The Indian markets have continued their southward movement, tanking by 3.2 per cent this week due to concerns over the sharp rupee depreciation and weak global cues from the estranged euro zone.
The Indian markets have continued their southward movement, tanking by 3.2 per cent this week due to concerns over the sharp rupee depreciation and weak global cues from the estranged euro zone. During the week the rupee was seen touching the Rs 54 per dollar mark. On the last day of the week it has closed at Rs 53.8 per dollar, suggests data collected from NSE India. What’s disappointing is that this decline in the markets has occurred despite some positive news flows like the deferment of the implementation of the GAAR. This clearly indicates that the market sentiments are negative and the outlook going forward is gloomy.
On the global front, the scenario looks very dull as it appears that skeletons may tumble out again from the euro zone with the coalition in Greece failing to agree on the austerity terms. Coupled with the weakness seen recently in the Spanish banks and the mixed corporate earnings from Japan, this has cast a shadow over the US stock markets, which despite having seen some improvement in economic data have lost precious ground this week. During the week the gold prices declined by 3 per cent while the silver prices declined by 2.5 per cent. The crude oil prices have retreated sharply as the US stock piles increased.
On the sectoral front, the power index was among the topmost loser, shedding 4.67 per cent. This was led by a sharp decline of 13 per cent seen in the shares of Adani Power and Suzlon this week. The IT Index was also among the top losers this week as weak guidance by the management of Cognizant has cast a dim outlook over the entire sector.
On the individual stock front, IRB Infra was the top loser for the week despite having reported good financial performance for the quarter ended March 2012. This fall was majorly on the back of alleged murder charges levied against one of its promoters and the resultant polygraph tests. The Central Bank of India, a public sector enterprise, also lost nearly 16 per cent this week as the bank reported a loss of Rs 105 crore for the quarter ended March 2012 as against profit of Rs 132 crore in March 2011. Amongst the top gainers were Muthoot Finance, BPCL and CRISL. However, the week was primarily dominated by the losers.
In conclusion, for the week ahead the drift of the markets would mainly depend on the FII activity. The market may remain range-bound although stock-specific activity could be witnessed based on the Q4 earnings. On the macro front, the government will announce inflation data for the month of April 2012 on Monday, May 14, 2012. Investors are closely watching India Inc’s Q4 March 2012 and year ending March 2012 (FY12) earnings. The focus is on the guidance provided by the managements for the year ending March 2013 (FY13) to gauge the earnings outlook. As for the rupee, we are of the opinion that there is still some weakness left to be tested by the rupee. Experts suggest that it may touch a level of Rs 56-57 going ahead.