Holiday Cheer Eludes Indian Markets

The Indian markets closed the week in the red. The leading bellwether indices Sensex and Nifty closed the week lower, both declining by 1.61%. The markets started off on a positive note but failed to hold the momentum. For the preceding week, the markets had witnessed much volatility.

This week we saw the release of PMI data. The HSBC India manufacturing PMI stood at 50.7 in December against 51.3 in November, indicating the second month of consecutive improvement in the business environment. Manufacturing activity across the country rose for the straight second month, backed by the consumer goods sector. New orders placed across the manufacturing sector rose marginally in December, indicating improved domestic and overseas demand. The export orders registered growth for the third straight month.

Manufacturing employment rose marginal during December across all three broad areas. The overall inflation continued to be on the higher side. Input costs including that for raw materials increased marginally compared to that in the previous month. However, the prices of output rose for the seventh straight month consecutively. The current PMI data suggests a rise in purchasing activity across the country. However, the pre-production inventories fell for the first time since September with a moderate rate. Furthermore, the order backlogs increased again since the last announcement and reached a 6-month high.

Major auto companies came out with their sales numbers for the month of December 2013, continuing their downward momentum. This included most of the leading companies like Tata Motors, M&M, Maruti and Ashok Leyland. Even the two-wheelers space, which has been witnessing some up-move led by Hero MotoCorp, has reported a decline in the numbers for December 2013. You can read more about the auto sales figures for the month here: Dismal Auto Sales Numbers For December 2013.

On Thursday, January 2, the markets witnessed basket selling coupled with heavy volumes. This led to a sharp fall in the markets in the last half hour of trade, with the Sensex dipping by more than 250 points.

While the basket selling and persistently weak auto sales numbers were downers, FIIs continued to remain bullish on the Indian markets. Foreign inflows continued during the last week of the year gone by, taking their CY2013 tally to USD 20 billion.

Going forward, the next trigger that the markets will look out for are the quarterly results. Till then, the markets are likely to remain volatile and may trade in a range. Watch out for the Q3FY14 Earnings Previews of the different sectors on this site.