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Weekly: Markets gain on growth signs

Markets gained in all the four sessions during the week, continuing their surge for the third consecutive week to end at fresh record closing highs, due to improving business sentiment following a slew of initiatives unveiled by the Centre.

The Sensex gained for the seventh consecutive month. In the week ended August 28, the 30-share index rose 219 points, or 0.8 per cent, to close at 26,638, while the 50-share Nifty closed with a gain of 41 points, or 0.5 per cent, at 7,954.

For the quarter ended June this year, India’s gross domestic product (GDP) grew at a nine-quarter high of 5.7 per cent, compared with 4.6 per cent in the previous quarter, driven largely by industry, official data showed on Friday.

In the first three trading sessions of the week, foreign institutional investors were net buyers in Indian equities to the tune of Rs 782 crore; on Thursday, they were net sellers by Rs 711 crore.

The gains were led by defensive stocks such as HUL, ITC, Dr Reddy’s Labs and Cipla, which gained three-five per cent each. State-owned engineering major Bhel was the top Sensex gainer, rising six per cent.

Metal and power stocks recorded a sell-off after the Supreme Court termed all coal mine allocations between 1993 and 2010 arbitrary. Among Sensex stocks, Tata Power lost the most, falling 7.1 per cent, while NTPC lost 3.2 per cent. In the metals space, Hindalco, Sesa Sterlite and Tata Steel lost 4.5-6.6 per cent each.

Auto stocks rebounded, after carmakers said they would challenge the Competition Commission of India (CCI)’s directive that they pay a fine of Rs 2,545 crore for alleged unfair practices relating to spare parts and technology-sharing. Maruti Suzuki and Mahindra & Mahindra gained one per cent each.

CCI claimed 14 companies, including Tata Motors, Maruti Suzuki, were found guilty of violating trade norms after they failed to make their genuine spare parts available in the open market.

Tata Motors said it would file an appeal against the CCI order before “appropriate authorities”. It added the Rs 1,346-crore penalty levied on the company was calculated on its consolidated global turnover, which included Jaguar Land Rover revenue, instead of the turnover from its passenger vehicle business in India. The stock gained 2.5 per cent.

On Wednesday, the government opened the railways sector to private and foreign investments in select areas—high-speed trains, suburban corridors and dedicated freight lines. Foreign investment will also be allowed in the construction and maintenance of these lines, as well as in rolling stock-manufacturing facilities, electrification and signalling.

Easing investment norms in the defence sector, the government has apparently done away with the condition of 51 per cent equity ownership by a single Indian partner, while raising the foreign investment cap from 26 per cent to 49 per cent. Bharat Electronics surged 14 per cent, while BEML gained four per cent and Astra MicroWave 3.5 per cent.

Week ahead

The Nifty is likely to breach the 8,000-mark due to encouraging rollovers to the September series, as well as an improvement in GDP growth in the June quarter.

The Supreme Court’s decision on coal block allocations, scheduled for September 1, will be tracked. Investors will also track foreign fund inflows, crude oil prices and the rupee’s movement.

Automobile companies will start releasing sales data for August. In July, car sales had risen 11.3 per cent, the third consecutive month of growth.

Data on the HSBC Purchasing Managers’ Index (PMI) for manufacturing is set to be released on September 1, while HSBC services PMI data will be released on September 3.

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