Volatile Week Ends on a Strong Note
DSIJ Intelligence / 07 Sep 2012
The week began on a softer note for the Indian markets despite the Indian economy reporting better than expected GDP numbers for the June 2012 quarter at 5.5 per cent. This GDP growth lowered the probability of a possible rate cut by the RBI which weighed down the overall market sentiment later on Monday.
The week began on a softer note for the Indian markets despite the Indian economy reporting better than expected GDP numbers for the June 2012 quarter at 5.5 per cent. This GDP growth lowered the probability of a possible rate cut by the RBI which weighed down the overall market sentiment later on Monday. The markets continued their lackluster performance and extended losses on Wednesday after heavy selling was seen in the metal and capital goods stocks. However, on Thursday and Friday a slew of global cues provided strong support to the markets. The ECB’s bond-buying plan and later China’s announcement to boost infrastructure investment through the approval of 60 infrastructure projects this week in a bid to boost the economy in the country lifted the market sentiments.
| Benchmark Indices | |||
|---|---|---|---|
| Index | 31 Aug | 07 Sep | % Change |
| Sensex | 17,380.75 | 17,683.73 | 1.74% |
| Nifty | 5,258.50 | 5,342.10 | 1.59% |
| Hang Seng | 19,482.57 | 19,802.18 | 1.64% |
| Nikkei | 8,839.91 | 8,871.95 | 0.36% |
| Shanghai | 2,048 | 2,128 | 3.92% |
| Dow Jones* | 13,001 | 13,047 | 0.35% |
| S&P 500* | 1,399 | 1,403 | 0.29% |
| Nasdaq* | 3,049 | 3,069 | 0.66% |
| Bovespa* | 57,256 | 58,321 | 1.86% |
| FTSE* | 5,719 | 5,778 | 1.03% |
| DAX* | 6,895 | 7,167 | 3.94% |
| CAC* | 3,379 | 3,509 | 3.85% |
| * Closing till Thursday | |||
Also, the crude oil prices have again inched back to the USD 115 level due to which the under-recoveries of the oil marketing companies have swollen and the government is thinking of a petrol price hike. This is expected to be announced today or over the next few days. The government is also thinking about deregulation of the diesel price hike in order to curb the rising fiscal deficit. Both these prices play a major role in the inflation index. This raises concerns about a spurt in inflation in the coming months since the RBI would not like to change its current stance of keeping the rate high.
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 to 3 per cent. This was on the back of hope that the ECB was likely to announce its bond-buying plan to bring the economy out of the crisis. And on Thursday the ECB finally introduced its plan to buy unlimited government debt from the struggling euro zone economies. This lifted the market sentiments globally and most of the markets were trading with strong gains. The investor sentiment was further raised by economic reports that cast a more positive light on the U.S. labour market, one day before the monthly payroll report. After the ECB’s policy meeting on Thursday, focus was shifted to the U.S. economic numbers.
The Asian markets opened the week with quite a dull session on the weakening economic condition. However, they rebounded later on Thursday and Friday after Chinese officials announced their infrastructure plans to push economic growth in the country. China’s top economic planners approved another batch of major infrastructure investment projects yesterday, bolstering the more than two dozen subway and urban rail initiatives announced a day earlier. Also, the ECB’s plan of buying bonds lifted the sentiments on the last two days of the trading session too. Most of the Asian markets such as Hang Seng, Nikkei and Shanghai closed the week with gains of 1.64 per cent, 0.36 per cent and 3.92 per cent respectively.
Back home, all of the BSE sectoral indices closed in the positive territory. This was largely on the back of the rally seen on Friday. Among the major gainers, IT, tech and realty closed higher by 4.36 per cent, 4.34 per cent and 2.72 per cent respectively. Among the other gainers, indices like auto, CD, oil & gas and capital goods closed with gains of nearly 1.5 per cent each. The metal indices which were beaten down also closed with a gain of 0.89 per cent.
