Markets rise after two-week losses

After falling for the two consecutive weeks, the Indian markets surged led by support from banking and IT shares.

Major news for the week

Food inflation eases to 15.52%

Reliance Industries Q3 net profit surges 28% yoy

TCS Q3 consolidated net profit jumps 30% yoy

L&T Q3 net profit rises 11% yoy

Wipro Q3 net profit up 10% yoy




Indian Indices

After tumbling over 8% in the first two weeks of 2011, the Indian markets got some respite and ended this week with modest gains. Strong set of numbers by top Indian companies and easing food inflation boosted the investor sentiment. Banking shares gained after a decline in food inflation and information technology (IT) shares rose after Tata Consultancy Services posted strong Q3 results. The markets rose in three out of five sessions of the week.

India’s food inflation eased to 15.52% for the week ended January 08, 2011 as compared to 16.915 seen in the previous week.

During the week, the Sensex and the Nifty swung 388 and 124 points respectively. The Sensex ended the week higher by 147 points or 0.78% at 19007 and the Nifty rose by 42 points or 0.74% at 5697.

Global indices

The Sensex outperformed its global peers during the week, rising by 0.78%. China’s Shanghai Composite slid the most with losses of 4.07% after the Chinese government hiked its reserve requirement ratio. Major global indices ended the week in the negative territory except Sensex and Dow Jones.

Sectoral and stock screening

BSE Bankex was the top performer rising by 4.21%. BSE IT, Metal and TECk rose by 2.97%, 2.21% and 1.98% respectively. On the flip side, BSE Oil & Gas and BSE Capital Goods (CG) fell by 2.33% and 2.03% respectively.

Looking into ‘A’ group stocks, top three gainers this week - LIC housing Finance rose by 22.56%, Mahindra & Mahindra Financial Services jumped by 12.03% and Opto Circuits gained by 10.88%. Top three losers this week - DB realty declined by 13.63%, Exide Industries fell by 12.9% and Coromandel International dropped by 11.94%.

FII/MF activity

The foreign institutional investors (FIIs) continued its selling activity for the second consecutive week. The FIIs sold Indian shares worth a net of Rs1,614 crore this week as against net sell of Rs3,387 crore seen in the previous week. The local investors remained buyers for the second straight week and bought Indian stocks worth a net of Rs44.2 crore against net buy of Rs744.1 crore seen in the previous week.

Outlook

Next week all eyes will be on the two big events i.e. the F&O expiry on Thursday (January 27, 2011) and the Reserve Bank of India (RBI)’s monetary policy meet on Tuesday (January 25, 2011); this will set the tone for the Indian markets in the near term. The top Indian firms like State Bank of India, ICICI Bank, HDFC Bank, Sterlite Industries, Hindustan Unilever and JSW Steel will declare their quarterly results next week. The markets may remain volatile ahead of F&O expiry alongwith the quarterly results. The developments in the external environment and FII activity may have some bearing on the Indian markets.