Sensex advances for third session, caps week in green as earnings worries ease

By: |
Mumbai | Published: August 1, 2015 12:09:01 AM

Indian equities closed on a flat-to-positive note as the rally of the last two sessions helped recoup losses in the early part of the week.

Indian equities closed on a flat-to-positive note as the rally of the last two sessions helped recoup losses in the early part of the week. Benchmarks closed the week with marginal gains after losing more than 1% in the previous week.

The Sensex advanced for the third consecutive session on Friday. The index advanced 409.21 points or 1.48% to settle at 28,114.56, while the Nifty rose 111.05 points or 1.32% to end at 8,532.85.

Broader markets continued to outperform the benchmarks for the fourth straight week as the BSE Mid- and Small-cap indices gained 1.1-1.4%.

Foreign portfolio investors (FPIs) were net sellers during the week as the markets witnessed outflows of over $350 million, as per Bloomberg data.

It was a good week for fast-moving consumer goods (FMCG) companies. The BSE FMCG index was the top performer with 3.1% gains week-on-week.

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The monsoons have fared better than expectations and are likely to boost demand in rural markets for  FMCG goods, thereby improving the prospects for the sector in the near term, analysts said. The trend was witnessed in June quarter corporate earnings. Three — Godrej Consumer, Hindustan Unilever, Dabur India — out of four major FMCG companies announced results that met Street expectations. Godrej Consumer touched new highs during the week.

Pharma shares too ended the week in the green. The healthcare index on the BSE rose 1.25%. Shares of Cipla and Dr Reddy’s Laboratories (DRL) rose by 4.6% and 4.1% respectively and were the best performing shares during the week. DRL touched its all-time high on Friday and added close to 10% in the last two days.

Cipla had announced the launch of asthma treatment medicine in partnership with Sandoz during the week.

Experts see buying activity in pharma shares benefitting from the pick up in US FDA approvals. Swiss based investment banking firm Credit Suisse, in an investor note published in the first week of July, had said that data for the last three months shows approvals for Indian players have picked up but the proportion of total approvals going to Indian firms has fallen due to outstanding 483s at several companies.

IT stocks fared well as the BSE IT index rose 1.2%. US investment banking firm Jefferies  said in a research note published in the second of July, that it expects IT industry revenue to pick up sequentially due to seasonality and foreign exchange  tailwinds however on year-on-year basis the results will show a slowdown.

Oil stocks witnessed selling pressure during the week as the BSE oil index lost 2.5%. Despite the oil price deregulation, the margins for oil marketing companies (OMCs) have not improved significantly.

London-based HSBC said, “The state refiners have earned better margins only in the period when international oil prices were trending down. However, once the prices started to go up, the margins cameunder pressure. Hence one cannot assume that oil companies will earn a superior margin post diesel deregulation.”

Tata Steel, Bharti Airtel and ONGC were the biggest weekly losers as shares fell by 6.7%, 3.6% and 3.5% respectively.

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