To say that markets were volatile would be an understatement this week. Sensex lost around 700 points in first three days and gained 600 in last two. This week highlights were new lows made by rupee and RBI turning dovish (throwing in the towel?) and attempting easing liquidity in the market after a spell of tightening measures to fight the currency decline (which didn’t work of course, but RBI did claim victory!). Sensex and Nifty ended this week down 0.4% and 0.7% respectively, while CNX Midcap was down 1.6%.
Monday - Sensex down by 1.6%, Nifty down by 1.7%, Midcap down by 1.9%
Markets continue to plunge as investors voted with their feet as currency fell to its new all-time low of 62.81 vs. USD. Govt’s move of clearing few investment projects worth Rs.1,100bn was unable to provide any support to the market.
Tuesday - Sensex down by 0.3%, Nifty down by 0.2%, Midcap down by 0.6%
Investors’ worries seem not to be abating as any of the RBI measures have failed to stem rupee declines. So far, Indian IT and Pharma stocks have been able to save investors from full scale carnage in the markets.
Wednesday - Sensex down by 1.9%, Nifty down by 1.8%, Midcap down by 1.5%
A fresh low of 64.55 a dollar made by rupee prompted investors to even exit and book profits on their IT and Pharma stocks. RBI, in a bid to ease liquidity in the system and reduce long-term cost of borrowing announced purchase of Rs80bn worth of bonds in the market on Aug 23 and may buy more if required. This RBI action came as a breather to banks and banking stocks rallied amid the falling market.
Thursday - Sensex up by 2.3%, Nifty up by 2.0%, Midcap up by 1.1%
Tape turned green for the first time this week as RBI signaled change in its monetary stance. RBI also stated that its measures on short-term policy rates have stained their objectives, which send a positive signal to the market indicating no more tightening in short term. Bullish sentiment in the market overcame the Fed announcement on continuing tapering of its QE and new low made by rupee against the dollar.
Friday - Sensex up by 1.1%, Nifty up by 1.2%, Midcap up by 1.2%
Markets continued their previous day’s upside momentum as investors rushed to bargain hunting especially in capital goods sector, which has been facing lot of bearishness owing to delay in large scale projects in the country and abroad and increase in cost of borrowings.
Friday, August 23, 2013
Sunday, August 18, 2013
Weekly Market Commentary - Aug 12 - Aug 16, 2013
This independence day, RBI took away some of the freedom from its citizens and corporate as it introduced measures to cap dollar movement outside the country. While RBI and govt did their best to allay the fears of capital control, it is everybody’s guess what other bad policy decision lies ahead for the market and for how long this drama will continue. Sensex and Nifty went down by 1% each, while CNX Midcap gained 0.4% this week.
Monday - Sensex up by 0.8%, Nifty up by 0.8%, Midcap up by 1.6%
Markets went up as investors bought stocks amid govt and RBI interventions to prop up rupee. Although the measure adopted by RBI has failed to curb any decline in the rupee value, trade date brought good news as exports grew by ~12% to $26bn in July. SBI’s latest quarterly release indicating worsening asset quality, which is putting a dent on its profitability, capped the investor confidence.
Tuesday - Sensex up by 1.5%, Nifty up by 1.5%, Midcap up by 1.5%
Markets rallied as investors rushed to cover their shorts after recent sharp corrections ignoring the poor IIP data. The index of industrial production (IIP) declined by 2.2% in June while industrial output was 1.1% lower y-o-y. Govt move to hike import duty on gold and silver to curb CAD also cheered the bulls.
Wednesday - Sensex up by 0.7%, Nifty up by 0.8%, Midcap up by 0.4%
Tata group companies saved the day as markets ignored the impact of rise in WPI to 5.79% in July from 4.86% in June. Tata Motors surged around 10% after its unit Jaguar Land Rover reported 21% higher sales in July globally. Tata Steel also beat the street expectations with consolidating net profit surging by 90%.
