A Flat Closing To A Promising Week

Last week, the Indian markets saw four trading sessions on account of the holiday on 2nd October, 2012. In the four sessions, the markets witnessed three days of upward move. The cumulative result of these moves was the Sensex and Nifty closing rather flat as compared to last week, higher by 0.94% and 0.77% respectively.

This week, we saw the markets breaching the psychological level of 19K during the trading sessions. An important phenomenon that took place was the sudden crash and temporary halt in trading on the NSE due to a technical glitch.

The Indian markets ended the week flat, positive. The government has indeed taken some of the much needed steps towards reforms. The more important thing is that it has ducked the threats from its allies and opposition and gone ahead with these processes. Infact, on Thursday, a Cabinet meeting passed the bill for FDI in insurance. These are the steps that can be looked upon as the beginning, which will take the markets to the next orbit.

On the US front, we witnessed very little movement as far as the index is concerned. The Dow Jones remained flat, with a gain of mere 0.66%. Nasdaq too followed suit, with a gain of 0.40% over the week. The effect of the infusion of liquidity announced by the US Federal Reserve seems to be fading off. During the week, some important data was released, including total vehicle sales, initial jobless claims and factory orders. In the next week, we will see more key figures like the non-farm payrolls being declared.

The trouble in Europe now seems to be a never-ending phenomenon. However, the indices in this part of the globe witnessed some boost after the ECB President Mario Draghi said that the bank is ready to buy bonds. The FTSE closed the week with a gain of marginally over 1%, while Dax closed up by 0.71%. CAC remained in flat in the red. In the meantime, Spain has said that it will not ask for a sovereign bailout soon. The ECB and the Bank of England left their benchmark interest rates on hold.

The Asian indices have closed almost flat over the week. Taking cues from the US, its largest trading partner, all the major indices in the Asia Pacific region, viz. Nikkei, Shanghai Composite and Hang Seng remained flat in the green.

The overall depreciation in the US dollar and the strengthening of the yen and the end of political inaction at home has caused a drastic appreciation in the rupee, which has been in the range of 1.93%-3.19% with respect to the four major currencies.

Crude remained almost flat over the week. Precious metals like gold and silver has also witnessed a decline of more than 1% each.

On the domestic front, while the Sensex and Nifty ended the week flat, midcap and smallcap indices saw a decent upward move. Midcaps and smallcaps were up this week by 1.08% and 1.82% respectively. Among the sectors, Realty, Capital Goods and Consumer Durables were the highest gainers, up by 5.55%, 3.49% and 3.18% respectively. The Healthcare, IT and Teck indices were the biggest losers, lower by 1.35%, 0.20% and 0.09% respectively.

There has been significant interest generated among Realty stocks after them remaining underperformers for long. The BSE Realty index has been the top performer of the week, with almost all the stocks in it closing the week in the green.

The appreciating rupee has been taking a toll on the export-dependent IT industry, pushing IT lower by 0.20%. The IT index had dropped lower by 1.01% in the preceding week too. The Healthcare index has remained the underperformer of the week, losing over 1%.

The highest gaining for the week remained Apollo Sindhoori, with a gain of 72.34%, followed by Landmark Property and Tijaria Poly, which gained 43.90% and 40.91% respectively. The main losing stock for the period is Bilpower, which lost more than 40.81%, followed by Mothersumi and Kingfisher Airlines, which saw losses of 28.02% and 17.96% respectively.

With the end of the month of September, the markets will look forward to the corporate earnings. The results in the last quarter were well above the street’s expectations, and the market participants are indeed looking forward to the bugle to be sounded for the earnings season.

The next week will see the release of the IIP data on 12th October. The monetary inflows remained strong, with FIIs pumping in Rs 3843 crore during the week. DIIs ended the week in the red, selling off equities worth Rs 1127 crore worth of equities. We still remain positive on the markets and hope to see smart rallies going forward, taking cues from the corporate results.