Indices Turn Volatile, Quarterly Results Awaited

Global factors along with domestic concerns have weighed on the markets in the week gone by. The Sensex and the Nifty have closed the week down by 2.05% and 2.28% respectively.

Apart from this, the government’s direct tax collection in 2012-13 has fallen short of the revised estimate by about Rs 17000 crore. This certainly points towards a gloomy economic scenario and the low collection would pose a challenge to the Finance Ministry’s efforts. The Centre’s revenue deficit is also set to miss the revised estimate (RE) of 3.9% of GDP.
Apart from this, the data for 8 core industries has been released recently. These industries have a combined weight of 37.90% in the index of industrial production (IIP). This index stood at 144.4 for the month of February 2013, and growth has contracted by 2.5% as compared to an expansion of 7.7% witnessed in the same month last year. The decline in growth in February 2013 can be attributed to the negative growth witnessed in electricity generation and in the production of crude oil, coal, natural gas and fertilisers.

On the global front, China’s Manufacturing PMI number for March 2013 stood at 51.6 as against 50.4 in the previous month. The pickup in the manufacturing sector indicates that the world’s second largest economy is showing recovery at a faster pace. The operating conditions in China are pretty good as of now, with the highest production levels in the last five months, the report says. The expansion in its economy is the second fastest in the last two years.

Gold prices fell by 1.96% in the bullion market this week. Silver too witnessed a decline of more than 5%.

Out of the 13 sectoral indices, 9 have ended in the negative territory. The main gainer is the BSE Healthcare Index, which closed with a gain of 2.50%. Following this is the BSE Oil & Gas index (+1.08%) and the BSE PSU index (+0.44%). On the other hand, the main draggers for this week were BSE FMCG (-3.30%), BSE Metal (-2.74%) and BSE Teck (-2.62%).

Money inflows from the FII front remained strong in the last week, as they pumped in Rs 2261 crore in equities. DIIs, however, ended the week in the red, selling off equities worth Rs 252 crore.

Going forward, the markets will be looking to the Q4FY13 results for some direction. Till then, the volatility we have been seeing of late may be expected to continue.