Weekly Market Commentary - Aug 18, 2014 - Aug 22, 2014

PM Narendra Modi’s maiden Independence Day speech did well to excite Indian citizens with prospects of wonderful days ahead and enthuse investors to pour money into the Indian markets.

One thing is for sure, India is no longer business as usual. Things are changing, albeit at a slower pace than some expected, but it is changing. More and more projects are been given green light – without losing the focus on environmental issues, societal changes have been signaled without ruffling the opposition’s feathers and efforts are been made to drastically cut down the red tape and make India one of the world’s favored business destination (WB ranks us at 134 out of 189 economies ranked).

Modi also send the last reminiscent of India’s attempt of mimicking Soviet’s command economy – Planning Commission packing. With Planning Commission gone, the focus turns back to decentralization of Indian economy with states getting even more financing powers and autonomy going forward.

Sensex ended this week up by 1.2% while Nifty was up by 1.6% and Midcap up by 3.6%

Monday - Sensex up by 1.1%, Nifty up by 1.1%, Midcap up by 1.7%
Investors cheered as PM Narendra Modi delivered his maiden Independence Day speech where he vowed to make radical changes in the way country is run especially the bureaucratic setup. The news of declining WPI to five- month low and easing of tensions over Ukraine also boosted the positive sentiment.

Tuesday - Sensex up by 0.1%, Nifty up by 0.3%, Midcap up by 1.0%
Both Sensex and Nifty continued their journey upwards as oil retailers surged after Brent hit its 14-month low. FII sentiment is buoyed by positive noises made by Modi govt. on reforms and strong trust on RBI governor Raghuram Rajan’s ability to tackle exchange rate crises and inflation. Falling crude prices have also added to the bullish sentiment as India’s import burden eased.

Wednesday - Sensex down by 0.4%, Nifty down by 0.3%, Midcap up by 0.3%
Benchmark indices corrected after rallying continuously for six days as investors booked profits ahead of scheduled US Fed meeting on Thursday.

Thursday - Sensex up by 0.2%, Nifty up by 0.2%, Midcap up by 0.4%
Both Sensex and Nifty edged higher as FIIs continued to pour money in Indian markets, especially in blue-chips reflecting continued optimism about corporate earnings and a recovery in the domestic economy. Slipping in crude oil prices as China reported slowdown in its huge factory sector also helped the sentiment.

Friday - Sensex up by 0.2%, Nifty up by 0.3%, Midcap up by 0.2%
Nifty closed at its all-time high of 7,913.20 points led by IT stocks - which rallied on the news of improving prospects of US economy, and banks rose as RBI looks into reviewing lending caps to align them with global standards set by Basel committee.

Weekly Market Commentary - Jul 28, 2014 - Aug 1, 2014

Sensex ended this week down by 2.5% while Nifty was down by 2.4% and Midcap down by 0.2%

Monday - Sensex down by 0.5%, Nifty down by 0.5%, Midcap down by 0.3% 
Investors continued to book profits in the blue chips names ahead of the derivative expiry this week. RBI monetary policy review on next Tuesday will be the next catalyst for Indian stocks.

Tuesday – Markets closed on Id-Ul-Fitr (Ramzan Id)

Wednesday - Sensex up by 0.4%, Nifty up by 0.6%, Midcap up by 0.7% Markets went up slightly after Bharti Airtel, Lupin Ltd and Dr Reddy's Laboratories Ltd posted results better than street expectations. The gains were capped ahead of derivative expiry, expected Fed statement later in the day and lower than consensus L&T results.

Thursday - Sensex down by 0.7%, Nifty down by 0.9%, Midcap up by 0.1% Markets fell on the derivative expiry day weighed down by FII sales after not so impressive numbers from Maruti Suzuki and HCL Technologies. Cadila Healthcare also slumped 4.5% USFDA made certain observations after conducting a "product specific" inspection of its Moraiya manufacturing plant.

Friday - Sensex down by 1.6%, Nifty down by 1.5%, Midcap down by 0.7% 
Sensex and Nifty declined nearly by 1.5%, marking their biggest single-day fall in nearly 3-1/2 weeks in tandem with global market peers ahead of U.S. jobs data. Some analysts are anticipating that a strong US job report will prompt Fed towards interest rate hike, effectively slowing down the interest rates fueled rally across the globe.

