Indian Markets Cut Back On Four Week Losing Streak, End Positive

The Indian markets have managed to cut back on their four-week losing streak and post some modest yet satisfying gains for the week ended May 25, 2012. While the common man fretted and sulked, investors and traders on D-Street gave a thumbs-up to the government’s bold decision to go ahead and give its informal nod to the domestic oil refiners to increase the retail petrol prices and recoup their losses on unsubsidized and decontrolled fuel.

The week started off on a quiet and subdued note as most market experts and analysts believed that following the heavy beating that the Indian equity markets have received over the past couple of weeks, there was much room for some rebound in the stock prices. However, as feared, the Indian rupee played spoilsport to the party as it came crashing down to breach the Rs 56 per dollar mark, giving rise to some market humour exchanged through the digital world that it might soon apply for senior citizenship at the Rs 60 mark.

However, that was not to be as the government, for once in a very long time, took a courageous step to informally nudge the domestic oil refiners to raise the retail petrol prices. This was later on followed by some disappointment as the OMCs, towards the end of the trading session on Thursday, said that they would reconsider a partial rollback by the first week of June. Consequently, the markets on Friday ended on a very flat and volatile note as they swayed between the green and the red throughout the day.

On the global front, investors closely watched news headlines from Greece to assess the possibility of the nation’s chaotic exit from the euro zone. The scenario looks very dull as it appears that the skeletons are seen to be tumbling out again from the euro zone with the coalition in Greece failing to agree on the austerity terms. However, thanks to the Italian prime minister stating that Greece is likely to stay in the euro zone and that a majority of the region’s leaders have pledged their support to fight the debt crisis, the tensions seem to have eased. 

The week also saw market guru Marc Faber reckoning that the economy of China posed a larger threat to global risk rather than the ‘insignificant’ Greek economy. According to him, the European Central Bank will be able to support Greece and European tax payers would pay for it. On the other hand, a slowdown in China, the world’s second-largest economy, would have a huge impact on the prices of industrial commodities.

Back home, on the sectoral front, the consumer goods index (CGI) was among the topmost winner as it gained nearly 2 per cent. The oil & gas and PSU indices also gained by more than 1 per cent each as the petro price hikes relived the tension of the domestic refiners to bear losses and the upstream companies to compensate them. The FMCG index was the biggest loser of the week as investors took some profits off the table.

On the individual stock front, Wockhardt, a pharmaceutical and biotechnology company, was the top gainer for the week as its shares rallied more than 14 per cent after the company reported a good performance at the EBITDA level. Anil Ambani-led Reliance Capital was also among the top gainers as the company posted a good yearly performance. Among the losers, Crompton Greaves led the pack as it reported a sharp decline in its net profits during the recently announced March quarter results. Amongst other top losers were Sesa Goa, Opto Circuits and Manappuram Finance, etc.

In conclusion, for the week ahead the market may remain volatile as traders roll over positions from the near-month May 2012 series to June 2012 series as the May derivatives contracts expire on Thursday, May 31. The government is also expected to announce the Q4 March 2012 gross domestic product (GDP) data on Friday, May 31, which would eagerly be awaited by the investors. The GDP numbers will prove to be a key trigger for not only the markets but also provide some vital cues for the RBI’s next course of action on the monetary policy front in the aftermath of rising inflation.

On the March quarter results’ front, investor focus is on the guidance provided by the management for the year ending March 2013 (FY2013) to gauge the earnings’ outlook. Among the top results expected to be announced next week are those of Coal India, Tata Motors, ONGC, Steel Authority of India, Power Grid, Sun Pharmaceuticals, GAIL (India), DLF, Mahindra & Mahindra (M&M) and Jaiprakash Associates.