Weekly Market Commentary - Apr 28, 2014 - May 2, 2014

This one should be a quick one. Electricity woes made a big comeback in Ghaziabad. And we had two days of trying to conserve as much (power) we can – by stressing our invertor as little as possible. So, I had to delay my writing of this commentary and now I am doing it from my office so I should make this one quick.

All eyes are on results of general election to be announced on May 16. Market in short term will continue to be swayed by earnings results, inflation and other official economic stats released by govt – unless ofcourse Ukraine crisis turn into a major one. US has already put its economic (powerhouse) machine in motion – building pressure on Russia by way of sanctions. Let’s hope it does not escalate into something bigger and dangerous.

Sensex and Nifty ended this week down by 1.3% while Midcap was down by 0.8% 

Monday - Sensex slightly down by 0.2%, Nifty down by 0.3%, Midcap up by 0.7%
Cautious sentiment prevailed in the market as ongoing results season till date has shown increase in topline growth but decline in operating margins. Add to the mix the uncertainty of election outcome and you get a heady cocktail of increasing volatility. Investors also remained wary ahead of the U.S. Federal Reserve's two-day meet starting Tuesday, coming at a time of continued tensions between Russia and the West over Ukraine.

Tuesday – Sensex and Nifty down by 0.7%, Midcap down by 0.6%
Key benchmark indices closed lower as investors continued to book profits. Slowdown in capital inflows and MET forecast of below average rainfall continues to weigh on investors’ mind.

Wednesday - Sensex down by 0.2%, Nifty down by 0.3%, Midcap down by 1.3%
No change in sentiment visible on the street. Continues to be weighed down by global cues (read Ukraine crisis) and domestic uncertainties related to earnings season and elections.

Thursday – Markets closed on Maharashtra Day

Friday - Sensex slightly down by 0.1%, Nifty flat, Midcap up by 0.5%
Sensex and Nifty both continued their falling trend as profit booking increases and indices failed to attract fresh buying. All eyes are on outcome of general elections now.

Weekly Market Commentary - Apr 21, 2014 - Apr 25, 2014

As country made progress through election and earnings season, there is bound to be volatility in both main street and dalal street expectations and sentiments. As our elections have become more personality driven, our benchmark indices are also seeing activity specific to some stocks only. Whether the country or the markets will rise above the personality or stocks cult and will broaden its horizon will get clear only after elections are over and there is some clarity on what kind of leadership we are going to end up with.

Earnings results disappointments and MET warning have already made clear that we are not out of woods yet, and time has come for us to re-check our growth assumptions and turnaround hopes.

Sensex ended this week up by 0.3% while Nifty was flat and Midcap up by 0.7%

Monday - Sensex up by 0.6%, Nifty up by 0.6%, Midcap up by 0.8%
Benchmark indices rallied to their record highs led by surge in banking stocks ahead of their expected stronger results this week. Mining stocks also got relief from SC order to allow mining up to 20mt of iron ore per year in Goa leading to a bit of rally there. AstraZeneca India rose by more than 4% after the Sunday Times reported an expected bid of its parent company by Pfizer Inc for an estimated £60bn.

Tuesday - Sensex, Nifty and Midcap all ended flat
Sensex and Nifty rose to their record highs during the day but ended almost flat at the end of trading session as monthly derivative expiry advanced to Wednesday. Thursday is holiday for exchanges due to general elections voting in Mumbai on that day.

Wednesday - Sensex up by 0.5%, Nifty up by 0.4%, Midcap flat
Markets were in cheery mood on the day of derivative expiry as both Sensex and Nifty hit record highs for a third session in row. Indices were led by gains in infrastructure and banking stocks on hopes the worst was over in terms of deterioration in asset quality.

Thursday – Markets closed as Mumbai goes to polls for General elections

Friday - Sensex down by 0.8%, Nifty down by 0.8%, Midcap down by 0.1%
Key market indices took a beating on last day of the week as heavyweights such as ICICC Bank, Maruti Suzuki, Cairn India etc disappointed with their results. The earning shocker has sent the investors double checking their growth assumptions. MET department also worsened the sentiment after predicting lower than average rainfall this year.