Weekly Market Commentary - May 5, 2014 - May 9, 2014

And Sensex does it again. Indian markets driven by huge expectations from the coming (hopefully) BJP govt got a major spurt when PM candidate Narendra Modi declared on prime time that his party will form the most stable and strong govt in Indian history after Rajiv Gandhi. You can watch the full interview here. Any party to get a clean majority needs to score atleast 272 seats in general elections. Many exit polls and election survey predicts that there are chances that BJP (or current form of NDA) will do better than that.

A stable and decisive govt at the centre will certainly raise hopes of Indian investors, as trillions of rupees worth of projects are gathering dust in various govt departments waiting for approvals. Any govt formation that will expedite project approvals, unshackle the invested capital and get new (or better) jobs for our aspiring citizens is certainly welcome by public and businesses alike.

Sensex ended this week up by 2.6% while Nifty was up by 2.4% and Midcap up by 1.6%

Monday - Sensex up by 0.2%, Nifty slightly up by 0.1%, Midcap flat
Markets recovered a little after continuously falling over past five sessions. Sentiment although remains bearish as regional shares falls on news that China's April PMI has contracted for fourth consecutive month.

Tuesday - Sensex up by 0.3%, Nifty up by 0.2%, Midcap up by 0.2%
Investors showed some confidence in Indian stocks as key benchmark indices rose to touch its week high. HSBC PMI index showed some improvement (48.5 in Apr vs. 47.5 in Mar) but still languished below 50 mark indicating contraction, not growth, keeping hopes of expansion in hiring activities at bay.

Wednesday - Sensex down by 0.8%, Nifty down by 0.9%, Midcap down by 0.2%
Sensex and Nifty plunged due to heavy selling in IT counters amid weak global cues and rupee hitting a month high against US dollar. Investors are keeping an eye on US Fed testimony in congress related to continuous decline in value of USD while continuously hoping that tensions in Ukraine do not escalate into a full-fledged war.

Thursday - Sensex up by 0.1%, Nifty up by 0.1%, Midcap down by 0.2%
Investors continued to stay cautious as Indian general elections entered its last phase. BSE Sensex and Nifty recovered slightly from their recent lows as investors picked up some of the battered stocks. Indian market also got some sentiment uplift from dovish comments by US Fed Chair and upbeat Chinese trade data that suggested some signs of recovery in the world's second-largest economy.

Friday - Sensex up by 2.9%, Nifty up by 3.0%, Midcap up by 1.9%
Sensex and Nifty surprised all watchers as indices soared to touch their all time highs amidst weak trading sentiment ahead of election results. BJP’s PM candidate Narendra Modi’s interview previous night – where he declared that his party is getting clear majority probably lifted the mood of investors. Investors bought stocks in droves as country nears the closing of more bitterly contested general elections in its history on Monday.

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 - 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.

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 - Feb 10, 2014 - Feb 14, 2014

Highlights of this week will be the growing contrast between US economy, which has shown some strong signs of recovery in their economy, and Indian story, whose biggest facilitator public sector banks have started crumbling under the weight of increasing NPAs. The chance of some bank going under or requiring state assistance or bail-out have become very strong since United Bank of India story went out. State Bank of India’s weak results is indicator of how deep the mess is.

It is India’s worst kept secret that our public sector banks (and their investors) are suffering under crony capitalism –which reached its zenith under UPA regime. It is a high time now when our banking regulator – RBI may take a leaf out of its Governor Raghuram Rajan’s widely read book “Saving Capitalism from the Capitalist”- rolls up its sleeve and gets our banks out of clutches of this govt-crony nexus.

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

Monday – Sensex down by 0.2%, Nifty down by 0.2%, Midcap down by 0.3%
Markets continued their lackadaisical performance as earnings season continues without any major surprise. Investors continued to book profits on IT and banking sectors. Beginning of two-day nationwide strike by public sector bank staff also affected the trading on banking counters.

Tuesday - Sensex up by 0.1%, Nifty up by 0.2%, Midcap up by 0.1%
Indices rose slightly led by two Tata group companies. Tata motors rose the most in two months after its quarterly profit tripled. Tata Steel Ltd gained to its highest level in three weeks before its earnings report. The gains in Sensex were offset by fall in RIL shares after Delhi Chief Minister Arvind Kejriwal filed an FIR against Mukesh Ambani.

