The BSE benchmark Sensex extended its gains for the third consecutive week by surging another 133 points during the truncated week on sustained capital inflows coupled with easing of inflation figure though a clutch of CAG reports dented sentiments to some extent .
Shares of oil & gas, auto, consumer durable, capital goods, tech and IT sectors firmed up on good buying enquires while metal, power and FMCG shares fell on selling pressure.
Brokers said the sentiment improved following announcement by market regulator SEBI of wide-ranging steps to reform the mutual fund industry and the IPO space.
However, sentiments turned sour towards the weekend after a Comptroller and Auditor General of India (CAG) report named Jindal Steel, Essar Power, Hindalco, Tata Power and Adani Power amongst firms that gained Rs 1.86 lakh crore from coal blocks allocated on nomination basis.
Two other reports of the government auditor dealt with Delhi airport development and diversion of coal to a private power project in Madhya Pradesh.
The 30-share BSE sensitive index resumed slightly down at 17,551.69 and dropped to a low of 17,522.10 but recovered sharply on Friday to a fresh five-month high of 17,801.39 on renewed hopes of rate cut by the Reserve Bank, following lower-than-expected fall in July inflation numbers.
However, the index dipped to settle the week at 17,691.08 after the CAG said private firms are likely to have gained about Rs 1.86 lakh crore from coal blocks allocated on nomination basis, which amounted to notional loss to national exchequer.
The index was still up 133.34 points, or 0.76 per cent.
The Sensex has gained 851.89 points, or 5.06 per cent, in the last three weeks.
The NSE 50-share Nifty also rose by 45.90 points, or 0.86 per cent, to finish at 5,366.30. The Nifty has gained 266.45 points, or 5.22 per cent, over the last three weeks.
The government data showed inflation declined to 6.87 per cent in July . This was the first time the price rate fell below 7 per cent in over 30 months, but the number was still above than the apex bank's comfortable level.
"Inflation number was lower than Street estimates. This moderation raises expectation for some monetary easing steps," said Milan Bavishi, Head Research, Inventure Growth and Securities.
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The Foreign Institutional Investors (FIIs) were net buyers of Rs 1,085.02 crore, as per the SEBI's data, including the provisional figure of August 17.
Kishor Ostwal, CMD, CNI Research Ltd, said, "CAG reports seemed to have spoilt the bull party but we believe it is a trend for the market to close on Friday on a weaker note ahead of a good session. The Nifty has closed above 5,360, which is very strong level.
"It can correct at the most till 5,300 in the current situation where there is a very strong support. On upside, it seems 5,500 is capped for the settlement unless the call value shifts from 5,500 to 5,600. The next eight trading sessions need to be watched carefully."
"The strategy for next eight sessions should be - buy on dips and sell on rise - as the market may see volatility between 5,300 and 5,500 due to orthodox roll over system.
"In absence of liquidity in September series, the volatility is must for shifting the positions from August to September. Those with high leveraging will see problem on either side whereas those with lower or nil leveraging will enjoy buy on dips," Ostwal added. .
Shares of Tata Motors rose by 3.64 per cent after reports said the company's global sales rose. Maruti settled higher by 1.16 per cent after it announced that production will resume at Manesar plant from August 21.
However, the ITC dropped by 2.20 per cent on reports that Australia's tough new anti-tobacco marketing laws, which among others ban logos on cigarette packs, may be see similar action in India as well.
Other gainers from Sensex pack were RIL (4.23 per cent), M&M (3.85 per cent), HDFC (3.24 per cent), Bharti Airtel (2.48 per cent), Infosys (1.65 per cent), Dr Reddy (1.47 per cent) and Cipla (1.43 per cent) and Wipro (1.23 per cent,) while Hindalco Ind fell by 7.21 per cent followed by Tata Power 2.60 per cent, Sunpharma 2.21 per cent, NTPC 2.09 per cent, Jindal Steel 2.00 per cent, GAIL 1.92 per cent, Tata Steel 1.40 per cent and HDFC Bank 1.14 per cent.
Among the sectoral indices, the BSE-Oil&Gas shot up by 2.30 per cent followed by BSE-IPO 2.20 per cent, BSE-Auto 1.80 per cent, BSE-CD 1.75 per cent, BSE-CG 1.44 per cent, BSE-Teck 1.32 per cent and BSE-IT 1.25 per cent, while the BSE-Metal dropped by 1.84 per cent and BSE-Power by 1.10 per cent.
The total turnover, in the shortened week due to holiday on August 15 for 'Independence Day', at BSE and the NSE fell to Rs 8,355.78 crore and Rs 38,697.93 crore, respectively from the last weekend's level of Rs 10,603.40 crore and Rs 51,611.93 crore.
Forex: The rupee surrendered most of its last week's gain and depreciated by 45 paise to end the shortened week at 55.73 against the Greenback following fresh dollar demand from importers and some banks amid firm dollar overseas after mid-week.
However, sustained capital inflows and firm local stocks restricted the rupee fall to some extent, a forex dealer said.
The Forex market was closed on August 15, 2012 for observing 'Independence Day'.
At the Interbank Foreign Exchange (Forex) market, the domestic unit resumed slightly better at 55.25 a dollar from last weekend's close of 55.28 and improved further to a high of 55.19 on Monday on sustained dollar selling by exporters and continued capital inflows, while weak dollar overseas also helped the rupee to firm up at early stages.
However, it turned weak on dollar demand from importers, mainly oil refiners, at the fag-end of Monday's trading and remained in negative terrain till Thursday.
It crossed the 56-mark to an intra-trade low of 56.04 on Thursday after nearly two-week before concluding at 55.73, showing a fall of 45 paise or 0.81 per cent.
The Indian benchmark Sensex closed up by over 133 points, or 0.76 per cent, extending gains for the third straight week.
Pramit Brahmbhatt, CEO, Alpari Financial Services (India) said, "The beginning for INR was flat to firm note but turned into weakness towards the mid week and ended on weak note. The week witnessed some major economic numbers from India hitting the market except the WPI numbers all infused sheer disappointment.
"The July WPI numbers beat the expectations and came in at 6.87 pct against the hopes of of 7.30 per cent which eased some of the pressure on RBI but dwindling exports at a faster pace than imports resulted in the widening of the July trade deficit to $15.5 billion against $14.8 billion YoY."
"The process of revising the growth forecasts lower has been official now after the Economic advisor to PMO and the Centre for Monitoring Indian Economy (CMIE) scaled down FY13 GDP growth forecast to 6.7 pct on poor monsoon.
"A deficient monsoon is expected to pull down farm sector growth rate to 0.5 pct in 2012-13. In such a bleak economic situation the INR maintained its strengthening stance on the back of positive cues from global markets.
"The rising foreign capital flows has been negating the weakness in INR due to poor economic performance supported by abundantly available liquidity seeking avenues for risk on investments," he added.
"For the coming week Importers can wait for the INR to appreciate around 54.50 - 55.00 levels for partial hedging for their payments which we expect to be achieved on a move below 55.30 levels.
"A complete long Hedge can be created around 54.00 levels for medium term payments. Exporters can use the weakness towards 56.30 levels to initiate a short hedge with a stop loss above 57.00 levels as to cover their receipts.
"The crucial levels for INR appreciation are 55.30 levels as a move below the same shall extend gains and for depreciation the 56.70 levels can be closely watched as rise above 56.70 levels shall weaken the pair till 57.20 - 58.00 levels," he added.