The week may have started on a flat note but has ended with a flourish barring the slightly weak close on Thursday. Positive inflation data, strong global cues and some encouraging domestic results such as that of Tata Motors aided the rise this week.
The Sensex gained 2.9% while the broader Nifty registered gains of 3.2%.
The week saw the BSE Sensex cross the 18,000 mark with ease and the NSE Nifty closing comfortably above 5,500. All this while Greek debt tensions and Iran’s geopolitical worries loomed in the air. Never mind the fact that today’s gains were on the back of some renewed optimism that Greece would manage a bailout.
Today’s rally otherwise could be attributed to strong overseas cues and sustained buying in Indian equities. The markets gave up some of their gains in late afternoon trade ahead of the long weekend. In intraday trade, the Nifty touched a day’s high of 5,606.70, a level seen on July 26, 2011.
Finally the Sensex closed at 18,289, up 135 points or 0.75%. It touched a day’s high of 18,423 and a day’s low of 18,234.56.
The NSE Nifty ended at 5,564, up 42 points, or 0.77%. It had touched a day’s low of 5,545.20.
Overnight, the main US indices rose over a percent comforted by positive domestic economic data. The Dow has moved to levels not seen since May 2008 and Nasdaq is at levels not seen since December 2000. Dow Jones futures are in the positive zone as of now suggesting another positive start on the US bourses.
Asian markets ended mostly up, boosted by economic data and earnings, and with Japanese exporters sustaining as the yen falls further.
European markets are now mostly up after initially trading lower after Moody's Investors Service said it could downgrade more than 100 financial institutions. FTSE (UK) and DAX (Germany) were up 0.4% and 0.9%, respectively, while, CAC (France) is up 1%.
Crude oil futures traded near six week highs on a host of reasons. Encouraging data on the US economy and talk of resolution to the long-running debt problems confronting Greece stoked hope of higher global demand for fuel. Crude inventories declined for the first time in four weeks in the US, the world’s biggest energy consumer. Conflicting media reports on Iran halting oil supplies to six European nations also added fuel to the fire.
The BSE Mid-Cap Index closed flat while BSE Small-Cap index closed slightly down 0.2%.
Infosys, Wipro, ONGC, DLF, NTPC, L&T, BHEL, Siemens, Sterlite, Tata Power, SBI,ITC, Coal India, are among the leading gainers on the Sensex and the Nifty.
Sesa Goa, Maruti, Hero Motocorp, Tata Motors, HDFC Bank, Reliance Infra, GAIL and Hindalco are among the laggards on both the indexes.
Among the sectorals, Consumer Durables, Power, IT, Bankex, Consumer Goods, Realty, PSU, Teck, FMCG indices are the gainers. Auto indices are the losers with Pharma and Metals ending slightly down. Consumer Durables was the biggest gainer, up 4.2%, while Power gained nearly 3%.
About 1,398 shares advanced while 1,578 shares declined.
The shares of NTPC closed at Rs. 187.65, up 2.3% after the reports stated that the Supreme Court ruled in favour of the company in a two-year long tender dispute with boiler supplier Ansaldo Caldaie India.
BHEL, BGR Energy Systems, and Larsen & Toubro closed up 0.1%-9% on reports that state-run NTPC is set to place equipment orders worth Rs.220bn over the next 45 days as it won legal battle in Supreme Court against Ansaldo Caldaie Boilers India. NTPC will place orders for boilers based on supercritical technology.
After rising to Rs.66, Thomas Cook (India) declined 3.8% to Rs.59.95. The stock had risen after the company’s consolidated net profit surged 232.2% on year to Rs. 50.5mn.
Tata Metaliks gained 4.7% to end at Rs.78.50 after the company's board approved raising funds to the tune of Rs.1bn through a preferential issue of shares.
Rural Electrification Corporation climbed 2.9% to finish at Rs 248.35 after the company's Board approved raising of funds through a public issue of tax-free secured redeemable non-convertible bonds.
Adhunik Metaliks finished up 1.4% at Rs.54.90 on reports the company is in advanced talks to sell its unlisted forging subsidiary, Neepaz V Forge, to automobile component maker Amtek Auto for Rs 2.3bn.
Punjab & Sind Bank rose 3.1% to Rs 88.40 after the bank announced that its board had recommended issuing 5% of its equity, on preferential basis, to the Life Insurance Corporation of India.
MAN Industries (India) gained ~2% to end at Rs.112.45 after the pipe-manufacturing company announced that it had received export orders worth approximately Rs.5bn from West Asia for the supply of large diameter pipes for the Oil and Gas sector.
After rising to Rs.62.50, Tilaknagar Industries closed down 1.6% at Rs. 60.15 after the company announced its promoters Amit Dahanukar, Chairman & Managing Director of the company and M.L. Dahanukar & Co. Pvt. Ltd., a promoter group company, acquired over 50mn equity shares of the company during the period Feb 11, 2012 to Feb 15, 2012. The promoters now hold 54.69 % stake in the company.
So, what’s in store for market participants?
Unemployment figures and housing numbers reveal that the US economy is perhaps making a comeback of sorts. Yes, Moody's has put 17 global banks and 114 European financial institutions on review for possible downgrades. But that doesn’t seem to be of immediate concern for now.
Initial unemployment claims for the week ended Feb. 11 fell13,000 from the prior week to 348,000. Housing starts for January rose 1.5% to an annual rate of 699,000, according to the Commerce Department. Building permits rose 0.7% to a 676,000 rate in January.
The situation in Greece does not really seem to suggest some reason for revelry. The likelihood of a default remains as Greece faces a March 20 bond redemption totaling 14.5 billion euros ($19 billion). While Reports say European governments are considering cutting interest rates on emergency loans to Greece.
Then there is the Iran issue. Reports suggest the Iranian military is unlikely to intentionally provoke a conflict with the West. It does matter for India as the country depends on Iranian crude and any conflict due cause a spike in price as India imports 80% of petroleum needs.
While caution is always warranted when the market spikes like it has this year, there is no real need to sell on strength. Instead buying on dips should be the strategy given the strong momentum. Of course do you usual checks of checking the fundamentals well.
“With trading shortened by a day next week and major indices already moving up too fast too soon, some cooling is possible ahead of the F&O expiry on Thursday,” said Amar Ambani, Head of Research, IIFL - India Private Clients.
Monday will be a trading holiday on account of Mahashivratri. So, enjoy the extended weekend.