Weekly market wrap: Markets surge on hopes of growth-focussed reforms

Sensex ended 3.4% or 862 points up while Nifty rose 3.2% or 243 points

Markets hit fresh record highs on expectation that the Finance Minister Arun Jaitley in his maiden Budget would announce growth-oriented reforms and set the tone for economic revival. Further, stability of crude prices post the Iraq crisis and onset of monsoon also aided investor sentiment.

The 30-share Sensex ended up 3.4 per cent or 862 points to end at 25,962 after hitting a new record high of 25,981.51 and the 50-share Nifty ended up 3.2 per cent or 243 points to close at 7,752 after touching a record high of 7,758.

Further, the broader markets outperformed the benchmark indices during the week under review. The BSE Mid-cap Index ended up 3.7 per cent at 9,546 and the Small-cap Index ended up 4.8 per cent at 10,508.

The rally was purely driven by aggressive buying from foreign institutional investors (FIIs). According to the Securities and Exchange Board of India (Sebi), FIIs have invested $10.34 billion (Rs 62,053 crore) so far this year.

The BSE Auto and Capital Goods indices were among the top sectoral gainers on the BSE up five-six per cent after the government extended the excise concessions to both these sectors by a period of six months till December 2014. Other sectoral gainers include, Healthcare, Power, Bankex and Metal indices.

Tata Motors was the top Sensex gainer up 8.4 per cent. In a rare case of investor activism on managerial remuneration, shareholders of Tata Motors, India’s biggest automotive maker, rejected compensation payment in excess of prescribed limits to three directors.

Maruti Suzuki ended up 7.9 per cent. Sales in June rose 34 per cent to 112,773 units compared to June last year. Domestic sales rose 31 per cent during the month to 100,964 units, exports jumped 58 per cent to 11,809 units compared to June 2013.

Mahindra & Mahindra ended up 6.5 per cent. M&M’s June domestic sales also rose marginally at 36,457 units last month as against 36,207 a year earlier. Exports rose seven per cent to 2,014 units from 1,885 units in the same period a year earlier.

Hindalco ended up 7.5 per cent. Research firm CLSA has upgraded the stock to “buy” from “sell”. Improving margins in standalone and global operations should boost consolidated earnings over the next few years, the firm said.

In the capital goods space, L&T ended up 4.6 per cent. L&T Construction said it has bagged new orders worth Rs 2,002 crore across various business segments during June. BHEL gained 7.3 per cent.

Private bankers were also among the significant gainers during the week. ICICI Bank and HDFC Bank ended up 5-5.6 per cent each.

The week ahead

Markets are likely to trade firm near their all-time highs in the eventful and most significant week ahead.

The Budget session of the Parliament will commence on Monday. On Tuesday, Railway Minister Sadananda Gowda will table the Railway Budget 2014-15.

The Finance Ministry will release the Economic Survey on Wednesday, and Finance Minister Arun Jaitley will present the Union Budget 2014-15 on Thursday.

State-owned companies will be in focus if the government hikes the target from partial stake sale in PSUs while infrastructure stocks will see some action incase of higher allocation. Infosys will be in focus as the IT majors kicks off the first quarter earnings season on Friday.

Further, the government will also release industrial production data for May 2014.