Sensex jumps on strong foreign fund flows

Indian stocks surged to record high as foreign institutional investors (FIIs) stepped up buying. Investors are betting that the Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) will be able to form the next government at the centre with support from some regional parties after Lok Sabha elections in April-May this year. The BJP with its prime ministerial candidate Mr. Narendra Modi is considered more pro-business and a more pro-reform party than the Congress party. As chief minister for the fast-growing state of Gujarat, Mr. Modi has built a reputation for getting things done. Investors hope that if he becomes prime minister he will be better at building infrastructure, battling corruption and reducing the number of regulations that get in the way of investment. The barometer index, the S&P BSE Sensex, hit record high above 22,000. The Sensex gained in four out of five sessions in the week ended 28 March 2014.

The Sensex garnered 584.65 points or 2.68% to settle at 22,339.97, a record closing high. The 50-unit CNX Nifty garnered 201 points or 3.09% to 6,695.90, a record closing high.

The S&P BSE Mid-Cap index gained 3.21%, outperforming the Sensex. The S&P BSE Small-Cap index rose 2.44%, underperforming the Sensex.

Key benchmark indices surged to record closing high on Monday, 24 March 2014, after the government exceeded its $3.1 billion asset sales target for this fiscal year and as investors bet that the Bharatiya Janata Party (BJP) led National Democratic Alliance (NDA) will be able to form the next government at Centre. The Sensex moved past the psychological 22,000 level. The S&P BSE Sensex garnered 300.16 points or 1.38% to settle at 22,055.48 on that day, a record closing high for the barometer index.

A divergent trend was witnessed on Tuesday, 25 March 2014, as the barometer index, the S&P BSE Sensex, registered miniscule losses while the 50-unit CNX Nifty registered small gains. The Nifty hit record high both on intraday as well as on closing basis. The S&P BSE Sensex lost 0.27 points to settle at 22,055.21 on that day, its lowest level since 22 March 2014.

Small gains pushed key benchmark indices to record closing high on Wednesday, 26 March 2014. The S&P BSE Sensex garnered 40.09 points or 0.18% to settle at 22,095.30 on that day, a record closing high.

Key benchmark indices edged higher and hit fresh record high on Thursday, 27 March 2014, with the market sentiment boosted by data showing that foreign institutional investors (FIIs) made substantial purchases of Indian stocks on Wednesday, 26 March 2014. The barometer index, the S&P BSE Sensex, and the 50-unit CNX Nifty, both, hit lifetime high on intraday basis as well as on closing basis. The S&P BSE Sensex garnered 119.07 points or 0.54% to settle at 22,214.37 on that day, a record closing high.

Key benchmark indices gained for the third straight day in a row and hit fresh record high on Friday, 28 March 2014, with the market sentiment boosted by data showing that foreign institutional investors (FIIs) resorted to heavy buying of Indian stocks on Thursday, 27 March 2014. The S&P BSE Sensex garnered 125.60 points or 0.57% to 22,339.97, on that day, a fresh record high.

From the 30-share Sensex pack, 23 stocks rose and seven fell in the week that ended on Friday, 28 March 2014.

Index heavyweight and cigarette major ITC rose 0.64%.

Reliance Industries (RIL) gained 2.91%. ONGC gained 6.56%. The Election Commission on Monday, 24 March 2014, directed the government to put on hold a proposed hike in natural gas prices which was to take effect from 1 April 2014. The Congress party-led government's plan for increasing the price of natural gas to around $8 per million metric British Thermal unit from $4.20 was controversial and set to take effect days before the start of voting in national elections. Delhi's former chief minister, Arvind Kejriwal, criticized the move recently and cited the case as an example of federal policy makers going out of their way to help powerful energy company Reliance Industries (RIL). RIL operates India's Krishna Godavri D 6 field, which has been the country's richest gas discovery in recent years.

The government had sought the election regulator's approval to go ahead with the new policy. The polls agency has the power to stay any move in the run-up to elections that could influence the outcome of the vote.

Shares of gas distribution companies and power stocks gained after the Election Commission on Monday, 24 March 2014, directed the government to put on hold a proposed hike in natural gas prices which was to take effect from 1 April 2014.

GAIL (India) rose 7.8%. GAIL (India) announced after market hours on Monday, 24 March 2014, that it has signed a Memorandum of Understanding (MoU) with Chubu Electric Power Co., Inc., Japan (Chubu) on 21 March 2014. Under the MoU, GAIL and Chubu shall mainly explore possibilities for collaboration in the area of joint LNG procurement. Besides, the two companies will also seek to collaborate on shipping optimization, GAIL (India) said in a statement.

Chubu and GAIL are, both, large LNG importers having considerable synergy between their LNG business profiles. It is assessed that with GAIL joining hands with Chubu for jointly pursuing LNG procurement and other allied business opportunities, such a collaboration shall augment GAIL's efforts to aggressively source LNG volumes on competitive terms and would be a win-win proposition for both companies, GAIL (India) said.

GAIL's latest move is also in sync with the company's recent efforts in establishing and promoting Asia LNG Forum, a sort of Asian LNG buyers' club. GAIL is also actively working towards establishing a regional gas trading hub for Asia as well as an Asian gas index.

This MoU with Chubu is yet another effort by GAIL towards bridging the gap in demand supply of natural gas in the Indian market, GAIL (India) said. This is in addition to other initiatives of GAIL towards LNG sourcing, creating LNG regasification infrastructure, reserving liquefaction tolling capacity in overseas projects and augmenting transmission capacity significantly over the next few years. GAIL will continue to make efforts to tie-up affordable LNG in its portfolio to meet the rapidly growing energy demand of the Indian market.