Wednesday – Sensex up by 0.4%, Nifty up by 0.4%, Midcap flat
Markets rallied after US Congress agreed to advance legislation extending US borrowing authority. Also, newly appointed Fed Chairman Janet Yellen held off from making any changes to tapering schedule set the Asian shares soaring.

Thursday – Sensex down by 1.2%, Nifty down by 1.4%, Midcap down by 1.3%
Earnings disappointment in Cipla and Coal India stocks dragged the benchmark indices down. Also, govt released data indicated that industrial output contracted by 0.6% in December meaning all is still not well with the economy although retail inflation did ease to its two year low of 8.79%.

Friday – Sensex up by 0.9%, Nifty up by 0.8%, Midcap up by 0.3%
Sensex rose on last day of the week as some traders rushed to cover their shorts ahead of presentation of interim union budget next week. Meanwhile, January WPI numbers came at 5.05% vs. 6.2% in December, lower than ET-Now poll estimate of 5.5%.

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

Indian investors seem to have become defensive, as no new strong catalysts seem to emerge before elections in May. In fact, some of them are worried that current establishment may play a populist card to garner as much voting support as it can. The 70,000 crores farm loan waiver that UPA govt doled out is still bleeding the public sector banks’ balance sheets.

FIIs are already closing out positions in India and are avoiding fresh positions till elections. They have cut their positions worth $340mn since US Fed decided to cut its stimulus package further by $10bn on Jan 29.

Indian markets are expected to be “source of fund” for FIIs in coming months as they put their money in other markets where current environment is more congenial.

Sensex and Nifty ended this week with losses of 0.7% and 0.4% respectively while CNX Midcap fell 0.8%.

Monday – Sensex down by 1.5%, Nifty down by 1.4%, Midcap down by 1.1%
Markets continued their weak performance from previous week with Sensex falling more than 300 points as China manufacturing slowdown coupled with US Fed’s cut in stimulus spending sent caution among the foreign investors across the globe.

Tuesday - Sensex and Nifty flat, Midcap up by 0.4%
Indices recovered a little as investors cover their shorts and some value emerged during the end of the day. FIIs continued to stay net sellers and are expected to avoid any fresh buying before elections.

Wednesday – Sensex up by 0.2%, Nifty up by 0.4%, Midcap up by 0.6%
Markets stayed beaten down with no fresh buying seen across most of the counters. Short covering led to the up movement in some of the indices stocks.

Thursday – Sensex up by 0.2%, Nifty up by 0.2%, Midcap up by 0.3%
Market inched towards its week high as FIIs turned net buyers. Bargain hunting is leading to small gains in the indices as Indian markets continues to practice caution like other emerging markets ahead of US non-farm payroll data.

Friday – Sensex up by 0.3%, Nifty up by 0.4%, Midcap up by 0.7%
Markets ended the day at its week high as all emerging markets took cue from small US rally previous day. US stocks rallied ahead of non-farm payrolls data as unemployment benefit applications declined which is as indications of improving labour market and US recovery.

Weekly Market Commentary - Jan 6, 2014 - Jan 10, 2014

Trading activity remained muted for most of the week only to be picked up at the end of the week with starting of 3Q earnings season. Apart from ongoing earnings season, markets will also see release of CPI and WPI data next week, on which RBI’s interest rate policy hinges. Govt is also expected to come up with stake sales of IOC and Engineers India this month and BHEL, HAL in next to meet its disinvestment target of Rs 40K crores.

Sensex fell by 0.4%, Nifty lost 0.6% while CNX Midcap was down by 1.9% this week.

Monday – Sensex down by 0.3%, Nifty down by 0.3%, Midcap up by 0.3%
Market activity remains muted in absence of any catalysts. Most Asian stocks traded lower, as an index of China's services industry declined last month, and did not rise even after Fed reiterated its stand of accommodative monetary policy.

Tuesday - Sensex down by 0.5%, Nifty down by 0.5%, Midcap down by 0.9%
Investors seems to sit out on sidelines as they wait for minutes of Fed meeting and starting of earnings season on Friday which street expects to be weak.

Wednesday – Sensex up by 0.2%, Nifty up by 0.2%, Midcap up by 0.5%
Indian markets recorded their first gain of 2014 as most Asian stocks traded higher after the IMF said it would raise its estimate for global economic growth. Also, the recovery seen in US as their trade deficit narrows augurs well for Indian export stories.

