The Hindu Business Line : Diwali spirit lifts market

The week that began on a festive note ended leaving many investors happy. The Sensex, after many weeks of being on the losing side, posted a handsome 12.5 per cent gains during the week. The weekly gain however had its share of ups and down; markets swooned to new lows on Monday, which saw the Sensex briefly trade below the all-important 8k level (at 7697 points). But bottom fishing and value-buying by market participants propped the bellwether back to respectable levels. That these double-digit gains for the two indices has been despite two trading holidays mid-week also suggests that bulls may be back in action. After almost a decade, Muhurat trading on Diwali saw the indices scale over 5 per cent gains. This holds significance as the whole of October saw stocks across the board getting decimated to abysmal lows.

Company-specific action

Realty major, Unitech’s share price gained over 60 per cent during the week on news that it has sold 60 per cent stake in its telecom venture, Unitech Wireless to the Scandinavian telecom operator, Telenor for a princely sum of Rs 6120 crore. The deal would also see the debt of Rs 2,000 crore being transferred from Unitech to Unitech Wireless balance sheet.

Shares of IT major, HCL Technologies also soared following the announcement that it had clinched an order worth Rs 400 crore for its core insurance solution implementation from National Insurance Company.

Results prop up buying

September quarter earnings numbers of companies also rubbed off positively on the market - Hindalco, moved up by 38 per cent, Sterlite Industries (35 per cent), ICICI Bank (29 per cent), Jaiprakash Associates (21 per cent) and Reliance Infrastructure (20 per cent). Despite posting a 20 per cent fall in profits (because of a Mark to Market loss of Rs 120 crores), the share price of M&M registered a gain of about 23 per cent during the week. On the whole all most all sectors except FMCG and Health Care recovered quickly this week.

Global scenario

The cheer in the domestic bourses was partly driven by the sentiment boost in most global markets. The series of liquidity shots, by way of reduction in the interest rates by central banks in US, Japan and China provided the much-needed support to the ailing financial markets.

Prices of commodities however saw only a marginal recovery; oil and gold put up measly gains.

Macro position

The Indian rupee put up its first weekly gain in more than a month. The rupee climbed 1 percent last week after falling for 11 straight weeks. Inflation too came off considerably form its highs and for the first time since May, fell below 11 per cent; it is now at 10.68 per cent. Moderating inflation numbers and a slew of interest rate cuts across the globe appeared to have driven the RBI to reduce the repo rate by a further 50 bps to 7.5 per cent. It has also cut the CRR and SLR each by 100 bps to 5.5 per cent and 24 per cent respectively.

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