Weekly: Sensex gains 1% ahead of Q2 earnings

Caution is likely to prevail in Indian shares ahead of the September-quarter earnings from Infosys on Oct. 11

Benchmark indices ended higher in the truncated week as the Indian rupee remained high along with renewed buying among auto and metal shares bucked the trend.

The 30-share Sensex rose 188.68 points or 0.96% to 19,915.95. The 50-unit Nifty gained 74.10 points or 1.27% to 5,907.30.

The broader markets outperformed the benchmark indices during the week- BSE Midcap and Smallcap indices rose 1.94% and 1.25%, respectively.

RUPEE

The rupee recovered to trade strong on weak global dollar and uptick in stock market sentiment. It ended at 61.41 against US dollar on Friday.

A treasury head of public sector bank said globally US dollar is ruling the on concerns about the economic effects of a prolonged shutdown and debt-ceiling debate.

WEEKLY WRAP

Markets opened weak on Monday tracking dismal global cues. The S&P BSE Sensex plunged 347.50 points or 1.76% to settle at 19,379.77, its lowest closing level since 6 September 2013.

On Tuesday, Indices edged higher as the rupee strengthened against the dollar after data released by the RBI on 30 September showed a lower-than-expected current account deficit in Q1 June 2013.

The stock markets were shut on Wednesday on account of Gandhi Jayanti.

On Thursday, Indices gathered momentum on expectations that the US government's partial shutdown could lead to the US Federal Reserve postponing tapering of monetary stimulus to the US economy. Sensex jumped 384.92 points at 19,902.07, its highest closing level since 24 September 2013.

On Friday, markets ended marginally higher amid volatility. BSE Sensex was up 13.88 points or 0.07% to 19,915.95.

STOCKS

Bajaj Auto was the top Sensex gainer during the week which jumped 6.37%. The company’s total sales rose 2% to 3.67 lakh vehicles in September 2013 over September 2012. Motorcycle sales rose 3% to 3.23 lakh units in September 2013 over September 2012.

Tata Motors rose 2.91% to Rs 349.75. The stock hit a record high of Rs 364.70 in intraday trade on Friday.

Maruti Suzuki India rose 4.38%. The company’s total sales rose 11.7% to 1.04 lakh units in September 2013 over September 2012.

Metal stocks were in demand as China's official non-manufacturing Purchasing Managers' Index rose to a six-month high in September boosted sentiment. China is the world's largest consumer of copper and aluminum. Tata Steel (up 0.21%), Hindalco Industries (up 3.51%), and Sesa Sterlite (up 2.38%) gained. Jindal Steel & Power was down marginally by 0.02%.

Index heavyweight RIL rose 1.57% to Rs 853.40.  HDFC Bank, HDFC and GAIL (India) gained between 2-5%. Cigarette major ITC shed 2.52% to Rs 340.10.

FMCG major Hindustan Unilever (HUL) fell 2.06%. HUL's parent company Unilever Plc issuing a warning on Monday that it now expects underlying sales growth of just 3% to 3.5% in the period as against estimates of 6% as a slowdown in its emerging markets accelerated in the July-September quarter.

NTPC, ONGC and Dr Reddy's Laboratories fell between 2-5%.

KEY EVENTS THAT SHAPED THE WEEK

Services, the economy’s biggest sector, contracted in September for a third straight month, and at the steepest pace in a little over four years due to weak  orders, showed the widely-tracked HSBC Purchasing Managers’ Index (PMI), issued on Thursday.

The services PMI fell to 44.6 points in September from 47.6 in August. This is the lowest after March 2009, when it had stood at 43.7. A reading above 50 indicates expansion; below 50, a contraction.

India received 6% higher rainfall than normal in the 2013 monsoon season ended on September 30, the Indian Meteorological Department (IMD) said on Tuesday, 3 October 2013, strengthening prospects of a bumper farm output that could boost farmers' earnings.

The current account deficit (CAD) for the quarter ended June widened to $21.8 billion, which was marginally better than street expectations, but experts said the figure could narrow substantially in the subsequent quarters on the back of gold import curbs. The curbs would provide relief to the domestic currency which has depreciated 15.4 per cent against the US dollar in the current financial year.

According to data released by the Reserve Bank of India (RBI), the current account deficit rose to $21.8 billion or 4.9 per cent of GDP for April-June 2013 due to a rise in imports (especially of gold) and shrinking exports. The CAD for April-June 2012-13 was $16.9 billion, 4 per cent of GDP.

The combined output of the eight core infrastructure sectors rose 3.7% in August 2013, supported by strong growth in coal and cement production and electricity generation, data released by the government after trading hours on Monday, 30 September 2013, showed. It was the highest growth in core sector output in seven months.

Euro-area services output expanded more than initially estimated in September, as the 17-nation currency bloc's economic recovery gained momentum.

The European Central Bank kept its benchmark interest rate unchanged at a record low on Wednesday, 2 October 2013, as the euro area recovers from its longest-ever recession.

China's official non-manufacturing Purchasing Managers' Index rose to a six-month high of 55.4 in September from 53.9 in August, adding to a growing roster of evidence that China's economy has turned a corner in recent months.

KEY EVENTS TO WATCH OUT NEXT WEEK

Caution is likely to prevail in Indian shares ahead of the September-quarter earnings from Infosys Ltd on Oct. 11, which will kick off the results reporting season for blue chips.

India is set to report industrial output data for August on Friday.

Investors will also be eyeing market regulator Securities and Exchange Board of India (SEBI) of India, which holds its quarterly board meeting on Saturday.