Market gallops on bargain hunting

The market spurted last week on bargain hunting after a recent sell off. Easing of food inflation early this month and firm global stocks, triggered bargain buying. Global stocks rallied as investors greeted resignation by Egyptian President Hosni Mubarak. The barometer index BSE Sensex rose for five consecutive trading sessions from 11 February 2011 to 17 February 2011, registering its longest stretch of gains this calendar year. However, gains could not sustain longer as profit booking set in on the last trading day of the week on Friday, 18 February 2011. Earlier, the Sensex had tumbled to a seven-month closing low on 10 February 2011.



The BSE Sensex rose 482.91 points or 2.72% to 18,211.52 in the week ended Friday, 18 February 2011. The S&P CNX Nifty rose 148.95 points or 2.8% to 5,458.95. The BSE Mid-Cap index climbed 2.87% and the BSE Small-Cap index jumped 4.10%. Both these indices outperformed the Sensex.

The next major trigger for the stock market is Union Budget 2011-2012 to be unveiled by finance minister Pranab Mukherjee on 28 February 2011. The Budget session of parliament begins Monday, 21 February 2011. The Railway Budget is on Friday, 25 February 2011. The Economic Survey will be tabled in the parliament on the same day after the Railway Budget. Investors will watch if the Finance Minister announces measures to rein in inflation and inflationary expectations.

In macro news, food inflation eased to a two-month low in early February 2011 on moderating prices of onions and other vegetables. The food price index rose 11.05% and the fuel price index climbed 11.92% in the year to 5 February 2011, government data on Thursday showed. In the previous week, annual food and fuel inflation stood at 13.07% and 11.61%. The primary articles price index was up 14.59% in the latest week, compared with an annual rise of 16.24% a week earlier.

The headline inflation eased slightly in January 2011 on some moderation in prices of manufactured products. The wholesale price index (WPI), rose 8.23% in January 2011 from a year earlier. The index had risen 8.43% in December 2010. Food prices in the WPI index jumped 15.7% in January compared with 13.6% rise in December.

The industrial output in December 2010 rose a slower-than-expected 1.6% from a year earlier. Manufacturing output, which constitutes about 80% of the industrial production, rose an annual 1%, the statistics office said in a statement. Growth in industrial output in November 2010 was revised upwards to 3.62% from earlier 2.7%

Trading for the week began on a cheerful note. Bargain hunting and firm global stocks helped domestic bourses clock smart gains for the second straight day on Monday, 14 February 2011. Global stocks were mostly higher on positive China trade data and as Egypt worries faded. Domestic data showing slowing inflation in January 2011 eased worries of further monetary tightening by the central bank. The BSE 30-share Sensex was up 473.59 points or 2.67% to 18,202.20. The S&P CNX Nifty gained 146 points or 2.75% to 5,456.

Expectations that the deadlock in parliament may be ended ahead of the Budget session next week helped stocks extend gains for the third day in a row on Tuesday, 15 February 2011. Interest rate sensitive banking and auto stocks extended recent strong gains on a view that a bulk of the monetary tightening from the Reserve Bank of India (RBI) is over. The BSE 30-share Sensex was up 71.60 points or 0.39% to 18,273.80. The S&P CNX Nifty was up 25 points or 0.46% to 5,481.

The key benchmark indices edged higher in choppy trade, gaining for the fourth straight day on Wednesday, 16 February 2011, tracking firm global stocks. Concerns on the domestic political front eased after Prime Minister Dr. Manmohan Singh said there is no danger of any inner tensions that may lead to the break up of the ruling Congress-led coalition government at the Centre. The BSE 30-share Sensex was up 27.10 points or 0.15% to 18,300.90. The S&P CNX Nifty was up 0.70 points or 0.01% to 5481.70.

The key benchmark indices rose for the fifth consecutive trading session on Thursday, 17 February 2011, registering their longest stretch of gains this calender year, after the latest data showed easing of food inflation early this month. The BSE 30-share Sensex rose 205.92 points or 1.13% to 18,506.82. The S&P CNX Nifty rose 64.75 points or 1.18% to 5,546.45.

Profit booking set in on Friday, 18 February 2011, when the key benchmark indices slumped, dragged down by companies involved in the ongoing telecoms licence corruption probe, with Reliance Communications and other Reliance Dhirubhai Ambani (ADA) group shares hit especially hard. The BSE 30-share Sensex fell 295.30 points or 1.60% to 18,211.52. The S&P CNX Nifty fell 87.50 points or 1.58% to 5,458.95.

Among the 30 Sensex shares, 21 stocks rose and the rest declined.

Jindal Steel & Power was the biggest Sensex gainer last week. The stock spurted 9.77% to Rs 679.4 last week. As per recent reports, the company has got the environment ministry approval to build a Rs 25000 crore steel plant in Orissa.

India's largest steel maker by sales Tata Steel was the second biggest Sensex gainer. The stock climbed 7.21% to Rs 637.95 after consolidated net profit spurted 112.21% to Rs 1003.02 crore on 8.91% rise in total income to Rs 28985.12 crore in Q3 December 2010 over Q3 December 2009. The Q3 December 2010 result was announced after market hours on Tuesday, 15 February 2011.

India's largest commercial bank by branch network State Bank of India (SBI) was the third biggest Sensex gainer. The stock galloped 6.60% to Rs 2755.30. The bank plans to raise Rs 1,000 crore through the subsequent series of lower tier II bonds. The bonds open for subscription on 21 February 2011 and closes on 28 February 2011.

Bajaj Auto (up 6.34%), Tata Power Company (up 5.67%), HDFC Bank (up 5.43%), Larsen & Toubro (up 5.35%) and Tata Motors (up 5.01%), were the other major Sensex gainers.

Index heavyweight Reliance Industries rose 2.94% to Rs 937.35. As per recent reports company is planning major investments, totalling up to $ 30 billion over next five years in its various businesses, including energy and telecom sectors. The investments would be mainly targetted at petrochemicals, exploration and production and telecom businesses of the corporate conglomerate. The company expects its five main businesses in the next 5-10 years to be petrochemicals, refining, oil exploration and production (E&P), retail and telecom.

India's largest real estate company by market capitalisation DLF was the biggest Sensex loser last week. The stock fell 5.96% to Rs 232.80.

India's second largest listed telecom company by sales Reliance Communications (RCom) was the second biggest Sensex loser. The stock declined 4.12% to Rs 93.15 after consolidated net profit fell 56.7% to Rs 480.27 crore on 5.9% decline in net sales to Rs 4824.58 crore in Q3 December 2010 over Q3 December 2009. The result was announced after market hours on Monday, 14 February 2011.

The stock also tumbled after the Central Bureau of Investigation (CBI) questioned the group chairman Anil Ambani as a part of its probe into the 2G spectrum scam. RCom has denied any wrongdoing, and no charges have been filed against it or its executives. Reliance ADA Group on Wednesday said the group had not made any financial gain from Swan Telecom's 2G licence win.

India's largest state-run oil explorer by market capitalisation ONGC fell 3.35% to Rs 268.25. It was the third biggest Sensex loser.

Mahindra & Mahindra (down 2.57%), Reliance Infrastructure (down 1.64%), Cipla (down 1.60%), Hindalco Industries (down 0.83%) and Hero Honda Motors (down 0.59%), were the other major Sensex losers.