Friday was a big day for the Indian markets. The bellwether indices, Sensex and Nifty, rallied 2.3 per cent and 2.5 per cent respectively on the back of continued reform push by the UPA Government. Sensex and Nifty closed the week at 18,753 and 5,691, gaining 1.6 and 1.9 per cent for the week respectively.

The latest slew of reforms includes reduction in the withholding tax on overseas borrowing to 5 per cent from the current 20 per cent and approval of the Rajiv Gandhi Equity Scheme (RGESS). Under RGESS, investments up to Rs 50,000 by investors whose annual taxable income is below Rs 10 lakh, will be eligible for a 50 per cent tax exemption. These investments can be made through mutual fund schemes and exchange traded funds which have a three-year lock in.

Earlier in the week, the Reserve Bank of India cut the cash reserve ratio (CRR) by 25 basis points to 4.5 per cent, while the policy rates were kept unchanged. Rate-sensitive stocks cheered the move. BSE Realty and BSE Bankex jumped 8.8 per cent and 6.9 per cent respectively.

While a strong rupee drove down the BSE IT index by over 3.5 per cent, revived investor interest in cyclicals led to underperformance of defensives such as healthcare and FMCG. BSE Healthcare fell 2.2 per cent while BSE FMCG lost 2 per cent last week.

Hexaware Technologies was the top loser in the IT space down 8.6 per cent, followed by Tata Consultancy Services and MindTree Consulting which lost 7.7 per cent and 4.4 per cent respectively during the week.

Banking and power stocks gained on expectations that the Manmohan Singh-led Government will likely approve debt restructuring proposal for State electricity boards and power distribution companies. According to a data released by the Reserve Bank of India, the total outstanding debt of Indian power companies stood at Rs 3.56 lakh crore. State-owned banks such as Canara Bank, Oriental Bank of India, Union Bank of India, Central Bank of India, Andhra Bank and Karnataka Bank raked in gains ranging between 18 and 26 per cent last week. Key gainers in the power sector include PTC India, Reliance Power, GVK Power, Kalpataru Power, BHEL and Jaiprakash Power , whose gains during the week ranged between 12 and 19 per cent.

Despite the nationwide protests by the key opposition parties BJP and the Communist party, the UPA Government notified 51per cent foreign direct investment (FDI) in multi-brand retail and relaxed the conditions for single brand retail. The Government also notified foreign investment to the tune of 49 per cent in Indian carriers, and foreign investments in the broadcasting sector. Airline stocks Kingfisher Airlines and SpiceJet were up 21.3 and 9.2 per cent respectively for the week. Retail majors Pantaloons Retail and Shoppers Stop gained 16 and 6 per cent respectively for the week.

Telecom major Reliance Communications surged 8.5 per cent on Friday on raising its base tariff by 25 per cent from 1.2 paisa per second to Rs 1.5 paisa per second. The stock was up 21.5 per cent for the week.

Liquor maker United Spirits , jumped 7.1 per cent during the week on reports that Diageo Plc , the world’s largest distiller, is in advanced talks to buy a stake in the company.

Vakrangee Finserve Limited , a subsidiary of Vakrangee Software , was awarded a five year project worth Rs 1258 crore by Bank of Baroda . The stock gained 6 per cent last week.

Wind turbine supplier Suzlon Energy rose 7 per cent for the week, on the back of its subsidiary, REpower Systems signing a wind turbine supply contract with Dresden-based WSB Neue Energien GmbH .

Mahindra and Mahindra (M&M) gained 4 per cent during the week, after the company unveiled the new compact and versatile sports utility vehicle, Quanto.

Mahindra and Mahindra Financial Services approved the proposal for sale of 12.37 per cent stake in its wholly-owned subsidiary Mahindra Insurance Brokers to Inclusion Resources , Singapore for Rs 64.3 crore. The stock gained 5.46 per cent during the week.

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