Weekly: Markets end higher on reform hopes, strong FII buying

Benchmark share indices ended higher after gaining in all but one session of a truncated week on hopes of strong reforms in the upcoming Budget, sustained buying by FIIs and benign inflation data, making a rate cut by the Reserve Bank of India (RBI) more likely.

In the week to February 20, the 30-share Sensex ended up 137 points or 0.46 per cent at 29,357 and the 50-share Nifty ended up 23 points or 0.25 per cent at 8,828. In the broader market, the BSE Mid-cap Index gained 0.89 per cent, while the Small-cap Index surged 1.66 per cent, outperforming the benchmark indices.

As per the official data released on Monday, wholesale prices declined an annual 0.39 per cent in January, their second fall in three months, on the back of falling fuel prices, even as food inflation rose during the period.

On Wednesday, when the markets reopened following the holiday for Mahashivratri, the prime minister's rousing speech calling upon Indian industry and armed forces to Make in India for the defence sector at the inauguration of Aero India 2015 in Bengaluru led to an uptick. However, markets failed to sustain the gains in the last session of the week dragged down by profit taking in shares of Reliance Industries after one of its employees was arrested by the Delhi Police for illegally sourcing government documents, while the persisting uncertainty over Greece also weighed on investor sentiment.

Meanwhile, foreign investors were net buyers in equities to the tune of Rs 3,946 crore during the week, as per provisional stock exchange data.

Buzzing stocks
Among sectoral indices, the BSE Power Index gained the most, rising 2.9 per cent, followed by the BSE Capital Goods Index, up 2.7 per cent and BSE Realty Index, up 2.6 per cent. BSE Oil & Gas Index lost more than 3 per cent to emerge as the top loser. BHEL, up 6 per cent was the top gainer of the week followed by TCS, up 5.3 per cent. TCS has been recognised as a leader in Banking and Capital markets Application Outsourcing Services in Europe by leading advisory and research firm Everest Group.

Housing finance major HDFC gained over five per cent. HDFC’s consolidated net profit rose 12.61 per cent to Rs 2,179 crore on 18.89 per cent growth in total income to Rs 11,952 crore in Q3 December 2014 over Q3 December 2013.

Another index heavyweight, ITC gained 4.7 per cent on acquiring ‘Savlon’ and ‘Shower To Shower’ trademarks from Johnson & Johnson, India. Mahindra and Mahindra too gained around 4.7 per cent. The company recalled all the XUV500 vehicles, manufactured on of before July 2014 for the up gradation of the side curtain airbag. Hero MotoCorp lost nearly seven per cent. The Munjal family, the promoters of Hero MotoCorp, sold part of their personal stake worth $300 million on Wednesday to invest in power and real estate sector. Reliance Industries declined 4.79 per cent amid the corporate espionage controversy.

Axis Bank lost 3.5 per cent. On Monday, the bank raised Senior Notes in international market worth $55 million under the Medium Term Note Programme through its Hong Kong branch.

Week ahead
The market may remain volatile next week on speculations over the number and quality of reforms to be announced in the Union Budget on February 28 and traders rolling over positions in the futures and options segment on Thursday.

Traders will also watch, for cues, the Railway Budget to be tabled in Parliament on February 26 and Economic Survey on February 27.

Among global cues, Federal Reserve Chairwoman Janet Yellen’s semi-annual monetary policy testimony to Senate Banking Committee, in Washington is scheduled on Tuesday, while the preliminary reading of HSBC PMI Index of China's manufacturing activity for the month of February will be released on Wednesday. The negotiations over Greece debt crisis will keenly followed in the coming week.