The Hindu Business Line : Rate sensitives back in focus

The BSE Sensex gained by 1.1 per cent during the week August 22-29. The interest-rate sensitive sectors such as banking, auto and realty led the increase, with the WPI inflation lower at 12.4 per cent for the week ended August 16, compared to 12.63 per cent the previous week. Lower GDP growth of 7.9 per cent for Q1FY09 did not appear to surprise investors as the market had already factored in lower growth. Further, encouraging cues from the global markets provided hope. The GDP growth rate of the US economy was at 3.3 per cent, surpassing expectations.

Prominent sectors

The BSE Capital Goods and Metal indices were the only sector indices that declined. Many banking stocks registered a rise, on account of lower inflation and expectation that the RBI may not resort to further monetary tightening. The dip in inflation, which the Ministry of Finance viewed as ‘early signs of moderation’ in prices resulted in heavy buying among banking and realty segments, in anticipation of steady interest rates. HDFC Bank (6.9 per cent), State Bank of India (4.3 per cent) and ICICI Bank (4.2 per cent) were among the top gainers in the BSE Sensex. Among the stocks in the Realty Index, Akruti City topped the list with a weekly return of 12.6 per cent.

Among the IT majors, Infosys gained 3.2 per cent after its acquisition of British consultancy major Axon Group Plc. Satyam gained the most, with an 8.7 per cent increase. The increased activity in IT stocks can be attributed to the appreciation of the US Dollar vis-À-vis the Indian Rupee.

Stock-specific action

The shares of Jindal Photo surged 8.3 per cent during the week after its board approved a plan to delist the company’s shares from the BSE, this may be precded by an exit option for investors. The shares of Kilburn Engineering rose after it had won orders and letters of intent worth Rs. 14.9 crore for the supply of driers.

Reliance Industries with a decline of 4.8 per cent was the top loser of the week among the Sensex stocks. The decline should probably be seen in light of its plans to seek the approval of the Government to transfer 80 per cent of its holding in the D6 block of the Krishna Godavari basin, to four of its unlisted units.

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