Friday, May 31, 2013

Weekly Market Commentary - May 27 - May 31, 2013

We started the week with big bang news of another potentially huge discovery in KG-D6 by RIL and ended the week with weak, but expected sub 5% 4Q GDP numbers.

In the context of current Indian market performance, you can safely say that current volatility is the by-product of easy liquidity and uncertain economic environment. Every new economic data brings with it the question everyone is asking, whether this is the last of the bad news we are receiving. With every data release, we hear experts talking about Indian market bottoming out. But have we?

Current GDP figures are at decade low, consumption is showing decline, rupee is falling, RBI is dithering on rate cuts and Indian investor is choosing to stay away from stocks making our markets even more vulnerable to sudden FII outflow which could prove disastrous to the economy. This week sensex made a small gain of 0.3% while Nifty and CNX Midcap ended flat.

Monday - Sensex up by 1.7%, Nifty up by 1.7%, Midcap up by 1.2%
Sensex zoomed past 20K mark, gaining more than 350 points in the process. Main catalyst was Reliance Industries late Friday announcement of big gas discovery in KG D6 basin. Company is planning to start appraisal drilling soon to ascertain the amount of gas discovered. It remains to be seen how much of this gas, Reliance, can actually drill out commercially. Discovery also gives Reliance an additional weapon to strongly pursue market pricing of gas with govt. RIL, along with its partner BP are currently negotiating for higher price for their KG-D6 gas which is strongly contested by Petroleum Ministry and Fertilizer Ministry. There was also some short covering seen in the market, as current F&O contract expires this week.

Tuesday - Sensex up by 0.6%, Nifty up by 0.5%, Midcap up by 0.6%
Markets remained cautious ahead of GDP data announcement on Friday. Coal India, country's largest coal supplier, which reported earnings post market hours previous day, reported a jump of 35%, beating the consensus estimates, on the back of higher supplies and lower employee expenses. Company also announced its decision to hike prices by 10%.

Wednesday - Sensex down by 0.1%, Nifty down by 0.1%, Midcap down by 0.6%
No major movements in Sensex, as markets focus on Friday GDP data announcement and F&O expiry. Sun Pharma, country's top drugmaker by market value, reported 23% rise in 4Q profits and announced a bonus share issue.

Thursday - Sensex up by 0.3%, Nifty up by 0.3%, Midcap down by 0.1%
Sensex made small gain as investors cover up their position on the day of F&O expiry. Tata Motors and Mahindra & Mahindra beat the consensus estimates while ONGC reported a decline in 4Q profit on the back of lower sales and higher payment on statutory levies.

Friday - Sensex down by 2.3%, Nifty down by 2.3%, Midcap down by 1.0%
Markets went downhill as GDP grew at mere 4.8% in 4Q and 5% for full fiscal year 2013. Though, the street was expecting sub 5% GDP figure for 4Q, it was the comments from RBI which set the bearish tone pushing the investors towards the exit. RBI governor maintained it cautious stance suggesting that inflation data still has upward risk while current account position stays out of comfortable range. These comments deprived the market of any rate cut hopes in June meeting and led to selling across the board. Rupee also took the hit and is trading now at close proximity of 57 to a dollar.

Friday, May 24, 2013

Weekly Market Commentary - May 20 - May 24, 2013

This week saw even bigger movements in Sensex than previous week. Sensex moved almost 850 points between its low and high this week. Ben Bernanke's comments on halting its bond buying program aka stimulus spending send global markets in tailspin. Another issue that was on the mind of Indian investors was falling INR as US economic recovery gains pace, strengthening US dollar. Sensex fell by 2.9%, Nifty fell 3.3% while CNX Midcap dropped by 4.5%.

Monday - Sensex down by 0.3%, Nifty down by 0.5%, Midcap down by 0.7%
Markets tried to maintain its bullish momentum from previous week, but failed. Though market largely ignored the S&P downgrade warning, stocks went down as latest Ranbaxy scandal put the entire Indian healthcare sector on dock, which led the losses on Sensex.

Tuesday - Sensex down by 0.6%, Nifty down by 0.7%, Midcap down by 0.9%
Markets were nervous as bulls turned cautious ahead of the Ben Bernanke comments on Wednesday. In the recent times, FIIs buying has pushed the Sensex closer to its highs, with net buying of record $13.5bn this year alone. This highly speculative buying, abetted by easy liquidity, makes the Indian markets heavily dependent on any newsflow from US Fed.

Wednesday - Sensex down by 0.2%, Nifty down by 0.3%, Midcap down by 1.1%
Sensex was in negative again, as L&T results, barometer of performance of domestic economy, were weaker than expected. Company pared its orderbook guidance which raised the doubts on underlying economy fundamentals. Markets remained on shaky ground as investors booked profits ahead of Fed meeting.

Thursday - Sensex down by 1.9%, Nifty down by 2.1%, Midcap down by 2.1%
Sensex slumped around 400 points as Fed Chairman Ben Bernanke hinted at turning off the spigot of easy liquidity. Things were made worse as Rupee weakened on USD strength and SBI and BHEL posted weak 4Q results.

Friday - Sensex up by 0.2%, Nifty up by 0.3%, Midcap up by 0.2%
Markets tried to regain some ground as investors turned to bargain hunting. Overall breadth remained positive.