Thursday – Sensex down by 0.1%, Nifty down by 0.1%, Midcap down by 0.8%
Markets closed lower on a day ahead of 3Q earnings season commencement. Street expects results to be weak though slightly better than previous quarter.

Friday – Sensex up by 0.2%, Nifty up by 0.1%, Midcap down by 1.0%
Markets cheered Infosys’ better than expected results and set the IT stocks zooming. The company also raised its FY14 dollar revenue guidance as it sees improvement in US business environment and confidence.

Weekly Market Commentary - Dec 23 - Dec 27, 2013

2013 is coming to close. Markets registered a gain on last week of this year as it did in the first week of this year. Highlights of this year were all the noise around QE tapering from US Fed that led to a roller coaster ride for our currency and stock markets. Although, it all turned out to be a whimper but it did give a wakeup call to Indian govt. to get its act together. Add to all this mayhem the cancellation of POSCO and ArcellorMittal plans to setup plants in India, scams, inflation, gang rapes, policy paralysis, rating downgrade warnings and uncertainty around elections. So, there was the ground, seven layers of shit and then us.

Nonetheless, our markets recovered their old glory as Sensex made new highs. Market rejoiced as veterans returned to take care of their broken legacies; stalwarts were appointed to guide our way through fiscal mess, save rupee and general public from scourges of inflation; and anti-corruption wave made way for more business friendly governments and ushered into a new era as a one year old party made people realize that their voices are not unheard.

As many of the above problems have remained unsolved, hope has emerged as country prepares to elect its new leadership in 2014. Let us hope for an even better and interesting 2014.

I wish a very happy and prosperous new year to my readers.

Sensex gained 0.5%; Nifty gained 0.6% while CNX Midcap was up by 2.5% this week.

Monday – Sensex up by 0.1%, Nifty up by 0.2%, Midcap up by 1.1%
Upward movement during the first half of the trading day was capped by late selling seen in Infosys, which saw exit of another key management personnel, HDFC, which saw some profit booking after RBI said inflation fighting is still their topmost priority. Market momentum stayed bullish as global indices firmed up though some volatility generally increases near F&O expiry date.

Tuesday - Sensex down by 0.3%, Nifty down by 0.3%, Midcap up by 0.5%
Markets remained choppy as investors stayed cautious ahead of F&O expiry on Dec 26. Global markets also remained range-bound due to light trading activity ahead of holiday season.

Wednesday – Markets closed on occasion of Christmas

Thursday – Sensex up by 0.2%, Nifty up by 0.2%, Midcap up by 0.2%
Trading activity was mute on the F&O expiry day. Axis Bank rallied surged after the Cabinet Committee on Economic Affairs (CCEA) approved proposal to increase foreign investment in the bank from 49% to 62%.

Friday – Sensex up by 0.6%, Nifty up by 0.6%, Midcap up by 0.7%
Market closed the week higher led by gains in export-oriented sectors such as IT and Pharma as US data showed improved recovery in employment situation. Banks and FMCG also gained as street expects inflation data to be lower in January and RBI to maintain status quo on rates.

Weekly Market Commentary - Dec 16 - Dec 20, 2013

Quite a week for Indian markets. With Fed’s tapering decision out of the way and uncertainty related to Indian govt’s stand on KG D6 gas price revision cleared, investors and business got another major sentiment boost from RBI governor who decided not to raise rates even in the midst of rising inflation. Therefore, what resulted is Sensex regaining 21,000 level while focus now shifted to food inflation data, which, if strengthened, may warrant a rate hike from RBI.

Sensex gained 1.8%; Nifty gained 1.7% while CNX Midcap was up by 3.1% this week.

Monday – Sensex down by 0.3%, Nifty down by 0.2%, Midcap up by 0.4%
Sensex failed to gain ground as impending rate hike concerns, post high inflation numbers, have kept the street nervous. Street is widely expecting a repo rate hike of 25bps to 8.00% in Dec 18 policy review. Recent govt data shows that costly vegetables, particularly potato and onion has pushed the November WPI to 7.52% from 7% previous month while CPI has jumped to 11.24% warranting inflation controlling measures from central bank.

Tuesday - Sensex down by 0.2%, Nifty down by 0.3%, Midcap down by 0.1%
Markets traded in the narrow range as investors stayed cautious ahead of RBI policy review meet on Wednesday.

