Delight for D-street in July-Sept quarter

After a quite H1CY2010 (first six months of 2010), the bulls were back with a bang in July-September quarter. The domestic indices witnessed strong gains of over 13% in the quarter. The domestic indices outperformed its global peers mainly on account of continuous inflows of foreign funds. The other positive triggers back home were gross domestic product (GDP) for Q1FY2011 at 8.8% growing at a fastest pace in 2 ½ years, continuous rise in exports and strong index of industrial production data for July at 13.8%; this led foreign institutional investors (FIIs) to maintain their bullish stance on India. The Sensex and the Nifty touched new high of 20000 and 6000 levels respectively for first time since January 2008. However, the domestic markets shrugged off the rate hike by the Reserve Bank of India in its quarterly policy in July and in its mid-quarter policy review in September along with string of weak global data in the US.



During the quarter, the Sensex swung 2872 points and the Nifty 848 points. In the process, the Sensex and the Nifty hit new 32-month high at 20267 and 6074 respectively. To close the quarter, the Sensex shut with huge gains of 2368 points or 13.37%, at 20069 and the Nifty ended at 6030, 717 points or 13.5% higher.

On the global front, the Indian markets outperformed its global counterparts, with the Sensex posting gains of 13.37% during the July-September quarter. All the other major indices did well during the quarter, gaining in the range of 4.42-12.30%. However, Japan’s Nikkei index was exceptional as it fell marginally by 0.14% during the quarter mainly on worries over rising Yen against the dollar.

All the 13 sectors performed well during the quarter except BSE Oil & Gas that ended lower by 3.93%. BSE Consumer Durables (CD) was the top performer, gained by 32.89%, followed by BSE Bankex that advanced by 30.28% and BSE Realty surged by 16.58%. Rest of the sectors rose in the range of 2.7-15.15%.

Among the ‘A’ group stocks, Jet Airways surged the most by 53.64% during the quarter, followed by Bank of India and Bhushan Steel that gained by 48.24% and 46.89% respectively. Among the losers, Reliance Natural Resources fell the most by 41.29% after the company’s board approved merger with Reliance Power, followed by Nagarjuna Construction Company and Reliance Infrastructure that were down by 17.02% and 15.15% respectively.

The FIIs have been the major participants to lift the domestic markets to new highs in July-September quarter. The FIIs were the net buyers of the Indian stocks to the tune of record Rs53,282.7 crore. The domestic institutional investors (DIIs) were the net sellers of the Indian stocks to the tune of Rs13,181.1 crore during the quarter.

The strong rally in September has surprised investors. Double-digit gains within a single month came in as a wake up call for those sitting on fringes and were waiting for a correction to enter the markets. After the strong upmove last month, we would expect the Nifty to consolidate around the 6000 levels, with increase in stock specific volatility driven by individual performance in the forthcoming quarterly results season.