Week Ends Marginally Higher

The markets remained volatile in the week gone by, as they were predicted to be. The Sensex and Nifty closed the week with flattish gains of 0.52% and 0.44% respectively.

Tata Motors (TML) continued its downward journey. While its commercial vehicle sales dipped by 10.04% YoY in June 2013, its passenger vehicle sales were lower by a hefty 31.55%.

The success of Mahindra & Mahindra’s (M&M) XUV500 and the robust sales of other UVs propelled its numbers in FY13. However, due to the higher base, M&M’s sales witnessed a decline in June 2013. The total sales declined by 7.82%, with that of passenger vehicles (UVs plus Verito) down by 12.93%.

In another indication of slowing economic activity, the seasonally adjusted HSBC Services Business Activity Index for India fell to 51.7 for June 2013 from the 3-month high of 53.6 seen in May. Although a reading above 50 indicates an expansion in activity, it also shows a deceleration in activity and that the rate of growth has slowed down. Services companies registered weaker gains in new work, while production for manufacturers fell for the first time since March 2009.

India’s manufacturing activity is measured by the HSBC Purchase Manager Index (PMI), which saw a marginal improvement for the month of June 2013. This stood at 50.3 for the month of June 2013 against a forecast of 49.8 and down from the figure of 50.1 for May 2013. (A reading above 50 shows expansion in manufacturing activity whereas one below 50 indicates contraction.) The rise was led by an uptick in the export business, which went up by the sharpest rate since January 2013, as demand from key foreign clients strengthened.

Keeping the reforms processes on track, the government has approved 8 more Foreign Direct Investment (FDI) proposals worth around Rs 1311.54 crore. These were considered by the Foreign Investment Promotion Board (FIPB) in its June 14 meeting, and the approvals have come on the recommendation of the board.

On the global front, the Euro region comprising 17 countries (E-17) has reported a 0.3% fall in GDP in the first quarter of CY2013. The E-27 region has also seen a dip of 0.1%. On a YoY basis, the fall is 1.1% and 0.7% for E-17 and E-27 regions respectively, revealing that the Europe is far from growth at the moment. The US jobless claims data has also shown improvement.

Precious metals have witnessed healthy gains during the week. Gold and silver were up by 4.64% and 2.62% respectively for this week.

Money inflows from the FIIs remained subdued this week, as they bought equities worth Rs 619 crore. DIIs ended the week in the red, selling equities worth Rs 426 crore.

The Q1FY14 results that will start coming in later next week is the next trigger for the markets in the near term. However, looking at the current market sentiment, both domestically and globally, volatility would persist.