Sectoral Analysis - December 22, 2012 - HDFC Securities

The market declined marginally last week on weak global cues amid dimming hopes that US politicians will reach a debt deal before the end of the year. United States is the world's biggest economy. Gains fuelled by hopes of new government reforms also subsided as the winter session of parliament ended on Thursday, 20 December 2012. The Sensex has surged 24.5% in calendar 2012 so far (till 21 December 2012). From a 52-week low of 15,358.02 on 2 January 2012, the Sensex has risen 25.28%.

On the macro front, the rate of inflation based on the Consumer Price Index-Agricultural Labourers increased to 10.31% in November 2012 from 9.85% in October 2012. The rate of inflation based on the Consumer Price Index-Rural Labourers edged up to 10.47% in November 2012 from 9.84% in October 2012. The Reserve Bank of India (RBI) kept its key policy rate viz. the repo rate unchanged at 8% after mid-quarter monetary policy review on Tuesday, 18 December 2012.

The BSE Sensex fell 0.39% to 19,242 and S&P CNX Nifty declined 0.54% to 5,847.70 in the week ended Friday, 21 December 2012.The BSE Mid-Cap index fell marginally by 0.02% and the BSE Small-Cap index fell by 0.38%. Both these indices outperformed the Sensex.

Metals: The BSE Metals index rose 4.44% to close at 8,340 levels. Large players namely SAIL, Tata Steel, JSW Steel and Hindalco Industries were gainers gaining 8.9%, 8.1%, 7.9% and 7.6% respectively. Metal stocks topped the Sensex gainers last week. Metal shares gained after data on 14 December 2012 showed that a preliminary version of HSBC's China manufacturing Purchasing Managers' Index hit a 14-month high in December 2012. China is the world's largest consumer of copper and aluminum.

Healthcare: The BSE Healthcare index rose 0.97% in the week to close at 8,060 levels. The major gainers were Strides Arcolab, Aurbindo Pharma ,Glenmark Pharma and Cipla were gaining 7.7%, 4.9%, 4.8% and 3.7% respectively. Aurobindo Pharma has received final approval from the US FDA to manufacture and market 'Abacavir' tablets USP in the strength of 300 mg. The annual sale of the product has been pegged at approximately US$ 88 m. The product has been approved out of Unit III formulations facility in Hyderabad. Aurobindo now has a total of 167 ANDA approvals from the US FDA.

Capital Goods: The BSE Capital Goods index fell 1.95% in the week to close at 10,735 levels. Large players namely Punj Lloyd, Alstom T&D India, BEML and Larsen & Toubro fell 4.6%, 4.1%, 3.2% and 3.0 % respectively. Capital goods stocks such as Larsen & Toubro fell on worries of a slowdown in order bookings.

Oil & Gas: The BSE Oil & Gas index fell 1.23% to close at 8,340 levels. The losers were Cairn India, Reliance Industries, BPCL and HPCL, which fell by 3.8%, 1.9%, 1.8% and 1.2% respectively. Oil exploration stocks fell as US crude oil futures declined dropped on concerns that US lawmakers may fail to avert spending cuts and tax increases that threaten the world's biggest economy. Lower crude oil prices will result in lower realizations from crude sales for oil exploration firms.

FMCG: The BSE FMCG index fell 0.86% to close at 5,924. All the industry heavyweights were losers. Tata Global, ITC, Dabur India and Jubilant Food fell 4.6%, 2.7%, 1.5% and 1.4% respectively. ITC fell 0.86%. The stock had hit record high of Rs 306.20 in intraday trade on 12 December 2012. The Ministry of Health and Family Welfare in October 2012 notified new pictorial health warnings to be depicted on tobacco product packs, which will come into effect from 1 April 2013.

Source : Equity Bulls

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