Thursday – Independence Day Holiday
Friday – Sensex down by 4.0%, Nifty down by 4.1%, Midcap down by 3.1%
RBI spooked the investors as they bring back capital controls and restricted the movement of USD outside the country. RBI on late Wednesday brought back controls on fund flows limiting the investment citizens and domestic companies can do abroad. It also banned the import of gold coins and medallions while introducing fresh measures to attract NRI money. Recent positive developments in US and other developed markets also instilled fresh fears of stimulus tapering from Fed, which added to the bearish sentiment.
Monday - Sensex up by 0.8%, Nifty up by 0.8%, Midcap up by 1.6%
Markets went up as investors bought stocks amid govt and RBI interventions to prop up rupee. Although the measure adopted by RBI has failed to curb any decline in the rupee value, trade date brought good news as exports grew by ~12% to $26bn in July. SBI’s latest quarterly release indicating worsening asset quality, which is putting a dent on its profitability, capped the investor confidence.
Tuesday - Sensex up by 1.5%, Nifty up by 1.5%, Midcap up by 1.5%
Markets rallied as investors rushed to cover their shorts after recent sharp corrections ignoring the poor IIP data. The index of industrial production (IIP) declined by 2.2% in June while industrial output was 1.1% lower y-o-y. Govt move to hike import duty on gold and silver to curb CAD also cheered the bulls.
Wednesday - Sensex up by 0.7%, Nifty up by 0.8%, Midcap up by 0.4%
Tata group companies saved the day as markets ignored the impact of rise in WPI to 5.79% in July from 4.86% in June. Tata Motors surged around 10% after its unit Jaguar Land Rover reported 21% higher sales in July globally. Tata Steel also beat the street expectations with consolidating net profit surging by 90%.
Thursday – Independence Day Holiday
Friday – Sensex down by 4.0%, Nifty down by 4.1%, Midcap down by 3.1%
RBI spooked the investors as they bring back capital controls and restricted the movement of USD outside the country. RBI on late Wednesday brought back controls on fund flows limiting the investment citizens and domestic companies can do abroad. It also banned the import of gold coins and medallions while introducing fresh measures to attract NRI money. Recent positive developments in US and other developed markets also instilled fresh fears of stimulus tapering from Fed, which added to the bearish sentiment.
Thursday, August 15, 2013
Once Upon a time in India Dobaara
Bollywood released its much awaited sequel of Ajay Devgan – Emraan Hashmi starrer “Once Upon a Time in Mumbaai” this Thursday. The jury is still out on whether the sequel, “Once Upon a Time in Mumbaai Dobaara” has lived up to the magic of first one (first one has some good lines delivered by Ajay and good acting skills of Emraan). In the meantime, there is another sequel being served to the country, which will definitely have wider ramifications than the movie.
This sequel could aptly be called “Once Upon a Time in India Dobaara” as India in an effort to curb currency decline, brings back capital controls, 90s style. RBI has announced slew of measures like reducing the Overseas Direct Investment (ODI) by Indian companies from 400% of net worth earlier to 100% now. Local residents also now have to go through RBI if they are sending more than $75,000 abroad for investments or otherwise. This limit was earlier set at $200,000.
RBI exempted banks from including fresh deposits from NRIs into reserve requirements, raised the ceiling on FCNR deposits to LIBOR + 400bps (300bps earlier) for 3-5 years deposits and banned the import of gold coins and medallions.
No points for guessing who’ll get hurt the most by these measures: the corporate as their plans to invest abroad due to weakening local investment climate are put on halt and; Local residents who bought residential property abroad (as some did in Southeast Asia at favorable terms during slowdown) and are making regular payments towards it.
