With No Positive Triggers Indian Markets Continue To Remain Weak.

DSIJ Intelligence / 20 Jul 2012

The week began on a softer note for the Indian market on Monday. This was because investors were looking forward to the WPI inflation numbers for the month of June 2012 and were not disappointed since they came in at 7.25 per cent, which was below 7.55 per cent as recorded for the month of May, thereby indicating some decline.

The week began on a softer note for the Indian market on Monday. This was because investors were looking forward to the WPI inflation numbers for the month of June 2012 and were not disappointed since they came in at 7.25 per cent, which was below 7.55 per cent as recorded for the month of May, thereby indicating some decline. Later, on Wednesday the government announced the CPI numbers for the month of June 2012, which saw a marginal decline at 10.02 versus that of 10.36 in the month of May 2012. Both WPI and CPI saw a decline but the market did not react positively as the inflation was still high and does not offer any major room for the RBI to cut the rate in its meeting scheduled for July 31. The markets also took hints from the earlier comments of the RBI that inflation is a concern for economy and economic growth can wait for some time.

Benchmark Indices

Index

13-Jul-12

20-Jul-12

% Change

Sensex

17,214

17,158.44

-0.32

Nifty

5,227

5,205.1

-0.42

Hang Seng

19,093

19,640.8

2.87

Nikkei

8,724

8,669.87

-0.62

Shanghai

2,186

2,168.64

-0.79

Dow Jones*

12,573

12,943

2.94

S&P 500*

1,335

1,377.01

3.14

Nasdaq*

2,866

2,966

3.48

Bovespa*

53,421

55,346

3.60

FTSE*

5,608

5,714

1.89

DAX*

6,419

6,741

5.02

CAC*

3,135

3,256

3.86

* Closing till Thursday


Also, the crude oil prices have again inched back to USD 100 levels and the government is thinking of a diesel price hike. Both these prices play a major role in the inflation index. This is a cause for worry and the RBI would not like to change its current stance of keeping the rate high.  On Thursday the market awaited the presidential election event with highest probability of Pranab Mukherjee becoming the next president of the country and the prime minister taking the responsibility of the finance ministry. The markets are hoping for some major reforms from the finance ministry to be announced in the coming days so that the economy will be back on the growth track.

On the global front, developed markets like that of the U.S. and Europe also had a decent performance during the week. Dow Jones, S&P and other European markets like FTSE and CAC traded higher in the range of almost 1 per cent. This was on the back of hopes that the Federal Reserve will announce third round of stimulus measure to further boost growth in the world’s largest economy. The Fed is going to meet in mid-September and investors are hoping for an announcement of some QE measures. Further, the June quarter numbers till date have remained strong. Companies like Coca Cola and Intel reported decent numbers for the quarter. The positive sentiments were also on the back of the better-than-expected housing data.

In Europe, Spain has been offered recue funds from the ECB which leaves the government with higher borrowings. However, the government said that it won’t affect its borrowing plans. Also, despite a rise in the borrowing cost, the European markets were trading positive on the back of the June quarter results that lifted the sentiments. 

The Asian markets for the week remained quite positive on the back of cues from the U.S. and the European markets. The better-than-expected quarterly numbers of some American companies lifted the market sentiments. However, Japan’s Nikkei share average fell by 1.4 percent on Friday as investors took profits even while the global economy remains weak.

Back home, most of the BSE sectoral indices closed in negative territory except defensive sectors which ended in the green zone. Among the only gainers, consumer durables, FMCG and pharma indices closed higher by 2.53, 0.57 and 0.84 per cent respectively. In such uncertain and volatile markets investors have preferred defensive stocks to get steady returns. The other indices like auto, realty and power were among the major losers, down in the range of 1.56 to 2.52 per cent respectively. The auto index was down on the back of poor show by major auto companies in terms of the June quarter results and on the back of weak sales data for the month of June 2012.

Sectoral Indices

Category/Index

13-Jul-12

20-Jul-12

% Change

Broad

 

 

 

MID-CAP

6,247.89

6,184.10

-1.02

SML-CAP

6,737.42

6,675.35

-0.92

BSE-100

5,244.14

5,219.74

-0.47

BSE-200

2,126.71

2,116.57

-0.48

BSE-500

6,662.97

6,628.65

-0.52

Sectors

 

 

 

AUTO

9,310.02

9,161.80

-1.59

BANKEX

12,182.57

12,042.03

-1.15

CD

6,230.67

6,388.15

2.53

CG

10,054.75

9,942.05

-1.12

FMCG

4,909.59

4,937.80

0.57

HC

6,931.01

6,989.04

0.84

IT

5,360.65

5,320.58

-0.75

METAL

10,641.04

10,673.58

0.31

OIL & GAS

8,028.44

8,026.52

-0.02

POWER

1,964.05

1,933.40

-1.56

PSU

7,322.88

7,246.79

-1.04

REALTY

1,725.21

1,681.82

-2.52

TECK

3,181.61

3,171.40

-0.32


Among the individual stocks, Cadila Healthcare was the biggest index gainer, up by 12.31 per cent to Rs 880 post the news that the company had received a clean bill of health from the US Food and Drug Administration. The stock exchanges were informed that the USFDA had found its facilities at Moraiya to be “acceptable”. TTK Prestige this week was the second-highest gainer in the BSE ‘A’ group category, up by 8 per cent to Rs 3,563. This was mainly on account of good results for the June quarter.

On the other hand, there were losers too, among which Adani Enterprise and Adani Power closed the week lower by 12.03 per cent and 9 per cent respectively while companies like Union Bank of India, United Breweries, Jaypee Infra, etc closed down with losses in the range of 7.11 per cent to 8.92 per cent.

For the next week one may watch out for stocks like Colgate, Dabur India, Geometric, HUL, L&T, Tata Global, Jindal Steel, Sesa Goa, Ashok Leyland, etc which are going to announce their June quarter results. One may see volatility in the share prices of the above stocks on the back of their performances.

In conclusion, we expect the markets to remain volatile for the next week as there are no major triggers in the offing. The June quarter earnings so far have remained muted while the global markets are trading nervously on the back of slowdown in growth. On the Indian front, a ray of hope is that of the prime minister announcing some reforms. Our advice to investors is to adopt a ‘wait and watch’ approach.

Key Global Indicators

Index

13-Jul-12

20-Jul-12

Gold

29,246

29,232

Silver

53,033

53

Crude Oil (Brent)

101.99

106.89

Crude Oil (Nymex)

86.71

91.92


Currency Rate

Index

13-Jul-12

20-Jul-12

USD

55.38

55.15

EURO

67.58

67.60

GBP

85.48

86.57

JYP (per 100)

69.39

70.22


Volumes (Rs Crore)

Date

BSE

NSE

13-Jul-12

1,935

8,869

16-Jul-12

1,838

7,978

17-Jul-12

1,750

8,427

18-Jul-12

2,293

8,856


Institutional Turnover

Date

FII

DII

12-Jul-12

319

-221.7

13-Jul-12

380

-174

16-Jul-12

356

11

17-Jul-12

571

-92

Total

1,625.1

-476.2



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