India Insight

Markets this week: Sensex gains 1 percent, Tata Power surges over 10 percent

December 6, 2013

By Ankush Arora and Aditya Kalra

The BSE Sensex ended with gains of 1 percent in the week ending Dec. 6, as investor sentiment was boosted after exit polls indicated the Bharatiya Janata Party (BJP), seen by many as being more business-friendly, will win four of the five state elections conducted recently.

State elections are seen as a semi-final before the national polls next year. Elections are the key theme for the first half of 2014 and the recent rally in the stock market implies that a BJP government is no longer viewed as a low-probability scenario, UBS said this week. The investment bank has set a 2014 target for Nifty at 6,900.

Foreign institutional investors (FIIs) inflows for the year have crossed 1 trillion rupees, regulatory and exchange data showed. They have made net purchases of around $18 billion so far this year, Deutsche Bank figures show.

Here are the top five Sensex gainers and losers of the week:

GAINERS

TATA POWER: Shares in the Tata group company surged nearly 11 percent this week, outperforming a gain of 4.5 percent in the BSE power index during the same period. This is the second consecutive weekly gain for the stock, which despite these gains is still down 20 percent in 2013.

Last week, a senior official of the company said Tata Power is looking for more acquisitions as part of a multi-million dollar investment push into renewable energy.

In a research note on Tata Power, Credit Suisse said on Nov. 27: “Our earnings estimates are 31-48% below street and we expect consensus earnings cuts to continue. We reiterate our underperform rating.”

Of the 36 analysts covering the stock, 17 have a buy or equivalent rating, according to Thomson Reuters data.

JINDAL STEEL AND POWER: The stock extended its gains for the third consecutive week, closing nearly 10 percent higher and taking its gains since October to more than 20 percent. Still, the stock has had a rough year so far and is down over 35 percent on the BSE.

BHEL: Shares in India’s top power equipment maker jumped 9.8 percent to close at 171.35 rupees, their fourth consecutive weekly gain. The stock is down nearly 25 percent this year and had fallen to as low as 100.35 rupees in August.

Analysts, however, are not bullish about the stock’s prospects. Of the 48 analysts covering BHEL, 32 have a sell or an equivalent rating, data showed.

ICICI BANK: Shares of India’s top private lender gained 7 percent, outperforming the BSE banking index that rose 5 percent. In terms of the stock’s quarterly performance, the October-December period is proving to be its best this year as the stock has already gained over 20 percent.

On Thursday, Citigroup had raised the stock’s target price to 1290 rupees from 1250 rupees. Of the 49 analysts covering the stock, 31 have a buy or an equivalent rating, data showed.

COAL INDIA: After a lacklustre performance over the past few weeks, shares of the world’s largest coal miner rose 6.6 percent this week. For the year, the stock is still down over 18 percent.

On Wednesday, Coal India, which accounts for more than 80 percent of India’s coal output, announced it would resume full production from a major coal field that was closed due to labour unrest last Friday.

LOSERS

Stocks from the consumer goods space were among the top weekly losers. India’s largest consumer goods maker Hindustan Unilever slumped 5.7 percent and ITC, the top cigarette maker, closed 2.7 percent lower. Dr. Reddy’s fell 2.5 percent, while Tata Motors dropped 1.9 percent. Hindalco lost 1.7 percent.

(Editing by Tony Tharakan; Follow Tony @TonyTharakan| Disclaimer: This article is website-exclusive and cannot be reproduced in any form without permission)

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