BSE Small-Cap, Mid-Cap indices outshine Sensex
The market logged gains for third straight week on a slew of economic reforms announced by the government recently. The BSE Mid-Cap and the BSE Small-Cap indices outperformed the BSE Sensex.
The RBI announced a reduction of 25 bps in the cash reserve ratio (CRR) of scheduled banks to 4.5% of their net demand and time liabilities (NDTL) effective the fortnight beginning 22 September 2012 after mid-quarter review of monetary policy. The reduction in CRR will inject around Rs 17000 crore of primary liquidity into the banking system as per RBI. The RBI kept its policy rate viz. the repo rate unchanged at 8%.
The finance ministry on Friday, 21 September 2012, announced reduction in the tax rate on the interest paid to overseas lenders by local companies to 5% from 20%. The rate is applicable from July 2012 until June 2015.
The UPA government, which has been reduced to a minority after the Trinamool Congress decided to withdraw its support, can safely cross the half-way mark in the Lok Sabha with Samajwadi Party’s support.
The government, allowed an income-tax waiver of 50% on new equity investments of up to Rs 50,000 by retail investors who have annual income of less than Rs 10 lakh, under the Rajiv Gandhi Equity Savings Scheme. The total lock-in period for investments under the scheme would be three years.
Trading for the week began on an upbeat note as the government announced liberalization of foreign investment rules in retail, aviation and broadcasting sectors. The BSE Sensex gained 288.56 points (1.56%) to 18,752.83 and the S&P CNX Nifty surged 113.50 points (2.03%) to settle at 5,691.15, the highest closing level since July 2011.
Index heavyweight Reliance Industries (RIL) rose 1.06% to Rs 849.90 cigarette maker ITC shed 2.41% to Rs 261.65.
India’s largest sponge iron steel maker by capacity Jindal Steel & Power (JSPL) surged 14.6% to Rs 426.60 on bargain hunting and was the top gainer from the Sensex pack.
L&T gained 6.54% to Rs 1584.20. The company has restructured its IT and L&T Integrated Engineering Services businesses with a view to accelerate growth in the technology space. L&T Infotech has been reorganised around two business clusters, “industrial” and “services”. L&T Integrated Engineering Services (IES) will be rebranded as L&T Technology Services.
Bank stocks rose across the board on speculation that the government is likely to clear a proposal to restructure the debt of state electricity boards (SEBs) and power distribution companies (discoms) to revive the ailing sector. State Bank of India jumped 12.28%. HDFC Bank rose 2.15% to Rs 625.25 after striking a record high of Rs 628 on Friday, 21 September 2012. ICICI Bank gained 5.85% to Rs 1065.25.
India’s largest software services exporter by revenues Tata Consultancy Services (TCS) fell 7.70%. The newly opened TCS Solutions Center – Minneapolis in Bloomington, Minnesota, is an integral part of TCS’ Global Network Delivery Model.
Bhel (up 13.54%), Bharti Airtel (up 9.41%) and Sterlite Industries India (up 5.63%) edged higher from the Sensex pack.
Dr Reddy’s Laboratories (down 5.87%), Hindustan Unilever (down 3.26%) and Wipro (down 3.22%) edged lower from the Sensex pack.
NIFTY WEEKLY CLOSE – 5691.15 ( 113.50 pts)
In line with our expectation Nifty opened gap up around 5631 on the back of positive announcements. During the week Nifty made high of 5720. However heavy profit booking drifted Nifty down towards intraweek low of 5534 levels before closing the session at 5691 up 113 points over previous week.
At current levels Nifty upside may face steep resistance around 5750 levels. Nifty can consolidate and can correct in next few session from these levels.
Going forward, we continue to believe that Nifty once sustains above the 5750 levels it can even test the highs of 5880/5900 levels in mid-term. Technically on the lower end 5520/5450 should act a strong positional support for the Index holding over which the bias should remain positive in mid-term.