Markets End Volatile Session With Marginal Losses

The Indian markets remained volatile for most of the trading session today. After extending its morning losses in the afternoon trade, it reversed some of the downward movement and finally closed marginally negative. The rupee depreciation to the 57 levels against the dollar kept the investors' nerves weak today. The weak global markets did not provided any support either, and were down on the back of the global slowdown concerns. The Sensex and Nifty closed up by nearly 0.35% each.

The Asian and European markets were both in the red today on the back of concerns over the growth slowdown in the major economies. The Fed measures that stayed away from any major stimuli led fears of a further slowdown in the US economy. In the initial survey data, the manufacturing index slowed down in the US. Further, the Fed has also reduced the GDP growth forecast for this year from 2.4% to 1.9%, which dented sentiments across the globe. As per the HSBC PMI data, the Chinese economy too saw a decline in industrial output in May 2012, and exports have fallen due to weak demand from the global markets.

However, the slowdown in the global markets has raised hopes of fresh stimulus measures mainly from the European and US regions, which could be announced in the next week. If this happens, it may led to a short-term rally in the market in the near term.

We, at DSIJ, believe that the Indian markets will see some weakness in the near term on the back of the concerns looming over the economy. As we have said before, high rupee depreciation, the economic slowdown, high fiscal deficit and inflation figures have not been fully discounted. The global markets are looking very uncertain. Fitch downgraded the Indian economy's outlook to negative, and also downgraded SBI and 8 other Indian banks citing higher exposure to sovereign debts.

Dow Jones Futures is currently trading 47 points or 0.39% up at 12551, indicating a positive sentiment in the US markets.

Back home, among the sectoral indices, Realty, Power and Auto closed positive with leading gains of 0.41%, 0.10% and 0.04% respectively. All the others closed in the negative territory. Metals and CG were among the major losers, down by 1.48% and 0.63% respectively.

ACC closed with losses of 3.08% today at Rs 1215. This was on the back of the CCI reports, which penalised the company for cement cartelisation and manipulation of cement prices.

Pipavav Defence closed with of 0.36% gains at Rs 83.70 on the back of news that France’s DCNS may acquire upto 10% stake in the former for Rs 800 crore.

IT stocks were looking positive on the back of the falling rupee value against the dollar. IT companies generate 80% of their revenue in dollar terms through their export services.

The market breadth, which indicates the overall health of the market, was negative for today. Out of the 3214 stocks traded on the BSE, 1569 declined, 1507 advanced and 138 remained unchanged.

In the next week, we expect the markets to remain volatile and negative on the back of all the issues plaguing the domestic and global economy.