Friday, May 17, 2013

Weekly Market Commentary - May 13 - May 17, 2013

This was a rather volatile week for the markets. Sensex recorded more than 650 pts movement between its low and high for the week. Market experts made the familiar noises to explain the rationale: whenever market falls, call it profit booking and when it gains, call it FII buying or easy liquidity. Major highlights of this week were the CAD number which came higher than expectation, primarily on gold imports. Call it hedging or sentiments, but investors seems not heeding any call from PC. It also showed that our experts, including the FM has still not got handle of the situation. Markets had something to cheer about in form of lower inflation numbers which raised the hope of rate cut from RBI. Sensex recorded a gain of 1.0%, Nifty gained 1.5% while CNX Midcap rose by 2.2%

Monday - Sensex down by 1.9%, Nifty down by 1.9%, Midcap down by 1.6%
Markets saw heavy selling pressure on Monday as investors booked profits. The continuing rally snapped as trade deficit numbers rattled the markets. Country's April trade deficit increased to $17.8bn due to huge spike in gold imports. Gold imports increased by massive 138% yoy and 72% qoq to $7.5bn. The news of declining retail inflation to 9.39%, falling for second consecutive week, failed to cheer the markets. Retail inflation dropped due to decline in prices of vegetables, edible oil and protein-based items. CPI stood at 10.39% in March.

Tuesday - Sensex up by 0.2%, Nifty up by 0.2%, Midcap up by 0.5%
Markets stayed rangebound trying to recover from the carnage previous day. All eyes are on WPI data, which street expects to fall further to 5.3% in April against 5.96% in March.

Wednesday - Sensex up by 2.5%, Nifty up by 2.5%, Midcap up by 2.1%
Interest rate sensitive stocks such as banks, auto led the rally on the expectation/hope of a rate cut from RBI and took Sensex back to 20K. The headline inflation fell to 4.89%, lower than market expectation of 5.3%. Core inflation, or non food and fuel manufacturing inflation also declined to 2.74% in April 2013 from 3.41% in March 2013. Market sentiment also turned positive post RBI statement of taking note of falling inflation data when considering potential rate cuts.

Thursday - Sensex up by 0.2%, Nifty up by 0.4%, Midcap up by 0.6%
Markets consolidated a bit, but stayed positive, after huge rally in stocks previous day. Nifty closed over its 30 month high.

Friday - Sensex up by 0.2%, Nifty up by 0.3%, Midcap up by 0.5%
Markets had a choppy session. Overall breadth and sentiment stayed positive.

Friday, May 10, 2013

Weekly Market Commentary - May 6 - May 10, 2013

Markets continued its bullish trend as easy liquidity flows in; Bullish mood across the world financial markets after major central banks jumped on the global stimulus bandwagon to battle economic headwinds as well as record foreign fund flows had largely triggered the current round of rally. Sensex recorded a gain of 2.6%, Nifty gained 2.5% while CNX Midcap rose by 1.4%

Monday - Sensex up 0.5%, Nifty up 0.5%, Midcap up 0.9%
Markets stayed rangebound with positive tone on the back of FIIs buying shares in Indian companies.

Tuesday - Sensex up 1.1%, Nifty up 1.2%, Midcap up 0.9%
Sensex and Nifty both made their 13 weeks high as global liquidity keep flowing into Indian stocks. The government is looking to launch a Rs 20,000-crore share sale by divesting 10 per cent equity in Coal India, which will single-handedly meet half of this year's disinvestment target and is expected to be completed by September 2013.

Wednesday - Sensex up 0.5%, Nifty up 0.4%, Midcap flat
Sensex crossed the psychological level of 20,000 for the first time since Jan 31. Global liquidity keeps the shares buoyed.

Thursday - Sensex down 0.3%, Nifty down 0.3%, Midcap down 0.7%
Investors booked profits in some blue-chips that registered gains in last few sessions ahead of March IIP tomorrow and a weakening trend elsewhere in Asia and Europe.

Friday - Sensex up 0.7%, Nifty up 0.7%, Midcap up 0.3%
Sensex closed above 20,000 as India’s industrial production climbed 2.5% from a year ago after a revised 0.5% gain in February. The median of 26 estimates in a Bloomberg survey was for a 2.4% gain. The central bank forecasts economic growth will accelerate to 5.7% in the fiscal year through March 2014, compared with the baseline projection of 5.5% for the previous 12 months.

Friday, May 3, 2013

Weekly Market Commentary - Apr 29 - May 3, 2013

Markets continued its upward momentum this week and recorded gain of 1.5% in Sensex, Nifty gaining 1.2% while CNX Midcap rising 2.4%

Monday - Sensex up 0.5%, Nifty up 0.6%, Midcap up 1.2%
Markets went up as Hero Motocorp, HUL and Maruti posted good profits and beat the market estimates.

Tuesday - Sensex up 0.6%, Nifty up 0.4%, Midcap up 0.1%
Sensex made a 6 week high with Unilever announcing $5.4 billion program to raise its stake to 75% in HUL for 600/share. Markets went into negative territory when news of IMF downgrading India's GDP growth estimate from 7% to 6.1%. But markets recovered later when passing of Finance bill assured foreign investors that Tax residency certificate issued by foregin govt will be accepted as certificate of residence.

Wednesday - Markets closed on the occasion of Maharashtra Day

Thursday - Sensex up 1.2%, Nifty up 1.2%, Midcap up 1.2%
Expectations of an aggressive interest rate cut by RBI at its policy review meeting tomorrow and the Centre's recent decision to cut tax rates for foreign investors on interest income from investments in Government bonds and corporate debt to encourage capital inflows boosted market sentiment.

Friday - Sensex down 0.8%, Nifty down 0.9%, Midcap down 0.2%
Markets went down as profit booking occured in interest sensitive stocks. RBI cut its repo rate – key lending rate – by 25 basis points to 7.25 percent and kept the CRR intact at 4 percent in line with expectations. D Subbarao speaking after the announcement said the decision to ease the monetary policy rates was taken considering the steep deceleration in the economic growth.