Weekly Market Commentary - Apr 14, 2014 - Apr 18, 2014

Two steps back and one forward. That is pretty much how I will describe the action on Dalal Street this (short) week. IT stalwarts - Infosys and TCS reported better earnings but gave contrasting guidance, hence making sure the sector stayed volatile during the week. Throw in a bit of inflation and you have investors in every sector running for the corners. The thing about rallies built on hope and hype is that they don’t need much to fizzle. Remember, no matter how big the bubble is, you only need one small pin to burst it.

Sensex and Nifty ended the week at pretty much the same level as last week while Midcap down by meagre 0.2%

Monday – Markets closed on occasion of Baisakhi / Ambedkar Jayanti

Tuesday - Sensex down by 0.6%, Nifty down by 0.6%, Midcap down by 0.9%
Markets were down as inflation raised its head again and soared to three-month high figure of 5.7% in March - dashing hopes of any rate reprieve from central bank. Almost all interest rate sensitive stocks fell while IT stocks surged on the back of good earnings reported by Infosys.

Wednesday - Sensex down by 0.9%, Nifty down by 0.9%, Midcap down by 0.8%
BSE Sensex corrected another 200 points as fear of rising inflation was stoked by the predictions of below normal rainfall this year. IT stocks fell as Infosys guidance pointed to weak outlook for the sector. Retail inflation also rose in tandem with WPI to 8.31% in March, largely driven by higher food prices also made investors cautious.

Thursday - Sensex up by 1.6%, Nifty up by 1.6%, Midcap up by 1.5%
Benchmark indices roared back as banks surged on value buying and hopes of bond portfolio gain as RBI fully sold the Rs.200bn debt it had on offer. IT stocks also rose as TCS and HCL reported better than expected earnings with positive future revenue guidance.

Friday - Markets closed on occasion of Good Friday

Weekly Market Commentary - Apr 7, 2014 - Apr 11, 2014

India continues to benefit from lack of alternatives in emerging market space as I already mentioned in my earlier post. Due to limited options, FIIs are pouring money into Indian markets giving the economy disproportionate share of the EM flows.
It remains to be seen for how long this situation will continue. But till then..party ho ri bahut bhayankar! :)

Sensex ended this week up by 1.2% while Nifty was up by 1.2% and Midcap up by 2.5%

Monday - Sensex slightly down by 0.1%, Nifty flat, Midcap down by 0.3%
Benchmark indices closed slightly down as country begins voting for formation of new govt at the centre. Some investors booked profits as Sensex and Nifty breached new record levels in days approaching elections. Sun Pharma leads the gainers on Sensex as company announced its purchase of Ranbaxy in total equity deal of $3.2bn. There was some action seen in cement stocks also after Swiss company Holcim, which holds more than 50% stake in ACC and Ambuja cements announced merger with France’s Lafarge. The combined entity will become the largest cement maker in India.

Tuesday – Markets closed on Ram Navmi

Wednesday - Sensex up by 1.6%, Nifty up by 1.5%, Midcap up by 1.6%
Markets surged to a new high after a brief pause and a break in beginning of the week. Sun Pharma rose by more than 7% as brokers rushed to upgrade the stock after Ranbaxy buy. Most interest rate sensitive stocks gained as investors expects more benign inflation scenario in near term.

Thursday - Sensex up slightly by 0.1%, Nifty flat, Midcap up by 1.2%
BSE Sensex ended slightly higher as gains were capped by profit booking seen in IT stocks as earnings season commences from Apr 15. In addition, investors are cautious ahead of release of IIP data. Other Asian bourses also saw some selling as US markets ended lower on concerns of high valuation of some tech stocks.

Friday - Sensex down by 0.4%, Nifty down by 0.3%, Midcap down by 0.1%
Key Indices closed lower as investors prepares for earnings season and release of inflation data next week. Govt data released on Friday showed the trade deficit widening to $10.5bn in March from $8.1bn in Feb due to lower exports.

Weekly Market Commentary - Mar 31, 2014 - Apr 4, 2014

Elections are coming. This week was a crucial week for the market as it recorded the all time highs our benchmark indices have achieved. This week was also crucial, as its performance will be benchmarked against for comparison in near to medium term to analyze the hope rally. This week also marks the end of wait for the biggest exercise in world’s biggest democracy to begin. The results of this exercise will probably tell the investors – and rest of the country that whether optimism and hope rally did really have any strong legs or was it just another bubble based on euphoria around Narendra Modi.

