Market rises for the seventh week in a row - Weekly Analysis

Bulls are on the rampage with the market surging for the seventh week in a row on the back of sustained buying by foreign funds amid signs of improvement in the Indian economy, possibility of further reduction in interest rates with inflation at near zero and on easing credit crunch.
The RBI, as part of its Annual Credit Policy, cut its key short-term rates by 25 basis points each on Tuesday, 21 April 2009, to prop up growth amid global economic slowdown. The repo rate, at which the RBI lends to the banks, was cut to 4.75%, and the reverse repo rate, at which the RBI absorbs excess cash from banks, was reduced to 3.25%, effective immediately. The bank rate, used by banks to price long-term loans, remained at 6%. Banks' cash reserve requirements (CRR) were also left unchanged at 5%.
Inflation based on the wholesale price index (WPI) rose 0.26% in the year through 11 April 2009, higher than previous week's 0.18% rise, data released by the government on 23 April 2009, showed.
FII inflow in April 2009 totaled Rs 4,860.40 crore, while the outflow in calendar year 2009 totaled Rs 1,811.20 crore (till 23 April 2009).
The 30-share BSE Sensex jumped 305.96 points or 2.78% to 11,329.05, in week ended 24 April 2009. It was the biggest closing level for the Sensex in more than six months. The broader 50-unit Nifty jumped 96.35 points, or 2.84%, to 3480.75 in the week.
The BSE Mid-Cap index gained 127.49 points or 3.67% to 3,600.09 and the BSE Small-Cap index advanced 116.7 points or 2.95% to 4,068.26 in the week.
Trading for the week started on a dull note. Key benchmark indices edged lower on 20 April 2009, as investors resorted to profit taking after a recent sharp surge in share prices. The BSE 30-share Sensex fell 43.59 points or 0.4% to 10,979.50. The S&P CNX Nifty fell 7.30 points or 0.22% to 3,377.10.
On Tuesday, 21 April 2009, key benchmark indices settled in the red in a day of high volatility triggered volatility in index heavyweight Reliance Industries. Rate sensitive banking and auto stocks fell even as realty stocks gained after the central bank cut short-term interest rates. The BSE 30-share Sensex fell 81.39 points or 0.74% to 10,898.11. The S&P CNX Nifty fell 11.80 points or 0.35% to 3,365.30.
The market fell for the third straight day on 22 April 2009, led by fall in realty, capital goods and auto stocks. Political uncertainty weighed on the market with polling for India's 15th Lok Sabha underway. The BSE 30-share Sensex fell 80.57 points or 0.74% to 10,817.54. The S&P CNX Nifty fell 35 points or 1.04% to 3,330.30.
Bulls were back on 23 April 2009, as key benchmark indices reversed three days losses on firm global markets. IT, metal, realty, banking and auto stocks jumped that day. The BSE 30-share Sensex rose 317.45 points or 2.93% to 11,134.99. The S&P CNX Nifty rose 93.40 points or 2.8% to 3,423.70.Indices closed higher on 24 April 2009, after sentiments turned bullish with a strong opening of European markets. Rate sensitives like realty and banks lead the rally. The BSE 30-share Sensex rose 194.06 points or 1.74% to 11,329.05. The S&P CNX Nifty rose 57.05 points or 1.67% to 3480.75.
India's largest private sector firm by market capitalisation and oil refiner Reliance Industries (RIL) rose 3.90% in the week. Its net profit fell 9.35% to Rs 3546 crore on 23.9% fall in sales to Rs 28,362 crore in Q4 March 2009 over Q4 March 2008. The company announced results after the market hours on Thursday, 23 April 2009.
Rate sensitive real estate shares rose on hopes lower rates will spur housing demand. DLF (up 5.01%), Indiabulls Real Estate (up 14.56%), and Housing Development & Infrastructure (up 19.32%), spurted. Most of the realty deals including sale of commercial property and housing sales is driven by finance.
Banking stocks mostly rose on hopes falling interest rates will boost lending growth. India's largest bank in terms of assets and branch network State Bank of India (SBI) rose 0.11%. SBI chairman O.P. Bhatt on 21 April 2009 said interest rate cuts by the Reserve Bank of India were a signal for commercial banks to lower their rates. He said a decision on whether SBI would lower rates would be taken after a meeting of the bank's asset-liability. SBI's advance tax payment jumped 27.64% to Rs 1810 crore in Q4 March 2009 over Q4 March 2008.