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.