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Weekly: Markets gain on rate cut hopes

Abhishek Vasudev/New Delhi 16 Jun 12 | 10:46 AM

Markets gained for the second straight week on renewed hopes that the Reserve Bank of India, at its mid-quarter policy review on Monday, would cut key policy rates and also lower the cash reserve ratio to boost growth and liquidity.

Meanwhile, on the macro economic front the government announced index of industrial production for April and the WPI inflation for the month of May.

India's industrial output growth almost stalled in April compared with a year earlier, reinforcing expectations the RBI will cut rates next week to try to combat a slowdown in the economy. The government data showed that output rose just 0.1% in April, lower than expectations of a 1.7% increase. Output fell in March from a year earlier by 3.5%.

However, Led by rising prices of vegetables and petrol, the inflation moved up to 7.55% in May making it tougher for the Reserve Bank to cut interest rates in its policy next week to boost sagging growth.

Experts said that the rise in inflation, which is mainly on account of food inflation, may not dissuade the RBI to go in for at least a 0.25% cut in short-term interest rate in its monetary policy review on June 18.

On the global front, the market participants across the globe would be closely eyeing the political developments in Grrece as the country is set to go in for the parliamentary elections on Sunday. The outcome of polls would decide whether to back the terms of its international bailout.

Back home, for the week ended June 15, the 30-share Sensex surged 231 points or 1.4% to end 16,950. The 50-share S&P CNX Nifty jumped 71 points or 1.4% to end at 5,139 levels.

Hindustan Unilever was the top weekly gainer among the Sensex stocks, up 5.1% to end at Rs 450, index heavyweight Infosys also jumped 4.2% to Rs 2,520, Coal India, ITC and TCS also advanced 3-4% each. On the other hand, NTPC was the top loser down 3.6% to Rs 150, Dr Reddy's Labs, Maruti Suzuki, Wipro and HDFC also ended lower by 1-3% each.

FMCG stocks, considered as safe havens during the turbulent times were on the buyers radar. The BSE FMCG index was the top sectoral gainer. The index advanced 3.4% or 158 points to close at 4,838 levels. Technology stocks were also in the limelight through out the week. The BSE IT index advanced 2.6% to 5,765 levels and Tech indices closed higher by 2.3%. Oil & gas, PSU, metal and consumer durable indices also ended higher.

Rate sensitive indices ended on a mixed note ahead of the RBI's mid-quarter policy review. Auto, bankex and capital goods ended on a flat note. While, the Realty index ended lower by 1.7% to close at 1,622.  Healthcare and power indices also edged lower in trades this week.

Among other shares, Henkel India was the stock of the week surging 24% to end at Rs 30.65 after its board, at its meeting on June 15, announced the company's merger with Jyothy Laboratories Ltd.

Further, select public sector enterprises zoomed during the week on hopes that the government would partially divest its stake. ITI jumped 23.3%, HMT surged 16.3% and Andrew Yule zoomed 13.9%.
 
The broader markets underperformed the benchmark indices. The BSE mid-cap index closed lower by 0.5% or 30 points to close at 5,958 and the small-cap index advanced 25 points to 6,351 levels.

The overall breadth through out the week was positive.

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Sensex

Company Price Gain (%)
Dr Reddy`s Labs3,009.101.09
ITC353.150.43
Hind. Unilever757.950.42
Infosys3,656.550.37
Sun Pharma.Inds.797.900.31

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