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.