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| Edited By: Yogesh Vinod Mehta |Source: DNA |Updated: Jan 22, 2018, 05:25 AM IST
Indices extended their gravity-defying run led by frontline stocks last week. Sensex rallied 919 points and Nifty gained 214 points, or about 2%, on a weekly basis and ended at a new record high of 10894, making a seventh consecutive weekly gain since 2012.
The mid and small cap indices reacted negatively losing 1.8% and 2.8% while Nifty Bank outshined with a gain of 4.5%. Major gainers were IT and private banks supported by PSU banks and the consumer sector, rest other sectors including realty, metals, energy, auto, media and pharma ended in red. The foreign institutional investors (FIIs) turned massive buyers and bought shares worth Rs 4,234 crore while the domestic institutional investors (DIIs) sold equities worth Rs 699 crore.
Last week, the government reassessed the additional borrowing plan and reduced it to Rs 20,000 crore from earlier Rs 50,000 crore, which will manage the fiscal deficit at projected 3.2% of the GDP for fiscal 2018.
The GST Council in its meeting decided to prune tax rates on 29 categories of goods and 53 categories of services, which include packaged drinking water, diamonds and precious stones, bio diesel, sugar candies, tailoring services, amusement parks ticket and low-cost housing construction services.
Media reported that the government was mulling increasing foreign direct investment limits in PSU banks from 24% to 50%, and in private banks from 74% to 100%, which boosted the rally in the banking stocks, further bolstered by stronger quarterly numbers of the banking giants IndusInd Bank, Kotak Bank and YES Bank. HDFC Bank posted its highest-ever earnings and entered into the Rs 5 lakh crore market cap club, joining Reliance and TCS.
IT sector stocks outshined with strong earnings announced by TCS, Infosys, MindTree and HCL Technologies. TCS has signed $690 million deal with M&G Prudential. Amber Enterprises IPO was subscribed 165 times.
Key global events this week are Bank of Japan monetary policy (Tuesday), European Central Bank meeting (Thursday). The US advanced GDP for fourth quarter of 2017 will be released on Friday. In the ongoing earnings season, companies including Asian Paints, Axis Bank, DHFL, Havells, Canfin home, India Bull Housing, RBL Bank, United Spirits, Canara Bank, Idea, IndiGo, M&M Finance, Pidilite and Maruti Suzuki will announce their third-quarter results.
In this truncated week, a strong rupee and reversal of crude prices along with Reliance Industries’s bumper result announced on Friday post market hours will keep market sentiments on the high. The January month expiry this Thursday will keep market volatility high. Banking stocks and Oil & gas stocks, on account of soft crude prices, will remain in action during this week. Result oriented stock-specific action can also be seen as this time almost all the companies have declared better or in-line results.
Technically on the weekly charts, Nifty may see rally towards psychological mark of 11000-11050 if managed to hold above 10800 level, while on the downside 10700 remains a strong support for the week.
The writer is VP- Retail Research, Motilal Oswal Securities Ltd
