Market gets draggedin global turmoil ; lose 3% for the week

It was a disastrous week for the Indian markets after boisterously moving in last couple of weeks, the benchmarks suffered severe setback plunging to their two months low during the week. Though, the major drag was induced by the risk off global sentiments, but weakness in domestic currency along with some major earnings disappointments, too took its toll on the markets. There was weakness since beginning and traders opted to book proft after the markets reached a 31 month peak supported by continued foreign fund inflow. Though, there was some hopes of rate cut from the RBI that restricted major losses initially, but things worsned as there was no other supportive cue to hold the markets.There was concern that if stimulus measures are eased at US, the consistent liquidity being provided by the foreign investors will get impacted.Markets remained in range, marginally losing their ground everyday, then worst happened on Thursday after Chairman Ben Bernanke told Congress that US central bank could slow down its asset purchase program in the next few months. There was global sell-off in the equity markets and Nikkei witnessed biggest loss in last two years, closing lower by huge over seven percent. Hong Kong markets too ended lower by over two and half a percent with Chinese manufacturing output unexpectedly contracting for the first time in seven months. Though, the domestic markets have been declining since last three days, still benchmarks lost around two percent, despite Finance Minister P. Chidambaram trying to soothe the nerves by saying that there is no need for any kind of nervousness. He said that the Indian markets should read the situation correctly rather than be influenced by something elsewhere. Markets witnessed some revovery on the final day of trade, but that was too little and the major indices lost around three percent for the week after declining in four out of five sessions.

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex shaved off 581.79 points or 2.87% to 19704.33 during the week ended May 24, 2013. The BSE Mid-cap index was down by 226.85 points or 3.43% to 6387.13 and the Small-cap index down by 206.73 points or 3.33% to 5992.46. On the sectoral front, Realty down by 234.41 points or 11.54% at 1797.62, Capital Goods (CG) down by 834.07 points or 8.00% at 9589.01, Power down by 97.36 points or 5.28% at 1746.93, Oil & Gas down by 462.42 points or 5.12% at 8569.29 and PSU down by 333.22 points or 4.75 at 6677.58 were major losers on the BSE sectoral space, while IT up 8.26 points or 0.14% at 5954.82 was the only gainer on the BSE sectoral front.

NSE movement for the week

The Nifty plunged by 203.75 points or 3.29% to 5983.55. On the National Stock Exchange (NSE), Bank Nifty down by 547.75 points or 4.11% to 12769.35, CNX IT down by 0.25 points to 6330.80, while CNX mid-cap down by 366.45 points or 4.48% to 7820.20 and CNX Nifty Junior down by 411.75 points or 3.23% to 12325.80.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net buyers in equity segment in the week with gross purchases of Rs 18770.20 crore and gross sales of 12245.10 crore, leading to a net inflow of Rs 6525.10 crore. They stood as net buyers in the debt segment as well with gross purchases of Rs 6731.70 crore against gross sales of Rs 6264.00 crore, resulting in a net inflow of Rs 467.70 crore.

Industry and Economy

In a move to raise the price of natural gas produced by state-owned as well as private firms, the Oil Ministry has moved a Cabinet note on the same to the Cabinet Committee on Economic Affairs (CCEA). The ministry has proposed raising gas price for state-run firms immediately and that for Reliance Industries (RIL) from April 2014 to $6.7, less than $8-8.5 hike previously expected. The ministry wants Rangarajan Committee recommendation be accepted with a minor modification. Further, as per the oil ministry, the Rangarajan panel report needs to be accepted so that domestically produced natural gas prices are fixed in a fair manner and in a way that incentivizes production. However, the ministry has proposed notifying the gas price on a quarterly basis, instead of Rangarajan panel's recommendation of calculating gas price every month.

Outlook for the coming week

In the passing week, benchmark equity indices declining for four session, took a cut of over 3% to end above the 19700 (Sensex) and just shy off the crucial 6000 level (Nifty).

