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Sensex records highest weekly gain since June 2014

Markets scaled fresh record highs and the Sensex recorded its highest weekly gain since June 2014 following robust growth forecast by the IMF and on expectations that the pace of foreign inflows would improve after higher-than-expected monetary stimulus from the European Central Bank.

In the week to January 23, 2015, the 30-share Sensex topped the 29,000 mark to end 4.1% higher at a record closing high of 29,279. In the week to June 06, 2014 the Sensex had surged 4.8% to 25,396. The 50-share Nifty breached 8,800 to rise 3.8% and also end at a record closing high of 8,836.

The International Monetary Fund (IMF), in its World Economic Outlook Update,  has slightly cut projections  for India’s economic growth to 6.3% for 2015-16 against 6.4% made in October last year, while retaining the  forecast for the current financial year at 5.6%. On a different growth parameter, it projected India’s economy to grow faster than China’s by 2016-17 and pegged the country’s growth rate at 6.5% for 2016-17.

The European Central Bank (ECB) President Mario Draghi surprised the market by not only announced a higher package but also  extended the tenure. He announced a package to buy Euro 60 billion ($ 69 billion) worth of private and public Euro-area bonds a month, popularly known as quantitative easing (QE), till September 2016 taking the  total amount above one trillion euros.

Market expectation was that the ECB would announce a euro 50 billion per month QE program which would run for a year totalling between euro 600-700 billion.

The rally in the markets which witnessed record highs for four straight sessions during the week under  review was largely led by aggressive foreign fund buying. Foreign institutional investors were net buyers in Indian equities to the tune of Rs 6,388 crore (over $ 1 billion) during the week, as per provisional stock exchange data.

The rally was led by rate-sensitive sectors such as Bankex, Auto and Capital Goods, Realty while Metal and Healthcare indices were also among the top gainers.

Telecom stocks were in action during the week after the cabinet approved swapping arrangement of spectrum between telecom and defence ministries, which will vacate 15 MHz of spectrum in 2100 Mhz in the next one year. Bharti Airtel was the top Sensex gainer up 12% after a foreign brokerage upgraded the stock while Idea surged 11% and Reliance Communications rose 5%.

ITC was the top Sensex loser down 2.8% after weaker-than-expected show of the cigarettes business (85 per cent of operating profits) impacted its December quarter performance.

Tata Motors jumped 12%. The auto major launched its much awaited new-age hatchback Bolt attractively at Rs 4.65 lakh (ex-showroom, Mumbai) for the base version of petrol and Rs 6.34 lakh for the base version of diesel.

Wipro surged 8% after the IT major surprised the Street by delivering better than expected third quarter numbers. The company reported a net profit of Rs 2,192 crore in the third quarter ended December 31, 2014, up 9% over a year and 5% sequentially.

Week Ahead

The market will remain closed on Monday, January 26, on account of Republic Day. US President Barack Obama will preside as the chief guest for the occassion.

Some of the major companies that will announce their third quarter earnings include, HDFC, NTPC, ICICI Bank, Dr Reddy’s Labs, Asian Paints and IDFC among others.

The roll-overs to February F&O series will be in focus as January F&O series are set for expiry on Thursday, January 29.

On the global front the Greek elections on Sunday, January 25 and the two-day US FOMC meet on January 27-28.


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