| Sectoral Indices | |||
|---|---|---|---|
| Category/Index | 31-Aug-12 | 07-Sep-12 | % Change |
| Broad | |||
| MIDCAP | 5,999 | 6,107 | 1.81% |
| SMLCAP | 6,386 | 6,456 | 1.10% |
| BSE-100 | 5,239 | 5,323 | 1.60% |
| BSE-200 | 2,119 | 2,153 | 1.65% |
| BSE-500 | 6,616 | 6,724 | 1.62% |
| Sectors | |||
| AUTO | 9,226 | 9,486 | 2.81% |
| BANKEX | 11,475 | 11,615 | 1.23% |
| CD | 6,201 | 6,369 | 2.72% |
| CG | 9,429 | 9,547 | 1.25% |
| FMCG | 5,346 | 5,347 | 0.03% |
| HC | 7,473 | 7,546 | 0.98% |
| IT | 5,723 | 5,972 | 4.36% |
| METAL | 9,671 | 9,755 | 0.87% |
| OIL & GAS | 8,181 | 8,343 | 1.98% |
| POWER | 1,868 | 1,884 | 0.81% |
| PSU | 6,929 | 7,016 | 1.25% |
| REALTY | 1,506 | 1,547 | 2.72% |
| TECK | 3,243 | 3,383 | 4.34% |
Among the individual stocks, Torrent Power was the biggest index gainer - up 16 per cent to Rs 172 post the report that the promoter group company acquired 29,90,000 shares representing 0.63 per cent of the total equity of power generation and distribution firm from Infrastructure Development Finance Company Limited (IDFC) through open market transaction. The other major gainer was Aurobindo Pharma which closed higher by 11.25 per cent at Rs 123.15 post the announcement that it has received final approvals from the US Food & Drug Administration (USFDA) to manufacture and market Amlodipine Besylate and Benazeprilo Hydrochloride capsules.
| Gainers | LTP | Change (%) | Losers | LTP | Change (%) |
|---|---|---|---|---|---|
| Torrent Power | 172.05 | 16.21 | Jain Irrigation | 59.9 | -7.35 |
| JP Hydro Power | 28.55 | 12.62 | Astra Zeneca | 1,785.45 | -5.67 |
| Dish TV | 73.05 | 11.27 | IDFC | 127.1 | -5.43 |
| Aurobindo Pharma | 123.15 | 11.25 | GSPL | 75.5 | -4.79 |
| Welspun Co | 102.55 | 9.27 | BHEL | 204.85 | -4.43 |
| MOIL Ltd | 257.70 | 9.06 | Godrej Constructions | 663.5 | -3.92 |
| Godrej Industries | 257.15 | 8.46 | United Spirits | 939.9 | -3.68 |
On the other hand, there were a few losers, among which Jain Irrigation, Astra Zene and IDFC closed the week lower by nearly 6 per cent each while companies like GSPL, BHEL, Godrej Consumers, etc closed with losses in the range of 3.92 per cent to 5 per cent.
In conclusion, we expect the markets to remain volatile for the next week. Also, there are media reports that the petrol price may be hiked soon and this might fuel inflation upwards. Further, the markets will set their sights on the wholesale price index (WPI) numbers for the month of August 2012 that are expected to be released on September 14, 2012. Also IIP Numbers are to be announced next week which will be closely watched by the markets. On the global front, one has to watch out tonight for the U.S. non-farm payroll report which is again key data for the markets. Next week we also have a Federal Open Market Committee’s two-day meeting which could drive the market in either direction. Now the million dollar question is that whether the Federal Reserve will launch a third round of quantitative easing that might be answered in the meet. We would advise our readers to play with caution.
| Key Global Indicators | |||
|---|---|---|---|
| Index | 31 Aug | 07 Sep | % Change |
| Gold | 30,684 | 31,301 | 2.01% |
| Silver | 56,798 | 61,646 | 8.54% |
| Crude Oil (Brent) | 113.15 | 113.95 | 0.71% |
| Crude Oil (Nymex) | 95.03 | 95.83 | 0.84% |
| Currency Rate | |||
|---|---|---|---|
| Index | 31 Aug | 07 Sep | % Change |
| USD | 55.72 | 55.52 | -0.36% |
| EURO | 69.66 | 70.20 | 0.78% |
| GBP | 87.95 | 88.49 | 0.61% |
| JYP (Per 100) | 71.04 | 70.31 | -1.03% |
| Institutional Turnover (Rs / Crore) | ||
|---|---|---|
| Date | FII | DII |
| 29-Aug-12 | 415 | -79 |
| 30-Aug-12 | 2501 | 315 |
| 31-Aug-12 | -146.3 | -58 |
| 03-Sep-12 | -47.1 | -153 |
| 04-Sep-12 | 302.6 | -63.5 |
| Total | 3025.2 | -38.5 |
| Volumes (Rs Crore) | ||
|---|---|---|
| Date | BSE | NSE |
| 30-Aug-12 | 2,598 | 15,011 |
| 31-Aug-12 | 1,844 | 10,907 |
| 03-Sep-12 | 1,644 | 7,821 |
| 04-Sep-12 | 1,635 | 7,812 |
| 05-Sep-12 | 1,978 | 8,813 |
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