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Sensex gains for second week; outlook uncertain

Sensex gains for second week; outlook uncertain
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First Published: Fri, Jun 04 2010. 04 41 PM IST
Updated: Fri, Jun 04 2010. 04 41 PM IST
Mumbai: Indian shares logged their second straight weekly gain as they climbed 0.6% on 4 June, helped by a rise in European markets, but market participants were not convinced if risk appetite had revived as yet.
Financials led the gains on optimistic long-term outlook in an advancing economy.
The 30-share BSE index closed 0.56%, or 95.36 points, higher at 17,117.69 points, and logged a 1.5% gain for the week.
Nineteen of its components advanced.
“Risk appetite has not yet returned. Europe issues are still far from resolved,” said Arun Kejriwal, director of research firm KRIS.
“We may continue to see selling pressure from FIIs (foreign institutional investors).”
The benchmark had dropped 3.5% in May, its first monthly decline after January, as foreign funds pulled out $2 billion from Indian equities.
They have already sold around $123 million in the first two sessions of June.
However, Indian markets have performed better than their peers. BSE Sensex has lost only 2% so far this year while MSCI’s measure of Asian shares other than Japan has dropped more than 8%.
“Notwithstanding the recent outperformance by the Indian market, the global uncertainties or risk of an unforeseen event could keep the markets volatile in the near term,” brokerage Sharekhan said.
Sensex trades at 15.8 times its 12-month price/earnings while rivals China’s Shanghai Composite Index and Brazi’s Bovespa trade at 13.9 times and 11.4 times, respectively, data from Thomson Reuters showed.
Dealers awaited the annual monsoon for more cues.
The monsoon, vital for farm output in India’s trillion-dollar economy, had hit the country’s southern coast on 31 May, a day ahead of its usual date of 1 June.
However, the weather office said on Thursday the monsoon rains were 11% below normal in the week to 2 June.
Leading lender State Bank of India rose 2.4% while private-sector lender ICICI Bank climbed 1.6%.
Mortgage lender Housing Development Finance Corp rose 0.3%.
Export-focused outsourcers gained on expectations that the euro zone debt crisis may not seriously hurt order flow from the region.
B.G. Srinivas, head of Infosys Technologies’ Europe and manufacturing verticals told Edelweiss that the recent Europe sovereign debt crisis has not impacted the company’s current business and deal flow, the brokerage said in a note on 3 June.
Infosys gained 1.2% while bigger rival Tata Consultancy Services rose 0.3%.
Hindustan Unilever rose 1.7% after the top household products maker said on 3 June its board would consider a share buyback on 11 June 11.
Weak base metal prices in Shanghai and London weighed on metals stocks.
Tata Steel and Sterlite Industries dropped 0.2% and 0.3%, respectively.
Aluminium producer Hindalco bucked the trend and rose 1.2% as it said its full-year 2009/10 net profit surged to Rs39.26 billion from Rs4.84 billion in the year before.
In the broader market, advancing shares and declining ones were nearly equal in number on volume of nearly 300 million shares, lower than that on 3 June.
The 50-share NSE index closed 0.5% higher at 5,135.50.
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First Published: Fri, Jun 04 2010. 04 41 PM IST
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