Wednesday – Sensex up by 1.2%, Nifty up by 1.3%, Midcap up by 1.5%
RBI sprung a surprise as it decided to maintain the status quo and left the rates unchanged. Investors’ sentiments turned bullish as RBI governor Raghuram Rajan indicated lowering of inflation in near term due to falling vegetable prices but promised to act if inflation did not subside as expected.

Thursday – Sensex down by 0.7%, Nifty down by 0.8%, Midcap down by 0.4%
There was some selloff as Fed announced $10bn of tapering every month. Neither the selloff nor the tapering decision came as a surprise. Federal Open Market Committee (FOMC) expects that with appropriate policy accommodation, economic growth will pick up from its recent pace and the unemployment rate will gradually decline.

Friday – Sensex up by 1.8%, Nifty up by 1.7%, Midcap up by 1.7%
Markets went up as Fed’s QE tapering decision is finally out of its way and as expected did not have major impact on either stocks or currency. Sensex got a major boost as govt. finally cleared Reliance Industries’ demand of higher gas prices while asking them to deposit a guarantee equivalent to any incremental revenue. With this decision, govt has cleared lot of uncertainties in the oil and gas industry and made easier for foreign companies to invest in India.

Weekly Market Commentary - Dec 2 - Dec 6, 2013

Indian investors are a happy lot this week. Though tapering sword is still hanging over bullish investor sentiments, it seems investors have lot to rejoice over the coming days. Not just exit polls have sounded a victory for their favorite PM candidate, but it has also forced the govt. to increase the pace of their reforms as a last ditch effort to thwart the current anti-incumbency wave in the country. Govt. is back to its disinvestment ways to fill the deficit gap and is likely to make some reform announcements benefitting power and sugar industries.

Sensex gained 1.0%; Nifty gained 1.4% while CNX Midcap was up by 1.1% this week.

Monday – Sensex up by 0.5%, Nifty up by 0.7%, Midcap up by 0.7%
Markets cheered the 2QFY14 GDP growth of 4.8% vs. 4.4% in previous quarter, according to data released by govt. The growth numbers were in-line with street estimates. Also, HSBC PMI index recorded improvement in manufacturing activity for the first time since July. The Index for the manufacturing industry climbed to 51.3 in November from 49.6 in previous month.

Tuesday - Sensex down by 0.2%, Nifty down by 0.3%, Midcap flat
Markets ended up lower as investors resorted to profit booking and cautiousness ahead of Fed’s job report expected at the end of the week. Any improvement in the job recovery may lead to decision in favour of tapering of QE by Federal Reserve. Investors also stayed cautious as India’s capital, New Delhi prepares for polls next day. Even a good announcement from RBI was unable to lift the mood of the market. RBI announced that India’s current account deficit (CAD) narrowed sharply to $5.2bn or 1.2% of GDP in 2Q, from $21bn or 5% last year.

Wednesday – Sensex down by 0.7%, Nifty down by 0.7%, Midcap down by 1.0%
Market sentiments were weak as rise in crude prices added to inflationary concerns. Investors raised concerns that this may lead RBI to raise rates again raising the cost of doing business in the country.

Thursday – Sensex up by 1.2%, Nifty up by 1.3%, Midcap up by 0.8%
Markets went up and regained 21,000 levels as exit polls showed BJP coming to power in at least 4 out of 5 states that had elections recently. BJP is widely viewed as business friendly party among the host of other parties contesting the elections. Any success in state elections will be a testimony of BJP Prime Ministerial candidate Narendra Modi’s popularity and acceptance.

Friday – Sensex up by 0.2%, Nifty up by 0.3%, Midcap up by 0.5%
Exit polls results kept markets up and gave boost to the idea that congress might try to get more reform measures passed in the run up to the main elections in May 2014.

Weekly Market Commentary - Nov 18 - Nov 22, 2013

Fed’s tapering stayed the talk of the town as markets look exhausted due to lack of any domestic or global cues. The question of will they cut or will not and when continues to linger over the market’s direction.

Sensex lost 0.9%, Nifty lost 1.0% and CNX Midcap was down by 0.9% this week.

Monday – Sensex up by 2.2%, Nifty up by 2.2%, Midcap up by 1.3%
Market continued to rally after Janet Yellen new chair of Fed Reserve allayed fears over QE tapering. Also, RBI governor Rajan’s statement to have an accommodative liquidity stand strengthened the rupee and boosted the investor sentiment.

