.58. The S&P CNX Nifty rose 36.45 points or 0.70% to 5,235.70.

Key benchmark indices edged higher for the third consecutive trading session on Thursday, 2 February 2012. Data showing substantial purchases of Indian stocks by foreign institutional investors underpinned sentiment. Also supporting sentiment for the second day in a row was data released during trading hours on Wednesday, 1 February 2012, showing strong manufacturing sector growth in the month just gone. The BSE Sensex rose 131.27 points or 0.76% to settle at 17,431.85. The S&P CNX Nifty rose 34.20 points or 0.65% to settle at 5,269.90.

Key benchmark indices gained for the fourth consecutive trading session to hit highest closing level in 13-1/2 weeks on Friday, 3 February 2012, as data showing stepping up of buying of Indian stocks by FIIs recently boosted sentiment. The BSE Sensex was up 173.11 points or 0.99% to 17,604.96. The S&P CNX Nifty was up 55.95 points or 1.06% to 5,325.85.

Among the 30 Sensex shares, 25 rose and the rest declined.

India's largest real estate developer by market capitalisation DLF was the biggest Sensex gainer last week. The stock jumped 8.86% to Rs 230.30. Interest rate sensitive realty stocks rose on expectations that the Reserve Bank of India will start cutting interest rates in the coming months to prop up slowing economy. Lower interest rates may help revive demand for properties. Purchases of both residential and commercial property are largely driven by finance.

India's largest motorcycle maker by sales Hero MotoCorp galloped 7.36% to Rs 1955.90. The company reported 11.5% growth in sales to 5.20 lakh units in January 2012 over January 2011.

India's second largest motorcycle maker by sales Bajaj Auto rose 4.70% to Rs 1610.50. The company said during market hours on Thursday, 2 February 2012, that its total vehicle sales rose 8% to 3.37 lakh units in January 2012 over January 2011.

India's largest commercial vehicle maker by sales Tata Motors gained 3.36% to Rs 247.95. The company's total sales rose 16% to 87,465 units in January 2012 over January 2011.

India's largest car maker by sales Maruti Suzuki India rose 2.18% to Rs 1234.50. The car major announced during market hours on Wednesday that its total sales rose 5.2% to 1.15 lakh units in January 2012 over January 2011. Domestic sales rose 0.6% to 1.01 and exports jumped 54.3% to 14,386 units in January 2012 over January 2011.

Maruti on Wednesday, 1 February 2012, introduced a shorter, cheaper version of its Swift Dzire sedan as part of efforts to retain its position as the country's largest car maker by sales. The new Dzire is 3.95 meters in length, qualifying it for a lower federal excise tax, compared with the current 4.1 meter-long model. The government imposes a 10% tax on cars measuring up to 4 meters in length. These cars can have a diesel engine of only up to 1.5 liters or a gasoline engine of up to 1.2-liters. An excise tax of 22% is imposed on cars beyond 4 meters in length.

India's largest private sector bank by branch network ICICI Bank rose 3.01% to Rs 914.80. The bank's net profit rose 20.26% to Rs 1728.10 crore on 24.14% increase in total income to Rs 10483.73 crore in Q3 December 2011 over Q3 December 2010. The result was announced during trading hours on Tuesday, 31 January 2012.

ICICI Bank said advances increased by 19% year-on-year to Rs 246157 crore as on 31 December 2011 from Rs 206692 crore as on 31 December 2010. The bank said its Current and savings account (CASA) ratio increased to 43.6% at 31 December 2011, from 42.1% as on 30 September 2011. Net non-performing asset ratio decreased to 0.7% at 31 December 2011 from 0.8% at 30 September 2011 and 1.16% as at 31 December 2010. The bank had strong capital adequacy ratio of 18.88% and Tier-1 capital adequacy of 13.13% as on 31 December 2011.

India's largest commercial bank by net profit and branch network State Bank of India (SBI) rose 2.96% to Rs 2103.10. SBI recently said that the Government of India has agreed to inject approximately Rs 7900 crore into bank by way of preferential allotment of equity shares to help SBI achieve minimum 8% Tier I CAR by 31 March 2012. The country's biggest lender by assets didn't say when the government would infuse the capital. The government currently owns 59.40% of SBI.

India's second largest bank by net profit HDFC Bank jumped 4.70% to Rs 506.35. HDFC Bank reported 31.4% growth in net profit to Rs 1429.70 crore on 35.6% increase in total income to Rs 8622.64 crore in Q3 December 2011 over Q3 December 2010. The result was announced on 19 January 2012.

HDFC Bank said its core CASA deposit ratio, adjusted for one-off current account balance of about Rs 4000 crore, was at 47.7% of total deposits as on 31 December 2011. The private sector bank said its asset quality remains healthy. The bank's capital adequacy ratio (CAR) remained strong at 16.3% as on 31 December 2011, against the regulatory minimum of 9%. The bank's Tier-I CAR was 11.2% as on 31 December 2011.

The Reserve Bank of India (RBI) has decided to allow all private sector banks to undertake Central and state government business, which is still a forte of public sector banks and three large private players, ICICI Bank, HDFC Bank and Axis Bank. Banks earn a fee while working as an agent of the central bank for collecting revenues as well as disbursing the payments under various schemes. At present, the three private banks are allowed to undertake government business in a limited way but RBI now said all the private lenders will be treated at par with their public sector counterparts.

According to the regulator, the move is aimed to enhance the quality of customer service in Government business through more competition, improving customer convenience by increasing the number of customer service outlets and broad basing the revenue collection and payments mechanism of governments.

Index heavyweight Reliance Industries (RIL) rose 2.46% to Rs 837.75. RIL said after market hours on Monday, 30 January 2012, that it proposes to buy-back its shares from the existing shareholders/beneficial owners other than the promoters/persons who are in control of the company from the open market. The company proposes to buy-back up to a maximum of twelve crore shares and a minimum of three crore shares. The buyback programme started on 1 February 2012 and will end on 19 January 2013.

The maximum price for buyback has been set at Rs 870 per share. The company has set aside Rs 10440 crore for share buyback, which represents approximately 7.22% of the company's total paid-up equity capital and free reserves as on 31 March 2011.

Tata Power (up 7.05%), Hindalco Industries (up 5.68%), TCS (up 5.35%), Sun Pharmaceutical Industries (up 5.17%), Jindal Steel & Power (up 5.04%) and GAIL (India) (up 4.73%), edged higher from the Sensex pack.

State-run Coal India (CIL) was the biggest Sensex loser last week. The stock declined 4.20% to Rs 326.20 on reports company has signed a pact with its trade unions to increase wages by 25%, which would put an additional burden of Rs 6500 crore on the public sector unit.

Mortgage lender HDFC fell 0.25% to Rs 697.40. US-based private-equity giant Carlyle Group sold a quarter of its stake in the company thorugh block deals on Wednesday (1 February 2012). Carlyle, which owned about 5.2% of HDFC before Wednesday's block deals, sold about 2 crore shares at an average price of Rs 677.25 each. The price is at a discount of nearly 3% to HDFC's Tuesday close price of Rs 696.75 on BSE. The sale represents 1.3% of HDFC's outstanding shares.

Bhel (down 3.60%), L&T (down 2.02%) and ITC (down 0.74%), edged lower from the Sensex pack.