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.