Business

Markets log gains for the second week on Moody’s upgrade

Markets registered gains for the second straight week after the rating agency Moody’s raised India’s credit outlook to positive from stable anticipating actions by policymakers will lift the country’s economic growth. 
 

Meanwhile, a stellar performance by Reliance Industries’ (RIL) after a significant recent gas discovery, MJ-1 coupled with a strong rally in the FMCG stocks on renewed buying interest at attractive valuations pulled the benchmark indices higher.

In the week to April 10, the 30-share Sensex ended up 619.24 points or 2.19 per cent at 28,879.38 and the 50-share Nifty ended up 194.10 points or 2.26 per cent at 8,780.35.

The broader markets outperformed the benchmark indices as investors bought mid-cap and small-cap shares at attractive valuations. BSE Mid-Cap index advanced 342.60 points or 3.19% and Small-Cap index gained 699.61 points or 6.28%.

“The market showed a steady trend last week with a positive bias with buying emerging at every correction. The highlight was however the mid-cap and small cap segments of the market which saw strong buying in several counters .

For the coming week, some consolidation could be seen with moves mirroring sentiments post the beginning of the corporate results particularly TCS which could have a bearing on the IT pack. However, positive price action could continue in the midcap small cap segments” said K.Subramanyam, Co-Head Equity Advisory, Altamount Capital.

KEY EVENTS FOR THE WEEK

Reserve Bank Governor Raghuram Rajan on Tuesday held repo rate unchanged at 7.5 per cent, as expected. Further, the CRR or cash reserve ratio, which is the amount of deposits lenders must keep with the RBI, was also left unchanged at 4 per cent.

Moody’s ratings revised India’s sovereign rating outlook to “positive” from “stable” on Thursday, a step closer to an upgrade of the credit rating.

According to Society of Indian Automobile Manufacturers, domestic passenger car sales grew 2.64% to 1,76,011 units in March, from 1,71,491 units in the same month of last year and motorcycle sales last month dipped 5.22% to 8,59,521 units as against 9,06,901 units a year earlier.

On the global front, Japan’s Nikkei breached 20,000 points for the first time in 15 years fueled by Japanese Prime Minister Shinzo Abe’s pro-growth policies.

SECTORS & STOCKS

On the sectoral front, all sectoral indices ended in green. BSE Metal and Realty indices were the top gainers up 5.6% followed by BSE FMCG, Consumer Durables, IT, Oil & Gas, Power, FMCG indices up between 3-5%.

Dr Reddy’s Laboratories and its subsidiary, Promius Pharma LLC, filed three new drug applications (NDAs) in support of the company’s proprietary products group with the US FDA. The stock gained nearly 8%.

FMCG majors ITC and HUL surged 5% and 4% each on renewed buying interest and on hopes that monsoon rains are seen to be normal this year. 

Mahindra and Mahindra’s (M&M) South Korean subsidiary SsangYong Motor sold a total of 12,870 units in March 2015 ( 7,719 units in domestic sales and 5,151 in exports). The stock soared 7%. 

NTPC ended up 5% amid reports that the country’s largest power producer will more than double its current installed capacity to 90,000 MW in the next ten years.

Fitch reaffirmed its BB+ rating as well as stable credit outlook for Tata Steel stating its highly profitable India operations are improving the company’s financial position. The stock climbed 6%.

Axis Bank ended the week with marginal loss after it cut its base rate by 0.20 per cent to 9.95 per cent after Reserve Bank Governor Raghuram Rajan’s hard talk.

SBI raised capital by allotting 10.04 crore shares on preferential basis to Government of India at Rs 295.59 per equity share. The stock gained over 4%.

Shares of real estate companies closed higher on the bourses on media reports that the Union government cleared amendments to the Real Estate (Regulation and Development) Bill, 2013, paving the way for legislation on regulators for the sector. Anant Raj, HDIL, Sobha Realty, Oberoi Realty and Unitech gained up to 31%. 

A Hyderabad-based special court set up to try the Satyam Satyam Computer Services fraud case has convicted former chairman B Ramalinga Raju and other nine accused following a seven-year trial. Tech Mahindra which has acquired the company gained over 4%.

Sun Pharma climbed nearly 4% following the completion of the merger of Ranbaxy Laboratories with itself. Further, trading was suspended in Ranbaxy Labs following the merger process.

Telecom shares gained on hopes that they would hike tariffs after huge investments to acquire spectrum. Bharti Airtel ended up 2%, Idea Cellular gained 3% while Reliance Communications jumped 18%.

Shares of IDFC ended up 2% after the company got the shareholders approval for the demerger of its financial undertaking into IDFC Bank.

Other notables gainers on the Sensex include RIL (8%), Coal India (7%), Hindalco (4%), Sesa Sterlite (6%).

OUTLOOK

The fourth quarter corporate earnings beginning in the truncated week ahead will dictate the trend on the bourses in the forthcoming week.

Shares of public sector oil marketing companies (PSU OMCs) will be in focus as fuel price review is due at the middle of the month.

Further, markets will react to the industrial production data for February released on Friday post market hours. Also, investors will cautiously await for the consumer price index (CPI) and the wholesale price index (WPI) which will  be unveiled next week.

Markets will be closed on Tuesday, 14 April 2015, on account of Dr. Baba Saheb Ambedkar Jayanti.