Going further a volatile week is in the offing for the Indian stock market, as lot of traders may adjust position on account of expiry of derivatives contracts on May 30, 2013. Additionally, the coming week could be a crucial one as January-March quarter GDP data, is expected to be released on May 31, which is expected to confirm the economy grew at its slowest pace in a decade in the 2012-13 fiscal year.

As the ongoing earning season draws to a close in the coming week, investors' would track results of some heavyweights like Coal India, Sun Pharmaceutical, Cipla, Gujarat NRE Coke, Bajaj Elect, Bhushan Steel, Jindal Stainless, JK Tyre, Lakshmi Vilas Bank, National Alum, Wockhardt, Cinemax India, Colgate Palmolive, Gail India, Godrej Industries, HPCL, Power Grid Corp, PVR, BPCL, J Kumar Infra, JK Lakshmi Cement, Lanco Infra and MCX.

In the coming week, investors could see more companies diluting their promoter's stake in order to fulfill SEBI's minimum public share holding norms. As per the norms stipulated by the Securities and Exchange Board of India (SEBI), privately promoted companies are expected to have a public shareholding at 25% by June 2013, while the same for the state-run listed companies has been relaxed to 10 per cent, which has to be met by August 2013.

Telecom stocks are expected to see some action in the coming week as Empowered Group of Ministers (eGoM) on auctioning spectrum may meet next week to discuss the terms for the sale of airwaves that's likely to take place before July.

On the global front, investors would eye few economic data from the world's largest economy, United States (US), starting from GDP data on May 30, followed by Jobless Claims data and finally, the Personal Income and Outlays on May 31, 2013.

Market extend the gaining streak on rates cut hopes

Markets continued their upmove in the passing week despite a big fall in the beginning and some consolidation in the latter part. Hopes of another rate cut following some better than expected macro economic data led the markets to their more than two years high during the week. Foreign fund inflow and traders optimism for the Indian equity markets kept the momentum going, making another week of gains. Though, the start was not so impressive and markets were butchered with benchmarks even losing their long held crucial levels, despite consumer prices index (CPI) Inflation for April 2013 slipping into single digit at 9.39%, as compared to 10.39% final inflation number for the previous month of March 2013. It was the trade deficit numbers that spoiled the party, as India's April trade deficit rose to $17.8 billion on account of massive surge in imports of cheaper gold and silvers. The banking sector took a hit after RBI's investigation report, pointed out at major anomalies in banks named in the Cobrapost expose. After the sudden and sharp fall, the markets took a breather next day and despite the Wholesale Price Index (WPI) inflation slowing down to its lowest since 2009 at 4.89% (Provisional) for the month of April, 2013 as compared to 5.96% (Provisional) for the previous month and 7.50% during the corresponding month of the previous year, traders remained on sidelines. But the dooms scenario got reversed on Wednesday when markets ralled fervently, taking the benchmark to their 28 months high. Rate sensitives' took the lead after the Reserve Bank of India's Governor Duvvuri Subbarao said that the central bank will take note of falling inflation when discussing potential interest rate cuts. There were some positive part played by the government too, as the Finance Minister P. Chidambaram said that he would set up a cell in his office to monitor and resolve the issues for speedy completion of the stalled infrastructure projects. The last two days of the week were of consolidation but still the markets managed to snap another week of gains, higher by over a percent.

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex surged 203.50 points or 1.01% to 20286.12 during the week ended May 17, 2013. The BSE Mid-cap index was up by 94.69 points or 1.45% to 6613.98 and the Small-cap index up by 32.85 points or 0.53% to 6199.19. On the sectoral front, Realty up by 113.44 points or 5.91% at 2032.03, Health Care (HC) up by 395.51 points or 4.51% at 9164.19, Capital Goods (CG) up by 432.30 points or 4.33% at 10423.08, Bankex up by 630.63 points or 4.32% at 15214.45 and Power up by 68.18 points or 3.84% at 1844.29 were major gainers on the BSE sectoral space, while FMCG down 172.82 points or 2.52% at 6682.57, IT down 126.07 points or 2.08% at 5946.56, TECk down 63.77 points or 1.74% at 3594.36, Consumer Durables (CD) down 129.70 points or 1.69% at 7542.41 and Auto down 61.04 points or 0.54% at 11202.29 were top losers on the BSE sectoral front.

