India Insight

Markets this week: Sensex gains 2.7 percent, Maruti surges 11 percent

By Reuters Staff
September 19, 2013

By Ankush Arora and Sankalp Phartiyal

The BSE Sensex rose 2.7 percent in the week ending September 20, as foreign inflows and the U.S. Federal Reserve’s surprise decision to continue with its bond-buying programme boosted market sentiment.

The benchmark index, which is now up 9 percent in September and has gained for four consecutive weeks, touched its highest level since November 2010 on Thursday after the Fed’s surprising move. Analysts said the U.S. central bank’s decision could lead to a resurgence of portfolio flows into emerging markets such as India.

On Friday, the Reserve Bank of India stunned markets by raising the repo rate by 25 basis points (bps), but some of the recent rupee support measures were trimmed. The Indian currency gained 2 percent in the last five sessions and ended the week at 62.23/24 per dollar.

Here are the top gainers and losers of this week:

GAINERS

MARUTI SUZUKI: India’s biggest carmaker was the top Sensex performer, with its stock surging 11 percent, taking its gains for the month to almost 18 percent.

The coming months are expected to be tough for India’s auto sector. Sales growth is expected to remain in the negative in the fiscal year ending March 2014, an industry executive said on Sept. 10.

Experts are optimistic about the stock. Of the 55 analysts tracking Maruti, 42 have a ‘buy’ or equivalent rating, Thomson Reuters data showed.

GAIL: The stock gained 8.9 percent, making it the second best Sensex performer of the week. The recently announced gas price hike will impact petrochemical and LPG business profitability, but there could be some respite if the government were to reduce GAIL’s subsidy burden, Motilal Oswal said in a research report on Sept. 17.

“Though we like the management’s strategy to build capacity, we expect GAIL’s medium term earnings to remain subdued, led by headwinds on incremental gas availability,” the report said.

JINDAL STEEL AND POWER: The stock gained 8 percent in the last five trading sessions, but is still down more than 40 percent in 2013.

“We remain positive on JSPL’s long-term business model. However, in the near term, lower JPL realizations, negative news flow from the CBI case and uncertainty over Shah panel recommendations (especially for Sarda iron ore mines) will weigh on sentiment,” IDFC Securities said in a research note on Sept. 11, while maintaining an outperformer rating on the stock with a target price of 320 rupees.

ITC: The country’s largest cigarette maker ended the week with gains of 7.2 percent, outperforming the 4.6 percent gain in the BSE FMCG index.

“We see the stock as a safer play versus other consumer names given low susceptibility to demand slowdown and rupee depreciation,” Kotak Securities said in a report on Wednesday.

BHARTI AIRTEL: Shares of India’s largest telecom operator gained 5.7 percent this week, extending their rally of the previous two weeks. For the month, the stock is up 15.3 percent. Data showed that of the 45 analysts covering the stocks, 35 have a ‘buy’ or equivalent rating on the stock.

Last week, India proposed a 60 percent cut in mobile spectrum prices in response to lukewarm interest from telecom companies in previous two sales. Analysts have said this could be positive for incumbents and more such moves may come considering lower demand for spectrum at higher prices.

LOSERS

BHEL was the worst performing Sensex component with losses of 5 percent. Hero MotoCorp shares slid 3.4 percent, Sesa Goa fell 3 percent, Cipla ended down 2.5 percent while Infosys ended with losses of 1 percent.

(You can follow Ankush on Twitter @ankush_patrakar and Sankalp at @sankalp_sp)

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