Weekly: Markets gain nearly 2% on strong global cues
Benchmark share indices gained nearly 2% in the extended trading week ended September 8, amid a rally in global stocks after the European Central Bank rolled out a bond buying programme, led by software, auto and bank shares.
The 30-share Sensex ended up 1.8% at 17,750 and the 50-share S&P CNX Nifty gained 1.9% to close at 5,359.
The markets were open on Saturday, September 8 for a special live 90-minute trading session conducted by the Bombay Stock Exchange to test its disaster recovery software. The National Stock Exchange (NSE) also decided to open during those hours.
In global news, the European Central Bank (ECB) has announced a fresh set of measures that would enable it to buy unlimited Spanish and Italian bonds – a move seen as plan to save the region’s currency.
“The programme will enable us to address severe distortions in government bond markets which originate from, in particular, unfounded fears on the part of investors of the reversibility of the euro," ECB President Mario Draghi said.
Software shares rose on encouraging economic data from the US and European Central Bank's bond buying programme aimed at resolving the debt crisis in the region. Software majors earn most of their revenues from exports to US and Europe.Private employers in the US added more jobs in August. Further, unemployment claims in the US fell last week to the lowest level in a month, as per the data release. TCS, Infosys and Wipro were among the top Sensex gainers.
Rate sensitive shares had witnessed profit taking last week after Apr-Jun GDP which was marginally higher than consensus estimates dashed hopes of rate cut by the central bank.
Auto shares which were beaten down last week also witnessed short covering and value buying at lower levels during the week under review. Maruti Suzuki, Tata Motors and Bajaj Auto were among the top gainers.Hero MotoCorp ended with marginal gains.
Bank shares also witnessed buying at lower levels. ICICI Bank, State Bank of INdia were among the top gainers in the Sensex. SBI also announced cut in term deposit rates by 50-100 basis points during the week under review.
Index heavyweight Reliance Industries was up 3% after foreign brokerage CLSA said after five years of underperformance it's "time to cut under-weight" on the stock as government approvals lead to reserve upgrades, rise in production and higher gas price, while its $12 billion downstream expansion would be completed by FY16 leading to doubling of profits. CLSA raised its target price on Reliance stock to Rs 850 from Rs 790 while maintaining its "outperform" rating.
Telecom major Bharti Airtel also gained during the week after the stock witnessed selling pressure in the wake of brokerage downgrades on account of rising debt burden.
In the defensive sectors, Hindustan Unilever hit a record high of Rs 541.65 on the BSE. “HUL’s portfolio of strong brands, catering to the masses as well as the premium end of the market, will help to maintain the growth momentum in the coming quarters," according to analysts at Sharekhan.
Select metal shares reversed losses in the special trading session on Saturday after China, the world's largest metal consumer, announced approvals for infrastructure projects worth over $150 billion. Tata Steel, Hindalco and Sterlite Industries were the top gainers in the metals sector.
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Pharma major Cipla also witnessed sharp movement in the special trading session on Saturday. The Delhi High Court ruled in favour of the Indian pharma company in a patent infringement case filed by Swiss-based Roche Holding AG over Cipla's cancer drug Erlocip.
Among other pharma shares, Aurobindo Pharma rallied after the company said it had received final approvals from the US drug regulator -- US Food & Drug Administration (USFDA) -- to manufacture and market anti-hypertension drug Amlodipine Besylate and Benazepril Hydrochloride capsules in various strengths.
Strides Arcolab surged during the week after the company’s wholly owned subsidiary Onco Therapies received final ANDA approval for Vinorelbine Injection. The benchmark index Sensex has gained 1.68% during the same period.