NSE movement for the week

The Nifty climbed by 92.55 points or 1.52% to 6187.30. On the National Stock Exchange (NSE), Bank Nifty up by 564.80 points or 4.43% to 13317.10, CNX IT down by 108.80 points or 1.69% to 6331.05, while CNX mid-cap up by 177.20 points or 2.21% to 8186.65 and CNX Nifty Junior up by 306.70 points or 2.47% to 12737.55.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net buyers in equity segment in the week with gross purchases of Rs 15167.80 crore and gross sales of 10699.90 crore, leading to a net inflow of Rs 4467.90 crore. They stood as net buyers in the debt segment as well with gross purchases of Rs 4371.70 crore against gross sales of Rs 4000.70 crore, resulting in a net inflow of Rs 371.00 crore.

Outlook for the coming week

Markets extended their winning streak for yet another week. Both, benchmark equity indices BSE's Sensex and NSE's Nifty, concluded above the psychological 20,200 and 6150 levels respectively.

In the coming week, traders will be eyeing the development in coal and power sector, as an Inter-Ministerial Committee (IMC) is likely to take a call on applications from the government companies /corporations for allocation of 17 coal blocks on May 23. NTPC, Neyveli Lignite Corporation and MOIL are among the companies that have applied for the coal blocks.

FII flows will be a key data to watch for in the coming week after benchmark equity indices soared to two years high in the passing week. FIIs have been net buyers for 21 consecutive sessions, bringing in a net of about $13 billion in 2013. Additionally, investor's would also track updates on monsoon, which could provide near term guidance to equity markets.

Among key earnings, Venus Remedies, Apollo Hospitals, City Union Bank, Coal India, SREI Infra, PC Jeweller and Shriram City Union, Subex, Tech Mahindra, BHEL and Hindustan Copper will report their results next week.

In the coming week, investors could see more companies diluting their promoter's stake in order to fulfill SEBI's minimum public share holding norms. As per the norms stipulated by the Securities and Exchange Board of India (Sebi), privately promoted companies are expected to have a public shareholding at 25% by June 2013, while the same for the state-run listed companies has been relaxed to 10 per cent, which has to be met by August 2013. Meanwhile, there will be some buzz in the primary market too as the local search engine Just Dial's initial public offer (IPO) will open for bidding on Monday, 20 May 2013. The price band for the IPO has been fixed at Rs 470 to Rs 543 per share.

 

MARKETS SURGE TO RECORD HIGH OF 2013 DURING THIS WEEK

                        The markets extended their winning streak for yet another week, (a special live trading session will be organized by the NSE and BSE on Saturday May 11 for a duration of one and half hour from 11.15 a.m. to 12.45 p.m.) Though there was some consolidation in the last of the week but the major indices managed to snap the week higher by over two and half a percent and at their highest level of 2013 on the back of gains in the initial three days and a rally on Friday. After the disappointment of the RBI's policy decision, markets made a good start of the week buoyed by firm global cues, also as Standard & Poor's despite ruling out a rating upgrade for India at the current juncture, indicated improvement in rating outlook. Though, the HSBC services Purchasing Managers' Index (PMI), fell to its slowest pace in one and half years to 50.7 in April from 51.4 in March and capped some gains. However, the jubilation remained on track and the benchmarks surpassed their crucial 6,000 (Nifty) and 19,850 (Sensex) levels, their highest level in more than 13 weeks on the very next day supported by higher capital inflows by foreign funds into the equity market. A slew of good corporate earnings too provided some fillip to the markets, also the National Council of Applied Economic Research (NCAER) said that the Indian economy is likely to grow by 6.2 percent in the current financial year, significantly higher than the Reserve Bank of India's GDP growth projection of 5.7 percent for 2013-14. There was some consolidation on Thursday and traders opted to book profits after the recent rallies, some result disappointments too, led the markets lower, however on Friday the markets bounced back on getting better than expected IIP data, India's annual industrial output showing signs of recovery, grew by 2.5% for the month of March 2013, higher than the previous month's growth figure of 0.6%. Surprisingly Auto sector led the rally despite Car sales in India falling for the sixth consecutive month with a 10.43% decline and the markets ended at record high on Friday.

