Markets this week: Sensex up marginally, Axis Bank gains 4.7 percent
After registering record closing highs, the BSE Sensex ended with small weekly gains as the index fell sharply on Friday after the RBI governor’s strong comments on inflation dented sentiment.
Raghuram Rajan called inflation a “destructive disease” on Thursday. Earlier in the week, a panel recommended that the RBI should make managing inflation its main policy objective and set monetary policy by committee.
The central bank is likely to keep the repo rate on hold at its policy review next week, a Reuters poll published on Jan. 23 showed.
Here are the top five gainers and losers of the week:
AXIS BANK: After falling for two consecutive weeks, the stock gained 4.7 percent and emerged as the best performing Sensex stock. Despite the week’s gains, the stock is still down 7 percent so far in January.
Half of the Indian government’s 20.7 percent stake in Axis Bank, India’s third-largest private-sector lender by assets, is likely to be auctioned by the end of February.
On Jan. 16, the bank reported 19 percent increase in December-quarter net profit, but the bank’s gross non-performing assets (NPA) rose marginally to 1.25 percent. Jefferies had cut its target price on the stock to 1,320 rupees from 1,405 rupees a day after the bank’s earnings were announced.
WIPRO: Shares of India’s No. 3 software services firm closed 3.8 percent higher this week, outperforming a 1.4 percent gain in the BSE IT index. The stock has extended gains in January after surging 61 percent last year.
Several brokerages raised their target price on the stock this week. Nomura raised its target to 590 rupees from 545 rupees. The stock ended the week at 572 rupees.
The company is looking at growing its sales by up to 4 percent in this quarter. Last week, Wipro reported a 27 percent rise in quarterly net profit, beating estimates.
India’s IT services businesses will continue to benefit from improving client demand from developed countries in 2014, pushing stocks higher after a stellar performance last year, analysts told India Insight.
HINDALCO: The company’s shares gained 2.3 percent this week and ended at 114 rupees, posting their second straight week of gains. The stock had hit its 52-week high of 126.85 rupees last month.
Ambit Capital, in a report dated Jan. 17, said: “Uncertainty around availability of the captive coal blocks for Hindalco’s new projects makes us believe that FY14-15 would be a painful period”. The brokerage maintained a ‘sell’ rating on Hindalco.
Of the 38 analysts covering the stock, 17 have a ‘sell’ or an equivalent rating, Thomson Reuters data showed. Fifteen analysts have a ‘buy’ or equivalent rating.
ICICI BANK: Shares of India’s leading private sector lender rose over 2 percent in the week ending Jan. 24. Rate-sensitive stocks such as ICICI will be in focus as the RBI reviews its monetary policy next week.
Data showed that analysts are optimistic about the stock. Of the 50 analysts covering ICICI, 44 have a ‘buy’ or an equivalent rating on the stock, according to Thomson Reuters data.
TCS: After falling almost 3 percent last week, shares of India’s No.1 software services exporter gained 1.5 percent.
Earlier this month, the company forecast faster sales growth in the next fiscal year. TCS, however, failed to ease investor worries that smaller rivals will also benefit from an anticipated rise in client demand.
In a research report dated Jan. 23, HDFC Securities said: “After reviewing Q3FY14 numbers, we feel TCS full year FY14 numbers could disappoint on the revenue front, but are likely to surpass our estimates on the profit front.”
LOSERS: Coal India was the worst Sensex performer this week with losses of 5.4 percent, followed by BHEL which dropped 3.6 percent. Tata Power fell 3.3 percent, while Reliance Industries and Hero MotoCorp shed 2 percent each.
(Editing by Aditya Kalra; Follow Aditya on Twitter @adityayk. This article is website-exclusive and cannot be reproduced in any form without permission)