Markets Hitting Reality

The Indian markets saw some moderation of gains in the second half of the trading session. The Sensex closed higher by 199.37 points, closing at 16839.19, up by 1.20 per cent and the Nifty closed higher by 56.85 points, closing at 5099.85, up by 1.13 per cent. This moderation was seen soon after the opening of European markets where sluggish results have started to overpower statements about doing whatever it takes to save the Euro. The economy is now seeing the effect of sentimental blowing. The FTSE and DAX opened flat to positive and are now trading in the negative by 0.1 per cent 0.33 per cent. The French CAC though is trading flat to positive at 0.03.

Miner Anglo American PLC put downward pressure on the index after lower earning pushed the stock down by 3.1 per cent. In Germany, the DAX saw downward movement because of the poor results of Deutsche Boerse AG which was trading 1.8 per cent lower. On the same lines, the French major Compagnie de Saint-Gobain SA traded 8.6 per cent lower after gloomy results. The CAC is trading flat at the moment though. Pressures have been added on the Spanish front though with the release of unemployment figures on the announcement of the jobless rate for the quarter. Unemployment reached an all time high in Spain reaching 24.63 per cent, beating the earlier high of 24.44 per cent. The previous all time high on the jobless front for Spain was reached in the year 1994.

Markets are now getting a reality check with worries spreading over the U.S. GDP figures. These figures are estimated to show a growth of 1.5 per cent which is low as compared to the previous quarter growing at 1.9 per cent. This is raising concerns all over with investors now eyeing the release of the data which is expected to come out later in the day.

Towards the end of today’s trading session, the small and mid cap indices again saw a decline like yesterday, though to a lesser extent. The small cap and mid cap index closed lower by 0.9 per cent and 0.97 per cent lower. The selling in these sectors also put downward pressure on markets. Among the sectoral indices, 9 of the 13 indices ended trade positive. Maximum losses were seen in Realty and Capital Goods while Metals gaind a hefty 2.09 per cent.

ICICI Bank, which posted robust results ended today, higher by 2.35 per cent. At the same time, TCS today took over ONGC to become the most valued firm. TCS shares today gained 1.92 per cent leaving ONGC to the second place in terms of market capitalisation. With major banks posting results today, it was observed that PSU banks relatively underperformed. On the back of underperformance, Bank of India tanked 5.34 per cent while Union Bank of India tanked as much as 7.86 per cent. Due to the parity between public sector and private sector bank results, the Bankex index ended moderately higher at 0.4 per cent.

We expect further moderation and cancelling of gains that were seen today in the next week. Moreover, next week’s movements will be largely defined by the actions taken in the central bank meets. RBI, BoE, ECB and the Fed meet next week and thus will give direction to the markets in a more defined manner.