This week may seem to be a non-event for the markets on the onset but one major step taken by the Govt recently will go a long way in consolidating its fiscal position. Govt launched inflation indexed bonds. IIBs, as they are called, in an attempt to wean off local investors from gold. Gold, one of the crucial components of our trade deficit has been touching new highs as markets turned volatile, giving the establishment new headache every passing day. How far will IIB go in reducing the country's gold import bill, only time will tell. You can read about IIB here.
Monsoon is here. On June 1, it arrived in Kerala, two days ahead of its time. It is a well known fact that the monsoon rains are very crucial for India, one of the world's largest producers and consumers of food.
Sensex ended this week with a loss of 1.7%, while Nifty and CNX Midcap lost 1.8% and 0.2% respectively.
Monday - Sensex down by 0.8%, Nifty down by 0.8%, Midcap down by 0.1%
Markets continued its downward movement taking the cues from sub 5% GDP growth announced previous week, weakening in rupee and from the fact that FIIs were net sellers on Friday. The sentiment were further dampened by the results of private survey, PMI, conducted by HSBC which indicated slowdown in manufacturing activity. The survey, which measures the business activity in Indian factories excluding utilities, indicated that index eased to 50.1 in May 2013 from 51 in April 2013, due to fall in output and less new orders. The survey also suggested that employment rose at a slightly faster pace; input prices deflated and output prices declined for the first time since the global financial crisis.
In data released by govt after trading hours on Friday, fiscal deficit for FY13 came in lower at 4.9% of GDP against 5.2% budgeted (revised) in Feb 2013. Fiscal deficit for FY14 is budgeted at 4.8% of GDP.
Tuesday - Sensex down by 0.3%, Nifty down by 0.3%, Midcap up by 0.4%
Markets lost initial gains made earlier in the day as rupee strengthened a bit and ended slightly negative amidst the choppy trade marked by profit booking.
Wednesday - Sensex up by 0.1%, Nifty up by 0.1%, Midcap up by 0.3%
No strong movements occur during the day. Markets ended slightly up as investors turn to bottom fishing, bargain hunting as markets in other parts of Asia see heavy selling due to fear of reduction in stimulus spending from Fed.
Thursday - Sensex down by 0.2%, Nifty down by 0.0%, Midcap down by 0.1%
Absence of any big news flow kept the sensex rangebound. RIL's AGM previous day, was a dull affair with no big bang announcements. Mukesh Ambani made familiar noises about E&P and 4G business.
Friday - Sensex down by 0.5%, Nifty down by 0.7%, Midcap down by 0.8%
Markets are trading nervous as rupee seems to be heading southward. Global environment has turned cautious after Fed's indication of tapering of its stimulus spending in case US economy gains upward momentum.
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