The Hindu Business Line : Sensex charges ahead on stimulus hopes

New Year and hopes of a new booster package drove the stock markets this week. Optimists sailed through waves of uncertainty and made gains. The possibility of funding support to infrastructure and auto companies supported by a cut in lending rates was in air since the beginning of the week. Though the markets dipped mid-week they scaled up towards the end of the week . The Sensex made a 7 per cent gain while the S&P CNX Nifty rose 6.63 per cent to close the week above 3000 levels.

The week began with the Deputy Chairman of the Planning Commission, Mr Montek Singh Ahluwalia, indicating a possible second stimulus package announcement towards end of the week. The Sensex cheered and advanced 370 points from its day’s low and closed the session 2 per cent higher.

Sad end, happy beginning

The week’s third trading session also the last trading session of 2008, saw wide fluctuations. Banking and realty shares declined on speculation about the RBI rate cut not being significant. Grasim Industries, JP Associates, BHEL, HDFC and many others in the Sensex basket edged lower and the index closed in red (0.7 per cent lower).

The first session of the New Year saw a gap-up opening. The indices were in green and buying was in specific realty-infrastructure and banking stocks. Exports for November declined 10 per cent year-on-year, the data was however ignored by market men and the Sensex made a 2.7 per cent gain that day. Inflation for the week ended December 20 was 6.38 per cent, lower than the previous week’s 6.61 per cent.

The New Year saw the global markets cheering too. The Dow Jones index edged 6 per cent higher in the week. The US Government announced its $5 billion support to General Motors auto and mortgage financing arm GMAC and $1billion support to General Motors early last week. FTSE index was up by 8 per cent and Hang Seng higher by 6 per cent.

Crude oil prices zoomed by 23 per cent this week following tensions in the Gaza strip and on fears of a possible production cut. Tracking crude oil, gold too inched up and closed the week gaining 3 per cent.

Stocks in action

The gains made by the market were also on stock specific triggers. Despite the news of three independent directors resigning from Satyam’s board, the stock made a good 32 per cent gain in the week on rumours that a few global companies and private equity players were interested in the company. Era Infra Engineering gained 13 per cent in the week on the back of substantial order wins.

The top gainers of the week were Satyam Computers, Reliance Communications (up 20.7 per cent), and Ranbaxy (up 16 per cent). The stocks that had a red tint were Hindustan Unilever (down 4 per cent) and Infosys (down 3.5 per cent).

It’s green across sectors

The BSE mid-cap and small-cap indices gained 9 per cent each and surpassed Sensex in the week. Interest rate sensitive sectors, realty and auto company stocks lent support to the markets. The BSE Bankex index gained 8.8 per cent. The stock of Bank of India was up by 6 per cent, State Bank of India higher by 7 per cent and ICICI Bank higher by 13 per cent.

The BSE Realty index was higher by 12.3 per cent and the BSE Auto index geared up by 6.6 per cent. Indiabulls Realestate gained 17.5 per cent in the week. DLF and Unitech too posted gains, rising 9 per cent and 28.5 per cent respectively.

The other key indices were also in the positive terrain. The BSE Power index gained 9 per cent, BSE teck index closed 6.7 per cent higher, BSE Oil and Gas higher by 5.6 per cent and BSE FMCG higher by over 1 per cent.

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