Weekly: Markets keep faith with Modi; Nifty tops 7,900

Cipla, BHEL, SBI, Axis Bank, Baja Auto among the top gainers for the week

Aggressive institutional buying buoyed by Prime Minister Narendra Modi's maiden Independence Day speech, easing whole-sale price inflation and declining crude oil prices turbocharged the markets to fresh record highs in the week ended August 22.

For the week, the BSE benchmark index gained 316 points or 1.2% to end at 26,419 and the Nifty advanced 122 points or 1.6% at 7,913.  In intra-day trades, both the indices had scaled a high of 26,531 and 7,929 respectively.

Prime Minister Narendra Modi in his maiden Independence Day speech boomed to the world that he will turn India into a manufacturing and export powerhouse coupled with employment generation for the country’s teeming youth even as he invited foreign investors to come and invest here.

The wholesale inflation eased to 5-month low 5.19% in July  helped mainly by a moderation in fuel costs, government data showed.

Also, speculation of an upward revision of India's sovereign rating outlook by global rating agency S&P, positive global cues and falling crude oil prices were added positives.
 

Banking on the growth revival hope, foreign investors have poured in nearly $12.2 billion in Indian equities thus far.

Broader markets which encompasses the mid and smallcap indices surged through the week with buying interest visible across the sectors. The midcap index was up nearly 4% and the smallcap index added 1.2% for the week.

Dipen Shah, Head- Private Client Group Research, Kotak Securities is of the view that going ahead, expectations on interest rate movements in US and fiscal reforms in India will continue to drive the markets in the medium-to-long term. In the short term, geo-political issues and monsoons will be the triggers to track.

Exuberance was visible in the currency market with the Indian currency gaining for the third straight week with gains of 0.5%.

Sectors & Stocks

Defensives were the laggards in trade with the FMCG index down 1.3% being the only sectoral index to end in red.

Meanwhile, the ones leading the gains were Consumer Durables, Health Care, Bankex, Auto and Capital Goods indices with gains between 4-5.6%.

The Bank Nifty ended at a record closing high of 15,819. PSU banks were among the top gainers during the week after Finance Minister Arun Jaitley said that the government was working towards bringing in more professionalism in the functioning of banks and improving risk management, amid the backdrop of the recent scams in some public sector banks. Canara Bank, Bank of India, Bank of Baroda, PNB and SBI ended up 5-8% each.

The star performers among the Sensex-30 were Cipla which rose over 11% along with BHEL, SBI, Axis Bank, Baja Auto, Tata Motors, Sun Pharma and Mahindra & Mahindra up 5-7%.

Meanwhile, HDFC, ITC, TCS and HUL down 1-7% were the notable losers. Tata Steel, RIL, Bharti Airtel and Infosys rounded off the losers list.

Week ahead

Markets are likely to be jittery on account of Federal Reserve Chair Janet Yellen statement that policymakers eyeing interest rate hikes need to move cautiously.

The F&O August derivate expiry on 28th, may see the market turn choppy as traders roll over their position.

The first quarter GDP numbers is expected on 29th.

Traders will keenly watch the dollar rupee equation in light of softening crude oil prices.