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Global cues add to the cheer

Mar 14, 2009

The Asian markets put up a strong performance during the week. However, the Chinese markets, which were last week's top performer, declined by 2.9% this week. India's benchmark index, the BSE-Sensex, increased by 5.2%, second only to Japan whose markets increased by 5.5%. Hong Kong and Singapore followed suit, increasing by 5.1% and 4.3% respectively. The Asian markets witnessed a positive week mainly on hopes of additional stimulus packages.As for other global markets, the US indices were the top gainers this week with the Dow Jones Industrial Index recording a gain of 9%. It may be noted that the markets saw their best run since November. While there was no more major reason for the same, this run has been termed as a 'relief rally' following several months of selling.

Coming to the performance of sectoral indices, barring the BSE-Consumer Durables index (down 1.1%), gains were witnessed in all other indices. During the week, the BSE-Metal (up 7.2%) and BSE-Auto (up 6.8%) indices recorded the highest gains, while the BSE-Healthcare (up 0.8%) and BSE-Smallcap (up 0.8%) indices remained the lowest gainers.

The past week was a positive one for the Indian auto sector. The key reason for the same was on account of higher sales volumes during the month of February. The Society of Indian Automobiles Manufacturers (SIAM) reported that cars sales grew by around 22% YoY during the month on the back of government stimulus packages that were earlier announced to improve consumer spending. The total volume sales stood at approximately 115,386 units in February 2009 as against 94,757 units in the corresponding period in the previous year. However, sales of trucks and buses declined by 32% to 31,069 units during the same period. The reason behind the same was on account of the slowdown in economy.

Apart from positive volumes, gains in auto stocks were also seen on account of news reports that India's defense forces are planning to place large scale orders to buy vehicles in order to meet their requirements for next two years. As per a leading business daily, the procurement plan is awaiting government's approval and would result in orders to the tune of around Rs 30 bn to Rs 40 bn for the auto sector, spread over next two quarters.

IIP (Index of Industrial Production) numbers were announced during the week. As per data released by the Central Statistical Organisation, the Index of Industrial Production stood at -0.5 % in January as against a 6.2% growth in the corresponding period previous year. This decline was mainly on account of lower manufacturing and mining output, which dropped by 0.8% YoY and 0.4% YoY respectively. However, output for capital goods, consumer durables and consumer goods increased by 15.4% YoY, 2.5% YoY and 1.1% YoY respectively.

Source: Yahoo FinanceSource: Yahoo Finance

Source: SEBISource: BSE

Source: BSESource: BSE

Movers and shakers during the week
Company 6-Mar-09 13-Mar-09 Change 52-wk High/Low Change from 52 -wk High
Top gainers during the week (BSE-A Group)
Akruti City 973 1,175 20.8% 1,135 / 550 3.6%
Sintex Ind. 74 87 16.7% 491 / 70 -82.3%
Tata Motors 139 162 16.7% 672 / 122 -76.0%
ICICI Bank 269 309 14.6% 955 / 253-67.7%
United Phosphorus 76 87 14.5% 182 /65 -52.2%
Top losers during the week (BSE-A Group)
Rolta India 49 43 -12.3% 344 / 41 -87.6%
HPCL 273 241 -11.4% 305 /164 -20.8%
BPCL 378 345 -8.9% 449 / 206 -23.3%
IRB Infra. 90 83 -8.3% 217 / 65 -61.8%
Tata Teleserv 23 21 -7.8% 38 / 13 -43.7%
Source: Equitymaster

The inflation numbers as measured by the wholesale price index (WPI) dropped to 2.43%, for the week ended February 28. It may be noted that this is the lowest figure in at least 6 years. During the corresponding week in the previous year, inflation stood at 6.21%. Inflation figures during the week declined mainly on account of lower prices of food items and manufactured goods. However, inflation measured by the consumer price index (CPI) stood at 10.5% for January. This indicates that fall in prices have not reached consumers at the retail level.

Earlier this week, the UK government announced that it would be raising its stake in Lloyds Banking Group to as much as 77% while guaranteeing the bank's toxic assets worth 260 bn. With the nationalisation of Lloyds, Barclays and HSBC remain as the only banks in the UK which are not controlled by the government. The British finance minister summed up the rationale behind increasing stake in Lloyds in simple words - "If we and other countries don't fix our banking systems we won't fix the rest of the economy".

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