Weekly wrap: Nifty, Sensex rise 2%; global cues to set near term mood

Equity benchmarks gained 2 percent during the week, mainly helped by benign newsflow in global markets even as many experts cautioned that US equities may have peaked out. Brokers say global cues will decide near term trend, and a sell-off in the US could spell bad news for emerging markets including India. US Fed chairperson Janet Yellen said the central bank was likely to keep trimming monthly bond purchases, even as macro data would be watched to check if recent weakness in the economy was temporary. The BSE Sensex ended the week at 21,120.12, up 419.37 points over last Friday, and the Nifty rose 121.50 points to 6,276.95. Capital goods shares were the star performers as investors appear to be anticipating a recovery in the capex cycle. The BSE Capital Goods index rose 5.3 percent, boosted by an 11.4 percent gain in BHEL shares. Third quarter GDP growth of 4.7 percent released post market hours Friday, however, was way short of the 5.2 percent growth that the Finance Minister had predicted for the December and March quarters, in his Interim Budget Speech last week. In key developments during the week, BJP leader Narendra Modi addressed industry captains at the India Economic Convention 2014 in New Delhi, assuring them of simpler laws and speedier decision making . But market experts said a NDA win was largely discounted by the market, though there could be poll-related volatility between now and till the results are out. The BSE Pharma and BSE Auto indices rose 4.5 percent and 3.5 percent respectively. But the surprise gainer was the CNX PSU Bank index, which rose 2.5 percent even as many experts see a crisis looming in the banking sector because of rising bad loans. The BSE Power index fell 1.3 percent, weighed down by a 15 percent decline in NTPC, which was also the worst Nifty loser for the week. The Central Electricity Regulatory Commission’s ruling last weekend is seen denting the company’s earnings prospects. Maruti shares fell 5 percent as the company’s latest clarifications over the transfer of the Gujarat plant to a Suzuki subsidiary spooked investors. Analysts now are worried that the deal will hurt Maruti’s operating margins. Metal share were mixed with Hindalco gaining 8 percent, and Tata Steel falling by a similar margin. Notable Nifty gainers included Dr Reddy’s Laboratories, Bank of Baroda, ONGC Tata Motorts, TCS, Lupin and Bajaj Auto - up 3-6 percent.