Reader will vividly remember those 90’s movies where Amrish Puri and Ranjeet were widely feared bad guys, used to spend their nighttime near Bombay beaches with a torch in their hands, for their “consignment” which was most of the time, you guessed it right, used to be gold biscuits. Latest import curbs and rising duties on gold have already started turning local Indians into smugglers (See here and here) as already one high profile case of a member of big industrial house caught smuggling on Mumbai airport has been highlighted by local media.
I have long argued (see here and here) that problems with our currency are largely fundamental ones and these govt policies are at best, can only be termed shortsighted. Investors are going to sell off your currency if they don’t find any value in it, if not today, tomorrow. But this is one definite, which is going to happen. Therefore, instead of using weak currency to make your economy export competitive and make some efforts towards solving your structural problems, you stop your citizens from importing anything from abroad.
Some people might argue that focusing on structural problems may not yield any short-term result and nobody in the current establishment has time and patience to wait. But isn’t that the same attitude which has landed us in current mess.
You ask anyone in establishment about their purpose behind these measures, you get a terse two word reply: Rupee stabilization. What they don’t tell you is when they think rupee has stabilized. Given our country’s problem, it doesn’t look like it is going to happen anytime soon and there is a strong chance that current measures and controls are not as temporary as they are sounded out to be.
This sequel could aptly be called “Once Upon a Time in India Dobaara” as India in an effort to curb currency decline, brings back capital controls, 90s style. RBI has announced slew of measures like reducing the Overseas Direct Investment (ODI) by Indian companies from 400% of net worth earlier to 100% now. Local residents also now have to go through RBI if they are sending more than $75,000 abroad for investments or otherwise. This limit was earlier set at $200,000.
RBI exempted banks from including fresh deposits from NRIs into reserve requirements, raised the ceiling on FCNR deposits to LIBOR + 400bps (300bps earlier) for 3-5 years deposits and banned the import of gold coins and medallions.
No points for guessing who’ll get hurt the most by these measures: the corporate as their plans to invest abroad due to weakening local investment climate are put on halt and; Local residents who bought residential property abroad (as some did in Southeast Asia at favorable terms during slowdown) and are making regular payments towards it.
Reader will vividly remember those 90’s movies where Amrish Puri and Ranjeet were widely feared bad guys, used to spend their nighttime near Bombay beaches with a torch in their hands, for their “consignment” which was most of the time, you guessed it right, used to be gold biscuits. Latest import curbs and rising duties on gold have already started turning local Indians into smugglers (See here and here) as already one high profile case of a member of big industrial house caught smuggling on Mumbai airport has been highlighted by local media.
I have long argued (see here and here) that problems with our currency are largely fundamental ones and these govt policies are at best, can only be termed shortsighted. Investors are going to sell off your currency if they don’t find any value in it, if not today, tomorrow. But this is one definite, which is going to happen. Therefore, instead of using weak currency to make your economy export competitive and make some efforts towards solving your structural problems, you stop your citizens from importing anything from abroad.
Some people might argue that focusing on structural problems may not yield any short-term result and nobody in the current establishment has time and patience to wait. But isn’t that the same attitude which has landed us in current mess.
You ask anyone in establishment about their purpose behind these measures, you get a terse two word reply: Rupee stabilization. What they don’t tell you is when they think rupee has stabilized. Given our country’s problem, it doesn’t look like it is going to happen anytime soon and there is a strong chance that current measures and controls are not as temporary as they are sounded out to be.
Friday, August 9, 2013
Weekly Market Commentary - Aug 5 - Aug 8, 2013
Rupee decline remain the focus of the week and its continuing slide has caused jitters in the market. Investors are also keeping a close eye on unfolding drama in National Stock Exchange Ltd (NSEL), promoted by Financial Technologies (FTIL), which also owns 26% in MCX, nation’s leading commodity exchange. Sensex and Nifty went down by 2% each, while CNX Midcap gained 0.3% this week.