Tuesday - Sensex up by 0.2%, Nifty up by 0.2%, Midcap flat
Lack of catalysts in the domestic markets makes sure that any rally or euphoria is short lived. Markets were flat as investors stayed cautious and booked profits.

Wednesday – Sensex down by 1.2%, Nifty down by 1.3%, Midcap down by 0.6%
Sensex floundered due to lack of any domestic or global cues. Investors booked profits in banking, IT and capital goods as market sees no new investment and project been announced till the elections are concluded in May.

Thursday – Sensex down by 2.0%, Nifty down by 2.0%, Midcap down by 1.7%
Release of minutes of Federal Open Market Committee (FOMC) meet spooked the investors globally as it indicated tapering might began in next few months, if economy improves. Fed’s doublespeak is confusing the markets as previous week they indicated any tapering is still far away.

Friday – Sensex down by 0.1%, Nifty down by 0.1%, Midcap up by 0.1%
Markets continued to stay cautious as Fed’s comments on tapering confused the investors.

Two charts that says it all

Well, the conclusion of the charts below is crystal clear. The Fed tapering talk in May, which led to sharp depreciation in rupee value, has clearly benefited the firms with significant dollar earnings while domestic environment continues to remain a hurdle. So, the investors should not be overly complacent if Sept quarter results were not as bad as everyone was expecting them out to be. We need to cover a lot of ground on domestic front to substantiate the India fundamental story.

The first chart is from my first weekly commentary in November. It speaks of the divergence in the market performance of different sectors. IT and Pharma with their export earnings have dominated the returns this year.

While the other one from the house of Motilal Oswal speaks of the divergence in the companies with dollar earnings and domestic earnings.

Weekly Market Commentary - Nov 11 - Nov 15, 2013

Global markets continue to anchor on central governors’ announcements for directions. This anchoring is making many market participants nervous. As results season nears its end in India, market is struggling to find any catalyst to move up. And as we know, when indices are not moving up, they are moving down. Can’t stay confused/range bound/flat or in inaction for long.

Sensex lost 1.3%, Nifty lost 1.4% and CNX Midcap was down by 1.1% this week.

Monday – Sensex down by 0.8%, Nifty down by 1.0%, Midcap down by 0.9%
Continuing weakness in rupee had its effect on investors. Investors continue to stay cautious as September IIP and October retail inflation numbers are due for release tomorrow.

Tuesday - Sensex down by 1.0%, Nifty down by 1.0%, Midcap down by 1.0%
Although market consensus indicates a recovery in IIP at 3.6% in September vs. 0.6% in August, it is the retail inflation, which is causing nervousness among the participants. Street expects CPI for October to be at 10% vs. 9.84% previous month. Also, car sales, considered by investors as a signal of consumer sentiment, provided little cheer with domestic sales declining 3.9% in October.

Wednesday – Sensex down by 0.4%, Nifty down by 0.5%, Midcap down by 0.7%
Street was little disappointed as IIP numbers came in lower at 2% for September vs 3.6% consensus while CPI was on higher side with rise of 10.09% in October. Investors have again started speculating a rate hike in coming December 18 meeting of the RBI.

Thursday – Sensex up by 1.0%, Nifty up by 1.1%, Midcap up by 1.5%
Markets cheered the Janet Yellen’s statement that US economy is still underperforming and Fed will continue its liquidity support for some more time. Janet Yellen is set to replace Ben Bernanke as Federal Reserve Governor soon.

On domestic front, Raghuram Rajan again sprung back to action and soothes the nerves of the investors with announcement of 8,000 crores of bond buying program to infuse liquidity in the system.

Friday – Markets closed on occasion of Muharram

Weekly Market Commentary - Nov 4 - Nov 8, 2013

Markets struggled to find ground as Diwali euphoria dies out. In addition, returning of oil companies to source their dollar requirements from market got the rupee falling again, which worried the investors.

Global investors remained nervous over what continues to be their single most important concern: Will there be talks of Fed tapering or not in the next meeting.

Markets lost all the gains they made previous week. Sensex lost 2.5%, Nifty lost 2.6% and CNX Midcap was down by 0.3% this week.

Monday – Markets closed on occasion of Balipratipada

Tuesday - Sensex down by 1.2%, Nifty down by 1.0%, Midcap up by 0.6%
Markets closed down as India’s service sector activity, as measured by HSBC / Markit purchasing managers index, contracted for fourth successive month as economic uncertainty continues. The index improved to 47.1 in October from 44.6 in September but continued to stay below 50, which indicates contraction.

