Market snaps 3-week losing streak, surges ahead of Union Budget

A host of positive factors helped both the key indices, Sensex and Nifty, to snap their three-week losing streak during the week under review and rally by nearly 2.8 per cent on the back of a smart rise in banking, metal and capital goods stocks.

After giving up 1,278.92 points or 6.73 per cent in the last three weeks, the benchmark Sensex bounced back on hectic short-covering amid taking up of fresh positions ahead of the Union Budget on February 28 and also due to expiry of February series on coming Thursday.

The Bombay Stock Exchange 30-share barometer resumed the week higher and remained in positive terrain throughout the week and ended up by 482.91 points or 2.72 per cent. Similarly, the 50-share index Nifty also shot up by 148.95 points or 2.81 per cent to end the week at 5,458.95.

The market sentiment was so strong that 12 out of 13 sectoral indices closed with gains. Second-line counters also attracted good buying support at lower levels from retail investors. Realty stocks were only at the receiving end following concerns over recent scams.

General inflation as well as food inflation showed signs of declining, mainly due to easing of concerns of further hike in interest rates. The general inflation declined to 8.23 per cent in January 2011 from 8.43 per cent last month and the Finance Minister expressed hope that the overall inflation will come down to 7 per cent by March-end.

Food inflation fell for the second straight week to a two-week low of 11.05 per cent for the week ended February 5 against 13.07 per cent in the previous week, providing slight relief to market participants.

The Securities and Exchange Board of India decision to probe the recent fall in stock markets and the Egyptian President Mr Hosni Mubarak’s decision to step down also helped to boost investors’ sentiment.

Foreign Institutional Investors (FIIs) turned net buyers during the week as they bought shares worth Rs 697.77 crore including provisional data of February 18.

Overall, 21 out of 30 index based counters closed with gains, while others ended with losses. From banking segment, SBI shot up by 6.6 per cent, HDFC Bank 5.43 per cent and ICICI Bank by 2.4 per cent.

Steel major Tata Steel flared up by 7.21 per cent on excellent third quarter performance. Jindal Steel also jumped by 9.77 per cent.

“Although we have recovered smartly after a three-week drubbing, doubts still persist about the continuation of the rally. So, be careful and tread cautiously even as the bias remains positive for now,” said the IIFL Head of Research, Mr Amar Ambani.

The market closed up in four out of five sessions as the fag-end selling trimmed some gains on week-end profit booking and the widening probe in the 2G spectrum allocation scam.

Market analysts said the overall sentiment was dampened on the last trading day by CBI raids at the offices and residences of top management of DMK’s first-family run Kalaignar TV in connection with the 2G spectrum scam.

According to brokers, the next major trigger for the market is the Union Budget to be announced on February 28, where some measures to rein in inflation may be announced.

Other major gainers from the Sensex pack were Bajaj Auto (6.34 per cent), BHEL (2.75 per cent), Maruti Suzuki (3.76 per cent), RIL (2.94 per cent), Tata Power (5.67 per cent), Bharti Airtel (3.94 per cent), HDFC (3.67 per cent), HUL (3.85 per cent), Infosys Tech (1.83 per cent), Jaipra Associates (4.28 per cent), L&T (5.35 per cent), Tata Motors (5 per cent) and Wipro (2.54 per cent).

However, DLF declined by 5.96 per cent, RCom 4.12 per cent, ONGC 3.35 per cent, M&M 2.56 per cent, Rel Infra 1.64 per cent and Cipla by 1.6 per cent.

Among the sectoral indices, the bankex flared up by 4.87 per cent, the BSE-Metal 4.02 per cent, the BSE-Capital Goods 3.93 per cent and the BSE-Consumer Durables 3.4 per cent.

Reflecting the rally in second-line stocks, the BSE-Smallcap index zoomed by 4.1 per cent and the BSE-Midcap by 2.87 per cent.

Total turnover on the BSE was up at Rs 17,390.19 crore from Rs 16,734.94 last week while on the NSE, it was down at Rs 63,240.49 crore from Rs 67,273.18 crore.