Mkt continues its northward journey

Continued buying in small-and mid-cap shares by retail investors played a major role in extending the rally. The BSE Mid-Cap index rose by 2.60 per cent,while BSE Small Cap index gained 4.26 per cent,outperforming the Sensex.

The 30-share Sensex rose 91.14 points,or 0.52 per cent,to end the week at 17,521.12. The S&P CNX Nifty of NSE gained 38.05 points,or 0.72 per cent,to settle at 5,316.95.

Sensex has gained 1,555.96 points,or 9.75 per cent,in the last five weeks,while the 50-unit Nifty firmed up by 475.35 points,or 9.82 per cent,in the same period.

Foreign Institutional Investors (FIIs) have bought shares worth net Rs 4,755.70 crore in July 2012 so far (till July 4).

Prime Minister Manmohan Singh,who also holds the Finance portfolio,said last month that he is chalking out plan for the country’s economic revival.

“Strong FII fund flows and expectations of measures from the government to boost the sagging economy helped the market to remain firm,” said Alex K Mathews,Head-Technical and Derivatives Research,Geojit BNP Paribas Financial Services. Shubham Agarwal,Associate VP and Senior Technical Equities Analyst,Motilal Oswal Securities,said,”Sentiment was positive on hope of FDI limit hike in retail and favourable decision on GAAR issue. However,rupee’s weakness remains a major concern.”

Planning Commission Deputy Chairman Montek Singh Ahluwalia’s comments yesterday that achieving average growth rate of 9 per cent in the next five years is not possible,weighed on the market on Friday.

“The share market has travelled a long way from a low of4,760 in May to a high of 5,350 in early July. During this period,market absorbed all bad news such as rating downgrades,stock downgrades,global worries,falling GDP,falling rupee,concerns over widening fiscal deficit and finally inflation not coming under control even after huge monetary measures over the last three years. Even FII flows are positive,” Kishor Ostwal,CMD,CNI Research Ltd,said.

“Post GAAR issue on March 16,the outflow were not that severe… The change of guards in the Finance Ministry has renewed the hope that the Finance Minister will pull something out of the hat to please the investors. The only worry factors today are the high rate of interest and monsoon factor,” he added.

Among the 30 Sensex shares,16 rose and the remaining declined.

India’s largest listed telecom operator by sales Bharti Airtel topped the Sensex gainers in the week. The stock jumped 5.41 per cent to Rs 321.50 on reports that cellular services providers will continue to offer third-generation services on a pan-India basis.

Other gainers from the Sensex pack were Sterlite (4.77 per cent),HDFC (4.46 per cent),Maruti Suzuki (4.01 per cent),HDFC Bank (3.51 per cent),ICICI Bank (3.96 per cent),Cipla (3.63 per cent),Hindalco Ind (3.46 per cent),M&M (3.42 per cent),SBI (2.73 per cent) and Tata Steel (1.39 per cent).

However,Jindal Steel fell by 3.06 per cent followed by Hero Motoco 2.68 per cent,TCS 2.45 per cent,ITC 2.41 per cent,Infosys 2.35 per cent,ONGC 2.13 per cent and Bajaj Auto 2.06 per cent.

Among the major indices the BSE-Realty rose by 4.60 per cent followed by the BSE-Consumer Durable 3.87 per cent,the Bankex 3 per cent,the BSE-Metal 2.01 per cent ,the BSE-Capital Goods 1.26 per cent,while the BSE-IT fell by 1.91 per cent and the BSE-FMCG by 1.64 per cent.

The total turnover at BSE and NSE was Rs 11,157.70 crores and Rs 50,600.39 crores respectively against the previous weekend’s level of 13,370.03 crores and Rs 48,809.00 crores.

Forex: The rupee maintained its uptrend for the second week in a row and appreciated further by 19 paise to settle the week at 55.42 against the Greenback in an otherwise volatile market on alternate bouts of buying and selling.

At the Interbank Foreign Exchange (Forex) market,the local currency resumed better at 55.50 a dollar against last weekend’s close of 55.61.

Later,it moved in a wide range between 54.18,its highest in nearly 7-weeks in intra-day trading,and 55.92 on alternate bouts of demand and supply before concluding the week at 55.42,showing a rise of 0.34 per cent. Last week,it had gained by 154 paise or 2.69 per cent.

The domestic currency closed at 54.38,up by 105 paise,or 1.89 per cent,on Tuesday,July 3,2012,registering the fourth largest gain in absolute terms in the last decade as the market has found hopes in Prime Minister Manmohan Singh,who also holds the Finance portfolio,pushing reforms.

But,the rise was not sustained due to dollar demand from importers,mainly oil refiners.

Experts said the rupee will take cue from the bond auction results for FIIs,which will determine the direction of rupee in the near-term. “By September,rupee should recoup to 53 level,” said N S Venkatesh,Head of Treasury,IDBI Bank.

Pramit Brahmbhatt,CEO,Alpari Financial Services (India) Pvt Ltd said,”The INR carried its stronger tone into the start of the week which it acquired on the last working day of the previous week… sharpest recovery against USD towards the mid week but pared all gains towards the close to end just below the start.”

“The global central bankers once again dashed the hopes of further easing by mostly maintaining a status quo or doing what was largely anticipated. The BOE maintained a dovish stance at its policy meet whereas the ECB went ahead with a quarter basis point rate cut which pushed the Euro towards its recent lows,” he added.

A contraction in agriculture produce due to below than normal monsoon in India will call for a rise in imports further pressurising the local unit and lowering of the economic growth targets which are already revised lower.

The RBI fixed the reference rate for US dollar and euro at Rs 55.4150 and Rs 68.6085 from Rs 56.3090 and 70.9080 last weekend,respectively.

The rupee premium for the forward dollar declined on fresh receivings by exporters.

The benchmark six-month forward dollar payable in December ended lower at 169-171 paise from last weekend’s level of 175-177 paise and far-forward contract maturing in June also settled weak at 304-306 paise from 318-1/2-320-1/2 paise previous weekend.

The rupee improved further against Pound Sterling to end the week at 86.08 from preceding weekend’s close of 86.78 and shot up further against the euro to 68.58 from 69.93.

It,also strengthened against the Japanese yen to 69.41 per 100 yen from last weekend’s level of 69.95.