Sensex and Nifty ended this week flat while Midcap was up by 1.5%

Monday - Sensex up by 0.2%, Nifty up by 0.1%, Midcap up by 1.1%
Indian stocks benchmark indices went up slightly and closed the fiscal year 2014 close to 20% higher than 2013 as strong foreign buying sparked a rally in stocks leveraged to domestic story. Market also expects RBI governor to hold interest rates on coming review meeting on Apr 1.

Tuesday - Sensex up by 0.3%, Nifty up by 0.3%, Midcap down by 0.3%
Sensex and Nifty continued to record new highs as RBI left interest rates unchanged and brought a relief to investors by saying that it may avoid any more policy tightening in near term.

Wednesday - Sensex up by 0.5%, Nifty up by 0.5%, Midcap up by 1.5%
BSE Sensex touched another high on the back of heavy FII buying and election commission allowing RBI to grant new bank licenses. Potential bank license candidates led the gainers with IDFC and LIC Housing Finance surging 4% and 5% respectively.

Thursday - Sensex down by 0.2%, Nifty down by 0.2%, Midcap down by 0.8%
Benchmark indices retreated from their all time highs as caution eclipse the optimism in the market as five-week election process draws closer. Investors booked profits as earnings season is also about to kick off with Infosys announcing its results on Apr 15.

Friday - Sensex down by 0.7%, Nifty down by 0.6%, Midcap flat
Market turned to profit booking on the last day of trading before election process begins (on Monday). IMF released a report saying that India’s economic mess is due to internal issues, strongly refuting the UPA govt’s claims blaming external macroeconomic environment for India’s problems.

Weekly Market Commentary - Mar 24, 2014 - Mar 28, 2014

Indian markets continued to zoom ahead as its peers in BRIC group faltered. Global investors – in search of better yields, seems to have gone full throttle on India in 2014 due to lack of other potential investment candidates.

Indian rupee has turned around dramatically in past eight months from being the worst performer among emerging market currencies to be the best performer. Strong fund inflows, positive economic data, shrinking current account deficit as well as easing inflation has helped the rupee and equities to move up with vengeance.

 

Problem with Russian equities is quite well known as investors continue to avoid them as global powers call for economic sanctions on the country in aftermath of Crimea annexation.

Brazil is facing somewhat similar political situation as India where current government has disappointed investors with their reforms pace and structure and market is preparing for a potential transition in October elections.

China, on the other hand, is facing prospects of recording its weakest growth since global financial crisis as manufacturing continues to disappoint. China released preliminary March factory survey data on Monday, which showed that manufacturing shrank for the third straight month. This release followed weaker-than-expected industrial output figures for January and February and a shocking fall in exports. Chinese Premier has asked investors to prepare for a wave of bankruptcies in the country.

Sensex ended this week up 2.7% while Nifty was up by 3.1% and Midcap up by 4.4%

Monday - Sensex up by 1.4%, Nifty up by 1.4%, Midcap up by 0.7%
Benchmark indices opened the week in positive territory with banking sector leading the pack. Hope rally continued in the last week of March as investors bet on 3Rs: Reforms, Recovery and RBI.

Tuesday - Sensex and Nifty flat, Midcap up by 0.8%
Markets broadly continued their upward momentum as benchmark indices touch all time highs during the day. Oil and gas stocks corrected a bit as Election Commission took cognizance of issue of gas price hike and asked Centre to defer it.

Wednesday - Sensex up by 0.2%, Nifty up by 0.2%, Midcap up by 0.6%
BSE Sensex continued its record-breaking steak and closed the day at all time high on the back of strong FIIs inflow. Rupee declined a bit as US recovery strengthens and PSU buy USD on behalf of RBI to prop up the reserve levels. However, sustained FII inflow restricted the decline in rupee value. Rupee is trading at its seven month ahead against the dollar.

