Markets Remain Flat, May Look Up Ahead

The Indian markets last week remained in the green but witnessed a flat movement. This was in line with the other leading indices around the globe. In the table mentioned below, we can see that all the indices that we keep a close track of have closed the week in the positive territory.

The market participants have been keeping their fingers crossed and were waiting eagerly for the country’s central bank, the RBI, to go ahead with the interest rate cut. The expectations were indeed high this time as the government has been proactive and had initiated a process of reforms that had been kept on hold for long. However, the RBI refrained from cutting the interest rates and instead has decreased the CRR (cash reserve ratio) for the second consecutive time by 25 basis points. On the other hand, the corporate results have been above the market expectations. Both the topline and bottomline have witnessed double-digit growth of 14.41 per cent and 22.70 per cent respectively on a YoY basis with 1,072 companies having disclosed their numbers as of November 1, 2012.

On the global front, this week the U.S. markets have dealt with one of the worst natural catastrophes. Hit by the hurricane Sandy, the U.S. markets have been forced to keep their shutters down for two days. However, they closed the week in green with gain of around 1 per cent. On the European front, the markets are headed for a positive weekly closing. Investors are awaiting the last American monthly jobs report data before the presidential elections next week. There are sets of data both on the American and the European front which are to be watched closely. On the U.S. front, the trade balance and retail sales data are to be released next week. On the European front, we have the ECB Monetary Policy along with industrial production in the U.S. and exports data in Germany and China due next week.

Crude remained flat this week, gaining merely 0.15 per cent. On the other hand, precious metals like gold went down by more than 3 per cent and silver witnessed a drop of more than 4 per cent last week.

Back in India, on the broader market front most of the indices have managed to close the week on a positive note. The BSE Midcap closed in green while the BSE Smallcap went down in the red. On a sectoral basis, out of the 13 indices, five have closed in red. With the onset of the festive season, consumer durables have been the flavour of the week. The BSE CD Index has been the top performer this week, gaining more than 5 per cent. This has been followed by the BSE Auto (+3.90 per cent), which is up on the back of better monthly sales numbers and the BSE HC (+3.16 per cent) on the back of better results posted by companies like Dr Reddy’s.

The money inflows remained a bit muted this week with the FIIs pumping in Rs 117 crore during the week in equities. The DIIs ended the week in red, selling off equities worth Rs 307 crore last week. The markets are yet to get into the groove of the festive season and display the kind of fireworks which most of the participants are hoping for. The markets have witnessed volatile trade in the last two weeks but, we believe, that these are temporary blips before the markets again start to witness smart rallies. Going forward, the movement of the market will depend on the implementation of the reform processes that have been given the green signal.