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Weekly Wrap: Sensex, Nifty consolidate; mid-caps outperform


The truncated week ended November 7 saw both Sensex and Nifty consolidate at higher levels even as benchmarks managed to close at record levels in two of the three trading sessions this week, building on last week’s momentum.

On a weekly basis, Sensex remained flat at 27868 levels while Nifty managed to churn out marginal 0.2 percent gains to close at 8337; broader markets significantly outperformed the benchmarks though. For the week, CNX mid-cap and BSE small-cap gained between 1.3-1.7 percent.

On the macroeconomic front, growth in the service sector stagnated in the month of October owing to weaker growth of business orders, according to HSBC PMI index. The index fell to 50 in October from 51.6 a month back.

On the global front, after Bank of Japan’s unexpected move to expand the pace of its quantitative easing last week, the Eurpoean Central Bank (ECB) on Thursday indicated that it may further pursue aggressive stimulus measures if the situation demands so.

Shane Oliver, head – Investment Strategy & Chief Economist at AMP Capital investors told CNBC-TV18 that global risk on rally is likely to continue on back improving growth outlook in US and easy liquidity binging spree as BoJ and ECB replace Fed on the quantitative easing front.

Gold tumbled to a fresh 4-1/2 year lows as the US dollar rallied on economic optimism and expectations the Federal Reserve could raise rates sooner rather than later.

Both foreign and local brokerages continue to remain bullish on Indian market; Jonathan Garner, MD, Morgan Stanley Research has a near-term Sensex target of 29000. He believes it could overshoot 29,000 in the medium-term. In an interview with CNBC-TV18, Garner said, “We took money out of IT and kept pharma exposure and if you look at the overall market. We have also been emphasising the financials on the private banks in particular which should do well in a more reflationary environments and again lower bond yields should help the financial sector.”

There was a word of caution though from Udayan Mukherjee, who in an interview with CNBC-TV18 said that markets are bit overheated and it is better to ride the momentum with banking stocks and good quality mid-cap stocks rather than taking a contrarian view.

October auto sale numbers disappointed the street sparking a 1.3 percent sell-off in the BSE Auto index. Shares of M&M, Bajaj Auto and Hero Motocorp fell 0.5-5.7 percent. Despite the festive season, Maruti Suzuki reported a 1.1 percent dip in total sales in October, Mahindra & Mahindra reported 15.39 percent decline in total sales at 42,776 units in October and Tata Motors’ sales slumped 17 percent to 42,819 units in October 2014.

Hero Motocorp stock came under pressure owing to a block deal: Bain Capital selling 8.5 million shares of the two-wheeler manufacturer on Friday.

MSCI in its semi-annual review on Thursday deleted HDFC Bank, Reliance Capital, JP Associates and Reliance Power and added Zee Entertainment and Motherson Sumi to its India index. Some of the major additions in the MSCI small cap index include CEAT, Info Edge, Jubilant Food, Thomas Cook, Strides Arcolab, said reports. MSCI is a global provider of equity, fixed income, and hedge fund stock market indices. Zee entertainment gained on the news of being added in the MSCI India Index.

Market Internals

Among major Nifty losers, GAIL, NMDC, Coal India, Hero Moto, M&M, Hindalco fell 4.6-8.3 percent. Top heavyweight gainers were Bank of Baroda, Lupin, ICICI Bank, Tech Mahindra, Axis Bank, Sun Pharma, DLF and Zee Ent, which gained between 3-8 percent.

Bank of Baroda’s released its September quarter results on Friday. Net interest income, climbed 17.5 percent on yearly basis to Rs 3,401 crore from Rs 2,895 crore while other income (non-interest income) grew by 1.8 percent to Rs 991.65 crore during the same period. Net profit fell 5.5 percent year-on-year to Rs 1,104 crore due to higher provisions and tax rate.

Among sectors, BSE metal index dropped 4.3 percent. A drop in iron ore prices to their multi-year lows dragged metal and mining shares. Fall in prices affect margins of miners, say experts.

Shares of NMDC dropped over 4 percent during the week. The company reported a revenue growth of 25.2 percent to Rs 3,105.1 crore in the quarter ended September 2014 as compared to Rs 2,480 crore in the same quarter last year. Other notable losers from the metal pack were Coal India and Sesa Sterlite which fell 4-7 percent.

Pharma, Media and Realty which hoisted between 3.7-5.7 percent, led the gainers among sectors. Both CNX pharma and BSE healthcare indices touched their all-time high levels on Friday. Aurobindo Pharma zoomed 6.5 percent this week. The drug manufacturer reported a 58 percent Y-o-Y surge in net profit at Rs 372 crore in the September quarter.

Ranbaxy staged a recovery on Friday after a brief sell-off. The company declared in a exchange filing that USFDA has revoked tentative approvals granted for generic versions of two drugs – AstraZeneca’s heartburn drug Nexium & Roche’s antiviral drug Valcyte.

Axis Bank touched its lifetime high levels at Rs 427 on the NSE on Friday.


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