Thursday - Sensex up by 0.5%, Nifty up by 0.6%, Midcap up by 0.3%
BSE Sensex rose to another record high as banking stocks gain ahead of expected favorable RBI rate policy review on April 1 and expected decision on Base III norm. Street expects RBI to keep the interest rates unchanged in this meeting as inflation and deficit data is in RBI’s comfortable range.

Friday - Sensex up by 0.6%, Nifty up by 0.8%, Midcap up by 1.9%
Key benchmark indices finished the week at record high – fifth consecutive day of record close. Markets continued moving upwards as RBI extended the deadline by another year for banks to implement Basel III capital-raising rules. RBI extended the deadline to Mar 31, 2019 as banks raised concerns on potential stress to asset quality.

Weekly Market Commentary - Mar 17, 2014 - Mar 21, 2014

Indian markets continued to have volatile sessions ahead of Indian elections due to lack of any other strong catalysts. US Federal Reserve attempts to increase short-term interest rates sooner than expected led to markets around the globe moving nervously. Any decline in interest spread between US and emerging markets may lead to decline in potential opportunities for yield-searching investments.

Sensex ended this week down 0.3%, Nifty was down by 0.2% while CNX Midcap was up by 1.3%.

Monday – Markets closed on occasion of Holi

Tuesday - Sensex up by 0.1%, Nifty up by 0.2%, Midcap up by 1.3%
Benchmark indices rose to their records highs but retreated later to settle almost flat. FIIs continue to put money in Indian blue chips ahead of Indian general elections. A small improvement in the industrial output and further lowering of inflation has also added to the positive mood on the street.

Wednesday - Sensex flat, Nifty up by 0.1%, Midcap up by 0.2%
Investor sentiment was subdued ahead of US Fed meeting later in the day. IT major TCS joined Infosys in flagging concerns about revenue growth in near term and indicated that growth could be weaker than previous quarters, which led to some profit booking in IT stocks.

Thursday - Sensex down by 0.4%, Nifty down by 0.6%, Midcap down by 0.8%
Stocks ended lower as Fed chairperson Janet Yellen hinted at raising interest rates sooner than expected and will affect the yield seeking investments. Indian capital goods, financial, auto and all other interest rate sensitive stocks ended the day lower.

Friday - Sensex up by 0.1%, Nifty up by 0.2%, Midcap up by 0.6%
Benchmark indices continued their positive momentum but ended the week only a tad higher on last day of the week.

The biggest risk in life...is not taking one

Hat Tip: Alpha Ideas

So, where are we, again?

Hat tip: The Reformed Broker

So where are we?

Interesting observation from Business Standard on past five year investment cycle in India.

"In the five years since the 2008 Lehman crisis, capital flow in equities and returns have followed a cycle. Immediately after the crisis, investors switched their focus to the domestic demand story, leading to a sharp rally in consumer goods and automobile companies. That story began to wane by early 2012 as the rupee began to depreciate, on account of a rising current account deficit and economic slowdown in India. Export or dollar revenue-driven companies in pharmaceuticals, information technology and some auto makers became the new darlings for equity investors.

The market has completed a full circle. In the past month, money has begun to flow to investment demand-driven stocks in capital goods, construction & infrastructure, real estate and banking, away from export-oriented sectors. The trigger has been an improvement in the current account deficit, rupee appreciation and expectation of a 'market-friendly' government after elections."

Read the full article here: Business Standard

Weekly Market Commentary - Mar 10, 2014 - Mar 14, 2014

Indian markets reported a weekly loss after ending three consecutive weeks in green. As expected, markets continued to stay volatile ahead of the elections, with somewhat positive momentum. It has been almost six months the key benchmark index, sensex trading above 20k level.

RBI review meeting on Apr 1 will be next key catalyst investors are focusing on. If RBI managed to cut rates, we may expect some more rally in cyclical especially banks and capital goods.

Sensex ended this week down 0.5%, Nifty was down by 0.3% while CNX Midcap was down by 0.9%.

Monday - Sensex up by 0.1%, Nifty up by 0.2%, Midcap up by 0.5%
Markets continued their positive momentum and sensex traded above 22,000 level for a while and closing at its new record high. Investors continued to show interest in cyclicals while defensives act as source of funds. Market is expected to stay volatile in days ahead of the election with a focus on economic data release on trade deficit, IIP, CPI and WPI in the near term.

