14:27
Moneycontrol BureauReserve Bank of India's decision to keep policy rates unchanged despite very high inflation and consistent inflow of foreign money even after Fed initiated its tapering, albeit in a small dose, helped equity market to close the week on a strong note.
Friday's broadbased "Santa Rally" (371 points upmove on the Sensex) helped overturn the possibility of a flat close with negative bias. The 30-share BSE Sensex climbed 364.14 points or 1.76 percent to close the week at 21,079.72 and the Nifty rallied 105.85 points or 1.72 percent to 6,274.25.
Relentless inflow of foreign money and steady rupee despite tapering is an indication that the market may not bother about the tapering going ahead, feel experts.
In fact, they are betting big on India and expect incremental FII money in the year ahead, driven by hopes that economy may improve, October-December quarter earnings may be better than earlier quarter and India may get stable government post general elections in 2014.
Saurabh Mukherjea of Ambit Capital sees something like USD 600-700 million flowing into India on FII funds.
"That is being accompanied by confidence that there will be a change in leadership at the center in summer. There will be better economic management, the economy itself seems to have bottomed out and all of that is combining to give India a fair bit of tailwind in terms of investor faith, and that narrative will continue through 2014," Mukherjea elaborated.
Meanwhile, Manish Sonthalia of Motilal Oswal AMC maintains his bullish stance on the market, saying he will look forward to a 7000-mark on the Nifty by March.
Specifically for the forthcoming truncated week (due to Christmas holiday), FII flow and derivatives data on expiry day will be key factors to watch out for.
"After looking at Friday's rally, I expect the Nifty to see expiry at around 6200 level and not 6300," SP Tulsian of sptulsian.com said.
The flow of foreign money remained healthy during the week as well as for the current year so far. Foreign institutional investors have bought Rs 6,178 crore (including provisional figure of Friday's trade) worth of equity shares in the week gone by.
They purchased nearly Rs 14,000 crore worth of shares in December and Rs 1,10,943 crore in 2013, which is still lower compared to Rs 24,299 crore in a year ago month and Rs 130,146.80 crore in 2012.
Meanwhile, the rupee closed at 62.04 against the US dollar, up 8 paise over earlier week.
News flow
The first big event - RBI policy - surprised the market. Reserve Bank of India governor Raghuram Rajan on Wednesday decided to keep policy rates unchanged on hopes that inflation will fall going ahead.
The consensus was that the central bank would hike repo rate by 25 basis points to 8 percent.
Rajan said there is no room for complacency on the back of high CPI inflation and the central bank will act outside policy if food inflation does not soften.
The second event was Federal Open Market Committee, wherein outgoing Fed chairman Ben Bernanke scaled back fiscal stimulus by USD 10 billion to USD 75 billion a month and kept in refinance rates unchanged at 0.0 percent to 0.25 percent. US gross domestic product grew at an annual rate of 4.1 percent in the third quarter as against 3.6 percent pace reported earlier this month.
Reliance Industries, which was the driver of Friday's rally, rallied 3.5 percent in the week. The Cabinet decided that the oil and gas giant can sell gas at a new price (USD 8.4 per million British thermal units) though the decision came with a rider that RIL will have to keep aside a bank guarantee, which the government can encash depending on the outcome of arbitration. The cabinet also rejected finance ministry's demand to cap gas prices.
Infosys will buzz next week after the news, announced after market hours on Friday, that CEO-in- waiting V Balakrishnan has quit the company to start his own private equity firm. This is the eighth top level exit at Infosys Since June .
Balakrishnana was a board member and top level executive at the firm who was also the former CFO. Infosys shares gained 5 percent to close at new high of Rs 3,552.30.
HDFC Bank fell more than 3.5 percent during the week. MSCI reduced weightage of the bank in its India Index to 5.41 percent from 7.05 percent with effect from January 20 after the RBI restricted FIIs from buying additional shares in the bank.
Sun Pharma gained 1.3 percent but the news was negative. Johnson and Johnson signed an agreement to lease part of Ben Venue lab's plant and take on manufacturing of Doxil generic itself while Sun was the only other supplier of Doxil generic (to treat cancer) in the US market for last couple of months.
Lupin climbed nearly 6 percent as its subsidiary has launched generic Trizivir (to treat HIV) tablets in US market after US court ruled in favour the company.
Power Grid Corporation's shares issued through follow-on public offer listed on Thursday. The stock gained close to 2 percent.
Shares of Maruti Suzuki rallied 7 percent to end at record high of Rs 1,809.95 on the BSE. Source-based reports indicated that promoter Suzuki Motor Corporation, which holds 56.21 percent stake, is looking at hiking stake in Maruti.
BSE IT, Healthcare and Realty indices gained 5-6 percent followed by Auto, Oil & Gas, Power and Capital Goods with 2-2.7 percent upmove. However, Bank Index was the only loser, falling 0.6 percent.
DLF, BHEL, Ranbaxy Labs, Cipla, TCS, Wipro, Sesa Sterlite and Hero MotoCorp were the biggest gainers among frontliners, rising 3-8 percent whereas JSPL and UltraTech Cement fell more than 3 percent.
Broader space of the market
The broader markets outperformed benchmarks with the BSE Midcap Index rallying over 3 percent and Smallcap rising 2.6 percent for the week.
MCX rallied 14 percent after Forward Markets Commission allowed Blackstone to increase stake in the company to 5 percent from 1.99 percent.
Trent shot up 20 percent after a disclosure on exchanges that Tesco will invest USD 110 million in India and is also in talks with the company to buy stake in Trent hypermarket.
Parent company GlaxoSmithKline plc announced a voluntary open offer to increase stake in its Indian subsidiary GlaxoSmithKline Pharmaceuticals, from 50.7 percent to up to 75 percent at a price of Rs 3,100 per share. The stock jumped 19 percent during the week.
SpiceJet surged over 9 percent after the company announced a three-year, interline agreement with Singapore-based Tigerair, a move that is expected to increase the carrier's load factor.
Strides Arcolab's stock was adjusted for dividend of Rs 500 per share. It plunged 57 percent.
Wockhardt listed its overseas holding subsidiary Wockhardt Bio AG on Switzerland exchange. Shares gained 18 percent.
Raymond soared 11 percent on talks of land stake sale. However, the management has mentioned again and again that they are opened for joint development and/or stake sale, but nothing has been finalised yet.
There was a big blow for liquor baron Vijay Mallya. Karnataka High Court declared the United Spirits share sale by United Breweries Holdings to Diageo is void. UB group and Diageo told CNBC-TV18 that they will look at approaching the Supreme Court. United Spirits and UB Holdings will be closely watched next week.
Among others, Anant Raj was the star this week, surging 35 percent followed by DEN Networks, Hathway Cables, Jammu and Kashmir Bank, Persistent Systems, DHFL and NIIT with a 14-22 percent upmove.
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