Wednesday – Sensex down by 0.4%, Nifty down by 0.6%, Midcap down by 0.1%
Investors are treading cautiously as S&P warned that it might downgrade India’s credit rating if next government fails to chart out a path to bring back the country to high growth. S&P currently has 'BBB-/A-3' sovereign credit rating on India with negative outlook. The rating major will conduct its next review after the general elections, which are due by May 2014; unless the country's fiscal or external standing deteriorates.

Thursday – Sensex down by 0.3%, Nifty down by 0.4%, Midcap down by 1.4%
Markets continued to stay range bound as oil companies return to market for their dollar requirements, which had got investors worried over depreciation in rupee. Any further depreciation in rupee may affect FIIs inflow in the domestic markets.

Friday – Sensex down by 0.8%, Nifty down by 0.8%, Midcap down by 0.1%
Markets continued to stay under pressure, as recent depreciation in rupee value brings back the inflation worries. Rise in inflation or inflation expectations may prompt RBI governor to hike rates again raising the cost of doing business in already reeling economy.

Investors were also cautious ahead of Fed meeting as improving US economic conditions fuelled the talks of tapering by US Federal Reserve.

Weekly Market Commentary - Oct 28 - Nov 1, 2013

Growing inflation, rising NPAs, deteriorating governance and still here we are at record high Sensex. As we all know, this rally is liquidity driven and this liquidity will not stop flowing until March next year. At least that is what street was expecting. I feel unless the rally spreads to midcaps and small caps (as the chart below suggests it hasn’t) it can’t be relied upon and can fizzle out anytime in next two quarters. It is advisable that investors book profits in the names, which have rallied beyond what their fundamentals would suggest.

Sensex gained 2.5%, Nifty gained 2.6% and CNX Midcap was up by 3.5% this week.

Monday – Sensex down by 0.5%, Nifty down by 0.7%, Midcap down by 0.8%
Markets were little jittery ahead of RBI monetary policy review meeting on Tuesday. A 25 bps repo rate hike is widely expected on the street. Fed is also scheduled to meet on Tuesday to discuss their tapering plans.

Tuesday - Sensex up by 1.7%, Nifty up by 2.0%, Midcap up by 1.5%
Markets went up as RBI actions were in line with what street was expecting. RBI raised the repo rate by 25 bps while cutting down the MSF rate by the same amount, thereby bringing the difference between them back to normal 100 bps. Mood was also bullish due to Fed’s decision of keeping their liquidity taps open and short coverings ahead of derivative expiry on Thursday.

Wednesday – Sensex up by 0.5%, Nifty up by 0.5%, Midcap up by 0.1%
Markets continued their momentum from previous day but were largely volatile ahead of F&O expiry next day.

Thursday – Sensex up by 0.6%, Nifty up by 0.8%, Midcap up by 1.5%
Sensex rose to its all time high amidst the sustained buying from institutional investors who ignored the latest Fed pronouncement of stopping the QE sooner than expected. As of now, market is factoring tapering to begin in March next year.

Friday – Sensex up by 0.2%, Nifty up by 0.1%, Midcap up by 1.2%
Strong support from FIIs and Fed’s decision to continue its QE program for now continued to take Sensex to a new high.

Weekly Market Commentary - Oct 21 - Oct 25, 2013

What might appear to be a dull week was actually quite interesting. Sensex tried to regain its old glory by rising within a handshake distance of all time high. In early 2008, when Sensex was at its peak, everybody (almost) believed India could do no wrong. Today investors are more cautious than ever.

Some bulls reason that current rally is sustainable due to good corporate results. This is not true. Markets are rallying as US Fed decided to defer its QE tapering decision and India benefits as it gets its share of global portfolio allocation.

Better than expectations result (was expectations low or results were actually better) helped the bulls find a fundamental story in the yarn they were already weaving.

Anyways, not all sectors have posted good results. Most of the cement stocks, the sector that should be the early riser in case of recovery, posted 50-80% decline in their quarterly profits.

We believe we want to believe.

Sensex lost 1.0%, Nifty lost 0.7% and CNX Midcap was up by 0.3% this week.

