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India's benchmark share indices surged for the fourth straight week amid a rally in FMCG stocks and upbeat earnings from software major TCS. Further, liberalisation of foreign direct investment limits in select sectors also boosted sentiment.
In the week to July 19, the 30-share Sensex ended nearly 1% or 191 points up at 20,150 and the 50-share Nifty ended up 0.3% or 20 points at 6,029.
India's inflation data (Wholesale Price Index, or WPI) for June edged up marginally on account of rise in food prices and prices of non-food primary articles to a 4.86 per cent annualised rate (a four-month high) from 4.7 per cent in May.
On the FDI fron the government decided to raise the FDI ceiling in the telecom services sector to 100% from 74%.
Similarly, in defence sector while the threshold remained unchanged at 26% through the official route, the government is willing to consider such proposals where even 100% participation will be allowed provided it meets certain conditions.
The government also allowed 49% through the automatic route for sector such as petroleum and natural gas, commodity exchanges, power exchanges and stock exchanges. For credit information companies 74% is allowed through the automatic route.
As far as FDI in Multi-Brand Retail is concerned the panel constituted under department of economic affairs secretary Arvind Mayaram suggested hiking the FDI cap to 74% from the present 51%, but nothing was done.
The gains during the week were led by rally in Hindustan Unilever supported by ITC. The company's parent recently completed a voluntary open offer and hiked stake in its Indian subsidiary to 67.26% from 52.48%. The huge surge in the stock during the week under review was on reports that the company has hiked price of several personal care products. The stock was the top Sensex after it zoomed 14.2% to end at Rs 687. ITC ended up 5.5% at Rs 369.
Software major TCS beat Street’s expectations in almost every aspect — net profit growth, margins, volume growth and growth across geographies.
In the quarter ended June 30, the company posted 15.7 per cent growth in net profit at Rs 3,831 crore when compared with the corresponding quarter last year. Revenue rose 21 per cent to Rs 17,987 crore. On a sequential quarter (compared with the trailing quarter) basis, net profit grew 5.5 per cent and revenue grew 9.5 per cent, better than what Infosys reported for the same period.
The growth was driven by a 6.1 per cent growth in volume (growth in billed man-hours in a quarter), one of the highest posted by it in the recent past. Infosys had reported 4.1 per cent volume growth. The stock gained 8.5% to end at Rs 1,742.
In the quarter ended June 30, HDFC Bank posted 15.7 per cent growth in net profit at Rs 3,831 crore when compared with the corresponding quarter last year. Revenue rose 21 per cent to Rs 17,987 crore. On a sequential quarter (compared with the trailing quarter) basis, net profit grew 5.5 per cent and revenue grew 9.5 per cent, better than what Infosys reported for the same period. The growth was driven by a 6.1 per cent growth in volume (growth in billed man-hours in a quarter), one of the highest posted by it in the recent past. Infosys had reported 4.1 per cent volume growth. The stock ended down 2% at Rs 681.
HDFC's standalone net profit for the June quarter was Rs 1,173 crore, up 17% compared with Rs 1,002 crore a year earlier, while total income rose 12.6% to Rs 5,557 crore over the same period. However, net interest margin (NIM) of the country’s largest mortgage declined to 3.9% in the quarter ended June 30, 2013 (Q1 FY2014) against 4.2% during March 31, 2013 quarter. The stock dropped 5.5% to end at Rs 803.
Reliance Industries ended up 3.8% at Rs 923. The company announced its June quarter results post market hours on Friday. The company posted a net profit of Rs 5,352 crore on the back of higher refining margins. Net profit for the same quarter last year was Rs 4,503 crores.
Further, the petroleum minister M Veerappa Moily late Friday said that the ministry has cleared investment worth $1.53 billion in KG-D6 block. The minister added that the investment for developing four satellite gas findings would add another 10 million metric standard cubic meters per day (mmscmd) in the next three years. He added that with a hike in domestic natural gas prices the output of major companies would increase categorically by 2016-17.
Bajaj Auto, India's second largest motorcycle manufacturer, reported a 2.6% rise in net profit for the quarter ended June 30 as higher realisations in exports compensated for sluggish domestic volumes. The Pune-based company reported a net profit of Rs 737.68 crore in the reporting quarter as against Rs 718.37 crore posted in the same quarter a year earlier. Net sales of the two and three wheeler making company rose 2% at Rs 4,808.73 crore as compared to Rs 4,713.64 crore posted in the same quarter last year. The rise in net profit was on the back of 9% drop in volumes during the quarter as domestic market remained weak and dispatches to Sri Lanka and Egypt continued to suffer due to geo-political issues. The stock ended up 5.3% at Rs 1,967.
Rate sensitive shares especially bank and realty were beaten down during the week as hopes of a rate cut by the central bank at its policy meet in the month-end faded after rise in headline inflation.
The marginal rise in June headline inflation to 4.9% may be a precursor to a pronounced increase in the coming months and RBI is unlikely to cut rates at the forthcoming policy meet on July 30, analysts said.
The BSE Bankex ended down 6.2%, Realty index slipped 4.1% and Capital Goods index ended 2.2% lower.
ICICI Bank was the top Sensex loser whhich slumped 9.7% to end at Rs 959 while SBI dropped 4.2%. In the capital goods space BHEL dropped 7.5% and L&T ended 2% lower.
Markets are likely to track earnings of large companies and settlement of July derivatives contracts in the week ahead.