Tuesday - Sensex down by 0.5%, Nifty down by 0.4%, Midcap down by 0.3%
Profit booking across the sector led to benchmark indices losing some ground. The fall in trade deficit failed to bring cheer to the market as the data showed decline in exports. The trade deficit lowered to $8.13bn in Feb, which is lowest in past five months.

Wednesday - Sensex up by 0.1%, Nifty up by 0.1%, Midcap down by 0.4%
Markets closed at almost flat as investors keenly await inflation data release. Inflation and industrial output data are key determinants of RBI interest rate policy that will be up for discussion on April 1.

Thursday - Sensex down by 0.4%, Nifty down by 0.4%, Midcap down by 0.7%
Benchmark indices climbed to their highs as govt releases inflation stats. Feb WPI inflation declined to 4.68% vs. 5.05% in Jan due to fall in vegetable and fuel prices. However, markets quickly gave up their gains as IT stocks declined after Infosys painted beak future of its business outlook. China’s missing of its industrial growth and retail sales target also add to the selling pressure in the markets.

Friday - Sensex up by 0.2%, Nifty up by 0.2%, Midcap flat
Indian markets traded weaker during most of the day like their asian and European counterparts on fears that China may be slowing down and standoff on Ukrain may continue or even escalate. But value buying in key sensex and nifty stocks during the end of the day led the benchmark indices closing in the green.

Weekly Market Commentary - Mar 3, 2014 - Mar 7, 2014

Both Sensex and Nifty ended this week at record all time highs. Investors, both domestic and foreign, are rushing in Indian markets to position themselves to benefit from an expected favorable election outcome. As I mentioned in my previous post, that favorable outcome is formation of stable NDA govt at the centre. With Congress losing its fight to retain prominence and AAP continues to use reality TV gimmicks to attract voters, NDA stock continues to rise.

As far as economics is concerned -- With India outperforming most of its emerging market peers in Feb, inflation declining, deficit numbers at four-year low and GDP growth bottoming out, India is definitely at a sweet spot.

Markets are expected to remain volatile in near term, as some people will book profits as markets rise while others will position themselves to benefit in a pre-election rally.

Sensex ended this week up 3.8%, Nifty was up by 4.0% while CNX Midcap was up by 4.1%.

Monday - Sensex down by 0.8%, Nifty down by 0.9%, Midcap down by 0.4%
War mongering in Ukraine sent investors’ mood around the world rolling down. World leaders unite in censuring the Russia’s move to send the forces in Crimea. Gold went up as fear and uncertainty rose. Indian markets ignored the improvement in HSBC PMI index – 52.5 in Feb vs. 51.4 in Jan, which indicated strongest manufacturing growth in last 12 months.

Tuesday - Sensex up by 1.3%, Nifty up by 1.2%, Midcap up by 1.3%
Benchmark indices bounced to their five-week highs as Russian President called back its troops back to their bases. Almost all sectoral indices ended up in green with cyclical leading the rally.

Wednesday - Sensex up by 0.3%, Nifty up by 0.5%, Midcap up by 1.4%
Markets continued their upward momentum. The benchmark Sensex closed just around 100 points away from its previous all time high. Investors have turned bullish ahead of general elections and have largely ignored the weakness in European markets.

Thursday - Sensex up by 1.1%, Nifty up by 1.1%, Midcap up by 1.4%
Benchmark indices soared past their earlier peak and set new record highs on the back of strong bullish investor sentiment as current account deficit numbers came at four-year low. With December CAD at 0.9% of GDP, exports picking up and gold imports subdued market is hopeful that the rupee will get a boost and FII inflows will increase.

Friday - Sensex up by 1.9%, Nifty up by 2.0%, Midcap up by 0.4%
Markets extended their winning streak and ended the week with all time record highs on the back of lower CAD numbers and increased fund flows from both domestic and foreign investors. Almost all indices ended the week in green barring IT and healthcare as investors churn their portfolios from export driven to domestic cyclical stories.

