Markets close the week in the green
Srujani Panda / 24 Dec 2011
The markets turned positive this week, putting an end to a two week losing streak that saw stock markets shed over 8-9 per cent of their value over a number of domestic and global macroeconomic concerns.
The week started off on a negative note over concerns raised by the sudden death of North Korean leader Kim Jong-II. However by mid-week, a positive set of inflation numbers (for the week ended Dec 10 showing) showing significant signs of easing and an upgrade by Moody’s Investor Services, led to a turnaround in market sentiments that helped power a strong 500 point rally. Even in the face of some volatility, the markets managed to close the week in the green.
Food inflation numbers easing off to 1.8 per cent against 4.35 per cent in the previous week brought some much needed cheer to the markets. This cool off was on the back of a decline in prices of essential items like vegetables, onion, potato and wheat. The Primary articles inflation also came in at 3.78 per cent against 5.48 per cent the previous week. Going forward, the latest set of inflation data could be indicative of a cut back in interest rates by the RBI.
On the global front, the US markets witnessed a great weekly run as equity markets extended their rally on strong economic data & other seasonal factors. A deal to extend the payroll-tax cut for two more months also added to the cheer.
Global commodities also saw some action this week as oil futures bounced back by around 6 per cent on the back of some renewed buying and concerns of supply shortage. Gold futures also gained 2 per cent this week.
Back home, a much needed intervention by the RBI (corrective measures to restrict speculative trading) seems to have put a stop to the Rupee’s highly volatile movements for now..Net investments by FIIs dropped in the negative for this week after flagging off the month of December on a positive note. FII net investments for Dec 2011, now stands at negative Rs 1602 crore.
Moving on, to the sectoral indices, Oil & Gas, FMCG and Auto were the top three gainers, while Capital Goods, Metals and Realty were the top losers. Metal stocks declined on worries that the global economic slowdown could hurt demand. Jindal Steel & Power, Tata Steel & Hindalco Industries lost 5.87%, 4.85% and 3.07% respectively. But after the recent slide in prices (50% this year), Sterlite Industries gained over 2.4% on bargain hunting. ONGC, India's largest oil & gas exploration firm by sales, was up 4.58%.
Interest rate sensitive BANKEX index edged higher on a positive set of inflation numbers, cementing expectations of a steady easing in overall price pressures. ICICI Bank rose 6.79% while HDFC Bank gained 5.2%. In another move aimed at easing the cash crunch in the banking system, the RBI relaxed some restrictions on banks borrowing from it.
The losers pack had PSU banks like UCO Bank, Syndicate Bank, Allahabad Bank and Canara Bank as investors expect the Dec 2011 quarter to be a weak one, judging by the advance tax numbers.
Sintex Industries was among the top gainers for the week, over renewed buying interest shown by investors after the stock took a beating by 32 per cent last week.
In conclusion, we at DSIJ expect the coming week to be highly volatile as investors and traders get ready for the December month-end expiry. There are also some concerns regarding the final outcome of the Lokpal bill, for which the Parliament closing date has been extended to the 29th of December. FIIs will also closely watch this development.
One may also expect cement and auto stocks to be in action as the sectors get ready to release their monthly figures on Jan 1, 2012. One can also expect investors, traders and institutions to build their expectations around the December quarter results
The week started off on a negative note over concerns raised by the sudden death of North Korean leader Kim Jong-II. However by mid-week, a positive set of inflation numbers (for the week ended Dec 10 showing) showing significant signs of easing and an upgrade by Moody’s Investor Services, led to a turnaround in market sentiments that helped power a strong 500 point rally. Even in the face of some volatility, the markets managed to close the week in the green.
Food inflation numbers easing off to 1.8 per cent against 4.35 per cent in the previous week brought some much needed cheer to the markets. This cool off was on the back of a decline in prices of essential items like vegetables, onion, potato and wheat. The Primary articles inflation also came in at 3.78 per cent against 5.48 per cent the previous week. Going forward, the latest set of inflation data could be indicative of a cut back in interest rates by the RBI.
On the global front, the US markets witnessed a great weekly run as equity markets extended their rally on strong economic data & other seasonal factors. A deal to extend the payroll-tax cut for two more months also added to the cheer.
Global commodities also saw some action this week as oil futures bounced back by around 6 per cent on the back of some renewed buying and concerns of supply shortage. Gold futures also gained 2 per cent this week.
Back home, a much needed intervention by the RBI (corrective measures to restrict speculative trading) seems to have put a stop to the Rupee’s highly volatile movements for now..Net investments by FIIs dropped in the negative for this week after flagging off the month of December on a positive note. FII net investments for Dec 2011, now stands at negative Rs 1602 crore.
Moving on, to the sectoral indices, Oil & Gas, FMCG and Auto were the top three gainers, while Capital Goods, Metals and Realty were the top losers. Metal stocks declined on worries that the global economic slowdown could hurt demand. Jindal Steel & Power, Tata Steel & Hindalco Industries lost 5.87%, 4.85% and 3.07% respectively. But after the recent slide in prices (50% this year), Sterlite Industries gained over 2.4% on bargain hunting. ONGC, India's largest oil & gas exploration firm by sales, was up 4.58%.
Interest rate sensitive BANKEX index edged higher on a positive set of inflation numbers, cementing expectations of a steady easing in overall price pressures. ICICI Bank rose 6.79% while HDFC Bank gained 5.2%. In another move aimed at easing the cash crunch in the banking system, the RBI relaxed some restrictions on banks borrowing from it.
The losers pack had PSU banks like UCO Bank, Syndicate Bank, Allahabad Bank and Canara Bank as investors expect the Dec 2011 quarter to be a weak one, judging by the advance tax numbers.
Sintex Industries was among the top gainers for the week, over renewed buying interest shown by investors after the stock took a beating by 32 per cent last week.
In conclusion, we at DSIJ expect the coming week to be highly volatile as investors and traders get ready for the December month-end expiry. There are also some concerns regarding the final outcome of the Lokpal bill, for which the Parliament closing date has been extended to the 29th of December. FIIs will also closely watch this development.
One may also expect cement and auto stocks to be in action as the sectors get ready to release their monthly figures on Jan 1, 2012. One can also expect investors, traders and institutions to build their expectations around the December quarter results
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