India Insight

Markets this week: BHEL, Hindalco top Sensex gainers

By Reuters Staff
February 28, 2014

By Sankalp Phartiyal and Ankush Arora

Indian shares rose around 2 percent on heavy buying by foreign investors in what was a holiday-truncated week. Foreign investors have been net buyers of cash shares in each of the previous 10 sessions, with net inflows totalling around $600 million, exchange and regulatory data show.

In the currency market, the rupee closed at 61.75 per dollar on Friday after the unit strengthened to its highest in more than a month.

GDP data for the December quarter on Friday showed the Indian economy grew at a slower-than-expected 4.7 percent, dragged down by slowing manufacturing and mining activity.

Also, the country’s fiscal deficit during April-January this financial year has crossed the target for the whole year, putting pressure on Finance Minister P. Chidambaram to make spending cuts ahead of a national election due by May.

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

GAINERS

BHEL: The engineering and manufacturing company was the best Sensex performer this week with its shares surging 11.1 percent. However, the outlook for the public sector undertaking continues to be grim.

“Given the strong competition (domestic as well as international), declining order book, and a weak capex cycle, we expect BHEL’s margin and ROE (return on equity) to decline from the current levels,” Angel Broking said in a research note dated Feb. 6.

With Friday’s close of 167.20 rupees, the stock has lost 20.4 percent from its 52-week high of 210 rupees hit on Feb. 28, 2013.

HINDALCO: Shares in the aluminium and copper producer rose 7.5 percent this week even as the company’s growth prospects remain limited thanks to a shortage of raw material and a tight balance sheet.

“An unexpected fall in aluminum prices, sluggish growth in developed countries and further delays in expansion activities could adversely impact earnings,” Motilal Oswal said in research note dated Feb. 13 while maintaining a buy rating on the stock.

AXIS BANK: Shares of the privately-run bank closed 6.4 percent higher, their second consecutive weekly gain.

In February, the stock gained 13 percent while in 2014, the stock has so far lost 2.6 percent. Last year, the stock closed 4.2 percent lower.

Of the 50 analysts covering the stock, 36 recommend a ‘buy’ or equivalent rating, according to Thomson Reuters data.

DR. REDDY’S: The drugmaker rose nearly 6.3 percent this week, making it to our list of the top Sensex performers. Shares in the company also touched their 52-week high of 2,939.80 rupees on Friday.

“We remain positive on DRL given its increased R&D efforts for complex US pipeline (Injectables) and first mover advantage in bio-similars (amongst Indian peers),” HDFC Securities said in Feb. 12 research note.

LARSEN AND TOUBRO: Shares of India’s No.1 engineering firm gained 5.4 percent this week, their third consecutive weekly gain.

On Tuesday, The Economic Times reported that a Canadian pension fund may invest 20 billion rupees in L&T’s infrastructure arm.

Of the 48 analysts covering the stock, 34 have a ‘buy’ or equivalent rating, according to Thomson Reuters data.

LOSERS

NTPC fell nearly 15 percent. On Monday, the stock slumped as much as 11.2 percent, marking its lowest level since Oct. 27, 2008, after electricity regulator tightened incentives on capacity utilisation and tax treatments for the state-owned company.

Tata Steel lost 8 percent this week. Maruti Suzuki dropped 5.3 percent, Sesa Sterlite was down 4.5 percent while Coal India shed 2.9 percent.

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

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