Bubble Trouble

The best way to spot a bubble is when everyone and his uncle start trading investment tips and predicting the next sensex or nifty level. We faced such times during late 2007-early 2008 duration. It seems everyone was on the bandwagon and was busy discussing Reliance Power IPO.

I present a chart below which shows that Indian markets are still far away from attracting volumes and interests they generated during 2007 bubble phase.

When indices makes new highs on the back of lower volumes, it is generally due to more institutional investment in high value stocks. Maybe that's why CNX Midcap is still far away from its record highs.

Time will only tell whether this rally has more legs.

Weekly Market Commentary - Feb 24, 2014 - Feb 28, 2014

If one goes by the direction of the market, it seems that nation (investor populace mostly) has already made up its mind regarding the outcome of Lok Sabha elections. Continuous upward momentum indicates the increasing expectations of a stable NDA government in the centre. NDA govt is widely expected to undo the decade of policy paralysis and junking of pro-growth model of development and replace it with one with more pro-market flavor.

Sensex ended this week up 2.0%, Nifty was up by 1.4% while CNX Midcap was up by 1.8%.

Monday - Sensex up by 0.5%, Nifty up by 0.9%, Midcap up by 0.4%
Markets continued to move up as buying interest emerged in capital goods and banking sector stocks on the back of favorable policy measures and reduced deficit numbers announcements by outgoing UPA govt.

Tuesday - Sensex up by 0.2%, Nifty up by 0.4%, Midcap up by 0.1%
Benchmark indices were able to hold ground after a volatile session as F&O contracts near their expiry on coming Wednesday. The optimism about US recovery led to higher closing of IT stocks.

Wednesday - Sensex up by 0.6%, Nifty down by 1.0%, Midcap up by 0.2%
Sensex regained 21,000 mark as foreign funds continued to flow in Indian equities. Stocks also gained as traders due to short covering on F&O expiry day.

Thursday – Exchanges closed on Maha Shivratri

Friday - Sensex up by 0.6%, Nifty up by 1.1%, Midcap up by 1.2%
Markets closed higher ahead of GDP data release for quarter ending December. A Bloomberg poll showed the growth expectations to be 4.7% as against 4.8% in September quarter. Mood was also positive as Fed Chairperson Janet Yellen indicated that Fed would continue its tapering program in a measured way.

Weekly Market Commentary - Sept 2 - Sept 6, 2013

Raghuram Rajan joined at a time when India is reeling under worsening deficit situation, falling forex reserves (lowest in three years) and deteriorating investment climate. Markets gave a warm welcome to his taking charge as it expects liberal policies and easing of monetary policies. Sensex zoomed 3.5% while Nifty gained 3.8% and CNX Midcap was up by 2.7% this week.

Monday - Sensex up by 1.4%, Nifty up by 1.4%, Midcap up by 1.7%
Markets continued their positive momentum as global stocks rose amid Chinese PMI data increase. Recent spate of reforms introduced in the economy by Finance Minister has buoyed the investor sentiment.

Tuesday - Sensex down by 3.4%, Nifty down by 3.8%, Midcap down by 2.3%
Ongoing crisis in Syria reached a new low as Russia reported missile firing by Israel on its ally. The news led to oil zooming, rupee falling and bloodbath in domestic markets. Indian market was also impacted by S&P credit downgrade warning of Indian economy owing to rising deficits and weaker currency, which again crossed 68 levels against the dollar. The rating agency said there is one in three chances of rating downgrade. To add to India’s misery, Goldman Sachs also cut India’s growth forecast to 4% from 6% earlier and predicted fall of rupee to 72 against the USD.

Wednesday - Sensex up by 1.8%, Nifty up by 2.0%, Midcap up by 1.0%
Markets recovered after previous day’s carnage with some value buying across the industries. The missile firing reports also turned out to be tests rather than war cry as Russian media reported. Realty stocks fell as RBI asks banks not to disburse the full loan amount for an under construction property. It said loan disbursal should be linked to construction schedule of the property.

Thursday – Sensex up by 2.2%, Nifty up by 2.7%, Midcap up by 1.7%
Markets gave a big welcome to Raghuram Rajan as he took charge of RBI. Rajan hit the ground running and announced steps to defend the falling value of Indian currency and measures to unshackle the overall economy. You can read his full speech here.