Monday – Sensex up by 0.1%, Nifty up by 0.3%, Midcap up by 1.0%
Markets are range bound, as investors get concerned about valuation levels. Easy liquidity flow continued to prop up the market levels.

Tuesday - Sensex down by 0.1%, Nifty flat, Midcap up by 0.4%
Investors continued to stay cautious as global markets wait for release of US jobs data later in the day. Jobs numbers are one of the critical figures, which US Fed looks out for to decide on its tapering plans.

Wednesday – Sensex down by 0.5%, Nifty down by 0.4%, Midcap down by 0.2%
Weak US jobs data firmly pushed expectations for the tapering of Federal Reserve stimulus into next year. Markets opened higher earlier in the day but lost all gains as interest rate sensitive stocks see selling pressure ahead of RBI meeting on Oct 29.

Thursday – Sensex down by 0.2%, Nifty down by 0.2%, Midcap flat
Sensex continues to see resistance as most of the stocks stayed in high valuation range while investor’s fear of another rate hike of 25 bps by RBI led to selling in rate sensitive stocks.

Friday – Sensex down by 0.2%, Nifty down by 0.3%, Midcap down by 1.0%
Sensex ended the day in negative after a brief rally during the day. India’s economic fundamentals do not support the current market levels. Investors continued to book profits in IT companies.

Keynes vs Hayek

Econstories surely knows how to make the drab subject of economics into an interesting one. Actually, the one you can rap to. This are the best videos on difference between the economic philosophy of John Maynard Keynes and Friedrich Hayek.

Watch and learn.

Round I

Round II

Weekly Market Commentary - Oct 14 - Oct 18, 2013

So far, earnings season continues to surprise Indian investors to the upside. As Sensex continues to hover around its all time high, most investors will do well to realize that expectation investing can come as an handy tool a bit before earnings season is about to start. Most investors do not use DCF while analyzing a stock/company. I do though. With so many assumptions and complexities built into it, DCF does not act as a quick tool to help investors/speculators make money. In such a scenario, they can resort to what Michael J. Mauboussin calls Expectation Investing.

Expectation Investing is also knows as Reverse DCF. In this method, instead of trying to value a company (stock) by forecasting free cash flows into the future and then discounting them to current period, you do it the other way round.

You look at the current stock price and then try to find out what assumptions market is building into the price. The analyst can review these assumptions and see whether expectations are excessively high or too low to arrive at the decision of investing in that particular company or not.

The biggest advantage of this method, is as you can see, is it eliminated the need of forecasting. However, this method does not provide a quick way to analyse stocks but when formalized into a framework it can help an investor to make a quick decision.

Finally, as a noted statistician George Box said “All models are wrong; some are useful.”

I urge my readers to share with us their experience with Reverse DCF process, if they have tried it in the past.

Sensex gained 3.1%, Nifty gained 3.2% and CNX Midcap was up by 2.3% this week.

Monday – Sensex up by 0.4%, Nifty up by 0.3%, Midcap up by 0.6%
Market party over good Infosys results (guidance) ended early as inflation played spoilsport. September WPI was 6.46% against 6.1% in August and 46 bps above the street estimate of 6%. Surge in inflation has put RBI in a fix and investors on back foot as RBI now will find it difficult to lower interest rates and even may lead to rate hikes to contain the inflationary pressure.

Tuesday - Sensex down by 0.3%, Nifty down by 0.4%, Midcap down by 1.2%
Yesterday’s high inflation numbers led to selling in banking and other rate sensitive stocks. HDFC lost some ground as bank reported its slowest growth quarter in a decade. HDFC earnings increased 27% y-o-y against its record 30% growth in every quarter in last decade.

Wednesday – Markets closed on Eid.

Thursday – Sensex down by 0.6%, Nifty down by 0.7%, Midcap down by 0.4%
Markets were down as investors resorted to profit booking as Infosys and TCS good results quickly became the story of the past. The market did not move much on the news of deal on US shutdown and debt ceiling. Most talked about event of recent times continued to be ignored by investors in the Indian markets.

Friday – Sensex up by 2.3%, Nifty up by 2.4%, Midcap up by 1.4%
A good close to a rather mute week. Markets went up as corporate earnings continued to surprise. L&T, the capital goods major, reported a 7% rise in quarterly profit beating the analyst estimates. Market sentiment was also boosted by the news that LIC will invest Rs. 40,000 crores ($1.28 billion) into the markets in FY14.