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex surged 506.98 points or 2.59% to 20082.62 during the week ended May 10, 2013. The BSE Mid-cap index was up by 143.32 points or 2.25% to 6519.29 and the Small-cap index up by 133.96 points or 2.22% to 6166.34. On the sectoral front, FMCG up by 278.21 points or 4.23% at 6855.39, Auto up by 431.90 points or 3.99% at 11263.33, Consumer Durables (CD) up by 250.55 points or 3.38% at 7672.11, IT up by 191.29 points or 3.25% at 6072.63 and Bankex up by 400.22 points or 2.82% at 14583.82 were major gainers on the BSE sectoral space, while Metal down 1.22 points or 0.01% at 8785.28 was the only loser on the BSE sectoral front.

NSE movement for the week

The Nifty climbed by 150.75 points or 2.54% to 6094.75. On the National Stock Exchange (NSE), Bank Nifty up by 385.70 points or 2.89% to 12752.30, CNX IT up by 215.15 points or 3.46% to 6439.85, while CNX mid-cap up by 112.35 points or 1.42% to 8009.45 and CNX Nifty Junior up by 237.45 points or 1.95% to 12430.85.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net buyers in the equity segment during the week with gross purchases of Rs 11973.60 crore and gross sales of 7848.20 crore, leading to a net inflow of Rs 4125.40 crore. They stood as net buyers in the debt segment as well with gross purchases of Rs 7321.70 crore against gross sales of Rs 2747.10 crore, resulting in a net inflow of Rs 4574.60 crore.

Industry and Economy

Growth in the services sector, which makes up nearly 60% of the country's economic output, eased dramatically during April as new orders came in at a much slower pace, prompting firms to rein in hiring plans. As per the HSBC services Purchasing Managers' Index (PMI), based on a survey of around 400 companies, fell to its slowest pace in one and half years to 50.7 in April from 51.4 in March. The services sector growth which rose an 18-month high in January, fell for its third straight month in April and took the index very close to the 50 mark that separates growth from contraction. Although the business placed in firm rose during April, service providers mentioned extreme weather and challenging market conditions for the slower pace of growth.

Outlook for the coming week

The passing week turned out to be extremely productive for equity markets, which led the benchmark equity indices end near their record highs of 2013 on the back of positive global set-up and improving macro conditions.

Investors for the coming week would be keenly eyeing the release of April inflation data, next crucial trigger for the markets after the March's factory output numbers. India's main inflation gauge, Wholesale Price Index data (WPI), which is up for release on May 14, 2013, is expected to have eased for a third straight month in April. However, before this investors' would also await the Consumer Price Index (CPI) data, scheduled to release on April 13.

Meanwhile, PSU's OMCs are expected to remain in action for the coming week on the hopes that diesel prices would be hiked by Rs 1 per litre during the weekend. Oil marketing companies have been hiking retail diesel prices in a staggered manner by Re 0.50 per litre to lower the under-recoveries. So far, the diesel prices have been hiked three times.

Additionally, deferred meeting of the Empowered Group of Ministers (EGoM) on raising prices of natural gas could take place in the coming week. However, this will depend on the availability of EGoM members. Key ministries like finance and oil along with the Planning Commission have unanimously supported aligning domestic gas price with the international market to encourage oil and gas exploration firms to commit more investments in raising domestic output.

Furthermore, investors would be looking for results from select corporate such as Amara Raja, Aptech, Bank Of Baroda, Nestle India, Rashtriya Chemical fertilizers, Reliance Power, Dr Reddys Lab, Elder Pharma, United Bank of India, Century Textiles, J&K Bank, etc.

On the global front, investors would be watching for a slew of major economic data from the world largest economy, United states, starting from Retail Sales data on May 13, followed by the Producer Price Index, Industrial production, Consumer Price Index, Housing Starts, Jobless Claims and finally the Philadelphia Fed Survey.

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UPDATE ON MARKET 07-05-2013