Friday – Sensex up by 1.5%, Nifty up by 1.6%, Midcap up by 0.6%
Overall market sentiment remained positive as RBI announcements indicated strengthening rupee and easing monetary tightening introduced by RBI recently.

Weekly Market Commentary - Jun 24 - Jun 28, 2013

There is a thing with democracies. They squabble over issues/decisions, slows down progress, are mostly unable to reap the benefits of good times and sometimes take action to soothe one interest group which works as detrimental to rest of the country, before realizing it is too late. More often than not, reforms happened with the gun pointing at their head. It was balance of payment crisis in 1991, this time rising deficits and sliding rupee did the trick. Govt finally got its act together and bite the bullet over gas pricing. The war is not yet over as markets are looking at rising external debt. 44% of total external debt is maturing in the next one year which, if not restructured, will eat into 59% of total foreign exchange reserve country has. Chart below, from Livemint, illustrates the situation better.

Sensex ended this week up 3.3%, while Nifty gained 3.1% and CNX Midcap was up by meagre 0.3%.

Monday - Sensex down by 1.2%, Nifty down by 1.4%, Midcap down by 2.6%
Market extended their losses from previous week as the global stocks continue to slid post Fed announcement of curtailing its bond buying program. Market seems to be ignoring the ifs and buts in the announcement and is running havoc with no plan in sight. Markets were also nervous when Chinese central bank made comments to the effect that liquidity in the system is reasonable, when China is facing liquidity squeeze. Central bank suggested fine tuning the system, which market assumed as reducing liquidity. Shanghai went down more than 5%.

Indian markets mirroring their global peers, are also under pressure due to rising CAD worries and fall in currency value. Brokers are of the view that FIIs have sold over $5 billion of debt and equities in June so far.

Tuesday - Sensex up by 0.5%, Nifty up by 0.3%, Midcap down by 0.6%
The Indian stocks went up in early trade as China tries to soothe investors’ nerves, short covering as F&O expiry nears. Markets also bought oil and gas stocks ahead of pending decision on gas price revision. Gas price were supposed to be revised previous week itself but the decision was deferred as Oil Minister was out for an official tour.

Wednesday - Sensex down by 0.4%, Nifty down by 0.4%, Midcap down by 0.0%
The Chinese central bank move to provide liquidity to some parts of its financial system to stabilize money market rates cheered the global market. Indian markets had a rangebound session as good news from China, short covering due to nearing F&O expiry was completely offset by rupee playing a spoilsport sliding below 60/$ level.

Thursday - Sensex up by 1.7%, Nifty up by 1.7%, Midcap up by 0.7%
Sensex and Nifty rallied as investors cheered the downward revision on US GDP data from 2.4% to 1.8%, which eased the concerns of reduced Fed spending. RBI also took advantage of this news and advanced its release of CAD data by one day. India's March quarter CAD came at $18.1 billion, 3.6% of GDP vs. consensus estimate of $21.7 billion or 4.4% of GDP. Corresponding figure for December quarter was 6.7%. The FY13 CAD stood at $88.2 billion and the Q4 Balance of Payments (BoP) stood at a surplus of $300 billion versus a $600 billion deficit year-on-year. Short coverings on the last expiry day of June series also buoyed the market.

Friday - Sensex up by 2.8%, Nifty up by 2.8%, Midcap up by 2.9%
Indian markets rallied as govt got its act together and approved doubling of gas prices from current $4.2/mmbtu to $8.4/mmbtu. The gas price decision was in limbo for several months now as various govt ministries, such as fertilizer, power and oil quarrel over the impact on their respective sectors. This decision was in tandem with the recent approval to power producers to pass on the imported coal cost to the consumers. The new gas pricing will get into force from April 1, 2014 and will work to attract investments in the sector as it makes several projects, big or small, across the country even more economical.

Rupee also rebounded to 59 levels after govt announced reforms to attract investments in the country and reduce country's dependence on imported gas (fuel). Govt has also initiated towards setting up of a coal regulator to settle disputed over quality and quantity of coal sold in the Indian markets. The poor quality of coal has led to squabbling between the country's premier energy producer NTPC and largest coal producer Coal India.

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.

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.