Chubu is one of the largest importers of LNG in Japan, and has significant presence across gas value chain including upstream assets, liquefaction capacity and regas capacity.

Among power generation firms, NTPC (up 5.64%) and Tata Power Company (up 8.95%) surged.

Bank shares rose as the Reserve Bank of India is widely expected to keep its main lending rate viz. the repo rate unchanged after a monetary policy review on 1 April 2014 as inflation has eased. Among PSU bank stocks, State Bank of India (SBI) surged 11.74%. The stock was the biggest gainer from the Sensex pack.

Among private sector banks, Axis Bank (up 5.14%), ICICI Bank (up 5.08%) and HDFC Bank (up 1.78%) rose.

The Reserve Bank of India (RBI) on Thursday, 27 March 2014, extended the deadline for banks to fully implement the stringent capital requirements under Basel III by a year due to industry wide concerns over potential bad loans and its impact on profitability. This may necessitate some lead time for banks to raise capital within the internationally agreed timeline for full implementation of the Basel III Capital Regulations, the RBI said in a notification on its website. The period for full implementation of Basel III capital regulations has now been extended to 31 March 2019, from 31 March 2018, the RBI said. Basel III is a global regulatory framework for more resilient banks and banking systems.

Capital goods stocks also gained. Bharat Heavy Electricals (Bhel) surged 6.61%.

Engineering and construction major L&T jumped 5.64% to Rs 1288.30. The stock hit a 52-week high of Rs 1,295 in intraday trade on Thursday, 27 March 2014. The company said on Thursday, 27 March 2014, its Buildings & Factories division has won new housing orders worth Rs 1981 crore in this month.

Tata Motors (up 1.95%) and Maruti Suzuki India (up 3.2%) edged higher. Mahindra & Mahindra (M&M) fell 0.71%

Shares of most two wheeler makers also gained. Bajaj Auto gained 4.12%.

Hero MotoCorp vaulted 8.34% to Rs 2244. The stock hit 52-week high of Rs 2,260 in intraday trade on Friday, 28 March 2014.

Metal stocks edged higher on growing expectations that China will take steps to stimulate its sagging economy. China is the world's largest consumer of copper and aluminum. Hindalco Industries gained 7.55% to Rs 130.35. The stock hit 52-week high of Rs 131 in intraday trade on Friday, 28 March 2014.

Sesa Sterlite rose 4.28%.

Tata Steel gained 5.26%. Tata Steel after market hours on Tuesday, 25 March 2014, said that the company had launched the bid-cum-auction process for the sale of its land parcel in Borivali on 18 December 2013 by public advertisements in national dailies. The site measuring roughly 25 acres is located at the junction of Western Express Highway and Dattapada road in Borivali (E), Mumbai and is abutting both these roads. The neighborhood predominantly comprises medium to high-end residential developments. Tata Steel said it has completed the e-auction process on Monday, 24 March 2014, for the sale of this land with the participation of several well-known developers. The Committee of Independent Directors appointed for the oversight and governance of the sale process by the Tata Steel Board on Tuesday, 25 March 2014, declared Oberoi Realty as the highest bidder of the auction on the basis of their final bid of Rs 1155 crore, after several rounds of bidding. As per the laid down process, the sale will be concluded after all requisite permissions are obtained, Tata Steel said.

IT stocks edged lower as the rupee edged higher against the dollar. A firm rupee adversely affects operating profit margins of IT firms as the sector derives a lion's share of revenue from exports. Wipro (down 3.02%) and TCS (down 0.94%) edged lower.

Infosys declined 1.1%. Infosys after market hours on Thursday, 27 March 2014, said its US-based subsidiary -- Infosys Public Services, Inc. -- has been selected by Prime Therapeutics LLC (Prime Therapeutics), a leading pharmacy benefit manager (PBM), to set up a testing center of excellence (COE) and consolidate the delivery of its application testing services as part of a new three-year contract. Prime Therapeutics will streamline and optimize its quality assurance (QA) and testing services as well as enhance its competitiveness with Infosys Public Services' expertise and world-class delivery model. Prime Therapeutics also expects to expand the capabilities of its QA organization and gain efficiencies in managing a large scale QA department, Infosys said in a statement.

Pharma stocks edged lower as investors dumped defensive stocks as market surged to record high. Cipla (down 1.88%), and Sun Pharmaceutical Industries (down 3.57%) declined.

Dr. Reddy's Laboratories lost 6.08%. The stock was the biggest loser from the Sensex pack. Dr. Reddy's Laboratories during market hours on Thursday, 27 March 2014, announced that it has launched Amlodipine Besylate and Atorvastatin Calcium Tablets 2.5/10 mg, 2.5/20mg, 2.5/40mg, 5/10mg, 5/20mg, 5/40mg, 5/80mg, 10/10mg, 10/20mg, 10/40mg and 10/80 mg a therapeutic equivalent generic version of CADUET (amlodipine Besylate and atorvastatin calcium) tablets, in the US market on Wednesday, 26 March 2014, following the approval by the United States Food & Drug Administration (USFDA).

The CADUET tablets brand and its generic had US sales of approximately $163 million for the most recent twelve months period ended 31 January 2014, according to IMS Health data. Dr. Reddy's Amlodipine Besylate and Atorvastatin Calcium Tablets are available in bottle counts of 30 and 90, the company said.