Markets this week: Sensex up 1.5 percent; BHEL, Infosys jump 5 percent
By Ankush Arora and Aditya Kalra
The BSE Sensex gained 1.5 percent this week, its first weekly gain in 2014, as easing headline inflation data raised hopes the Reserve Bank of India would keep interest rates unchanged at its Jan. 28 meet.
Headline inflation eased to a five-month low of 6.16 percent in December on lower prices of vegetables. This was the slowest pace of growth since July 2013 and below economists’ expectations of 7 percent.
Sentiment was also boosted for the rupee, which rose 0.6 percent during the week to touch a five-week high. However, share losses on Friday weighed on the currency.
Here are the top gainers and losers of this week:
BHEL: After falling over 4 percent last week, the power equipment maker’s stock ended 5.4 percent higher. The stock has now lost 3 percent this month, after posting negative annual returns between 2010 and 2013.
In a research report dated Jan. 16, Maybank Kim Eng said: “We forecast BHEL’s 3Q profit to decline 50 percent y/y due to backlog reduction, slowing revenue and margin pressure”. The report, that maintains a ‘sell’ rating on the stock with a target price of 126 rupees, added that any hope of recovery in new orders is unlikely until elections are over this year.
INFOSYS: Shares in India’s No. 2 IT services company registered a rise of 5 percent and emerged as the second best Sensex performer this week. The stock touched its life high of 3,759 rupees on Friday.
Citigroup, Jefferies and BMO raised their target price on the stock after the company reported a higher-than-expected increase in its quarterly profit on Dec. 10 and raised its revenue growth outlook for FY14.
The stock is now up 7 percent in January, after surging 50 percent last year when a depreciating rupee and improving demand from developed economies boosted the IT sector.
HDFC: Shares in HDFC extended gains for the third consecutive week, climbing 5 percent. The outlook for the stock, which fell 3.8 percent in 2013, is mixed. Of the 44 analysts covering the stock, 23 have a buy or equivalent rating while 20 have a sell or equivalent rating, data from Thomson Reuters showed.
LARSEN & TOUBRO: After struggling initially this month, shares in India’s largest engineering and construction group rose 4.7 percent in the week ending Jan. 17. The stock is still down around 6.5 percent so far in January.
L&T has already seen a few target price revisions this month: HSBC raised its target price from 990 rupees to 1,210 rupees while reiterating its overweight rating. Jefferies, which has a buy rating on the company’s stock, raised its target to 1,150 rupees from 1,075 rupees.
CIPLA: Extending its gains to a second week, the pharma company’s stock closed 4.8 percent higher. In 2013, the stock had lost 3.2 percent.
In a research report dated Jan. 14, Bank of America Merrill Lynch said they expect India, Africa and Middle East to remain key growth drivers in the near- to medium-term for Cipla.
“Despite disruption in the domestic market due to pricing policy, Cipla has been able to outpace industry growth by a wide margin and the company expects growth momentum to sustain,” the report said.
LOSERS: Telecom carrier Bharti Airtel was the biggest Sensex loser this week, closing 5.8 percent down. Coal India slumped 5.5 percent, followed by IT firm TCS, which lost 3 percent. Sun Pharma ended down 2.6 percent while Tata Power dropped 2.5 percent.
(Editing by Tony Tharakan. Follow Aditya on Twitter @adityayk, Ankush @Ankush_patrakar and Tony @TonyTharakan | Disclaimer: This article is website-exclusive and cannot be reproduced in any form without permission)