Monday - Sensex up by 0.1%, Nifty up by 0.1%, Midcap up by 0.3%
Markets pared the early gains made during the day as HSBC survey indicated that private manufacturing activity in the country has contracted for the first time in four years. The HSBC India composite index covers both services and manufacturing activities, declined to 48.4 in July from 50.9 in June. The tough investment climate in the country is taking its toll on business activity as investors are losing confidence in India story.
Tuesday - Sensex down by 2.3%, Nifty down by 2.5%, Midcap down by 2.5%
Sensex went down by 450 points as rupee hit a fresh low of 61.80 against the US dollar. RBI’s rescue plans are looking more like prayers than plan (stole a line from Andy Mukherjee).
Wednesday - Sensex down by 0.4%, Nifty down by 0.4%, Midcap up by 1.3%
Markets continued to weigh down by ongoing slide in rupee value against the dollar. Investors are worried that rupee might hit 64 in the near term and will cause more pain to already weak Indian economy.
Thursday - Sensex up by 0.7%, Nifty up by 0.8%, Midcap up by 1.2%
Indian markets bounced back after recent sell-offs owing to declining rupee value against the dollar. Ranbaxy Laboratories jumped 28% after good showing in US business sales. Maruti jumped 4% after there were news that Indian govt may cut excise duties on vehicles to revive falling demand.
Friday – Eid Holiday
Monday - Sensex up by 0.1%, Nifty up by 0.1%, Midcap up by 0.3%
Markets pared the early gains made during the day as HSBC survey indicated that private manufacturing activity in the country has contracted for the first time in four years. The HSBC India composite index covers both services and manufacturing activities, declined to 48.4 in July from 50.9 in June. The tough investment climate in the country is taking its toll on business activity as investors are losing confidence in India story.
Tuesday - Sensex down by 2.3%, Nifty down by 2.5%, Midcap down by 2.5%
Sensex went down by 450 points as rupee hit a fresh low of 61.80 against the US dollar. RBI’s rescue plans are looking more like prayers than plan (stole a line from Andy Mukherjee).
Wednesday - Sensex down by 0.4%, Nifty down by 0.4%, Midcap up by 1.3%
Markets continued to weigh down by ongoing slide in rupee value against the dollar. Investors are worried that rupee might hit 64 in the near term and will cause more pain to already weak Indian economy.
Thursday - Sensex up by 0.7%, Nifty up by 0.8%, Midcap up by 1.2%
Indian markets bounced back after recent sell-offs owing to declining rupee value against the dollar. Ranbaxy Laboratories jumped 28% after good showing in US business sales. Maruti jumped 4% after there were news that Indian govt may cut excise duties on vehicles to revive falling demand.
Friday – Eid Holiday
Sunday, August 4, 2013
RBI Analyst Conference Call Summary
Headline
RBI kept all the policy rates unchanged; the repo rate, the reverse repo rate and the CRR. The MSF rate too stayed at 10.25% with a mark-up of 300 basis points above the repo rate.
Two key things on RBI's mind while drafting this policy: external sector concerns, especially those stemming from global financial markets over the last 10 weeks (read Fed stimulus tapering plans); the second was the standard concern of any central bank of maintaining growth and inflation balance.
On Growth
On the domestic front, the silver lining is that the monsoon so far has been above long term average. However, industrial production is lower than what RBI thought it was and services sector activity is subdued in part because of because of tepid global demand.
Keeping all this mind, RBI revised its FY14 GDP growth projections downwards from 5.7% to 5.5%.
On Inflation
The biggest risk to inflation is from the depreciation of the rupee and the any pass-through from there. RBI’s recent study shows that the coefficient of pass-through has increased and now every 10% depreciation results in a 1.2% increase in inflation vs. 1.1% earlier.
Vulnerabilities
RBI discussed four risk factors in which biggest is vulnerability in the external sector, in particular sudden stop and reversal of capital flows seen over the last 10 weeks.
The second risk factor is the large CAD, which has stayed above the sustainable level for 3 years in a row and has affected external payment situation. Most external vulnerability indicators have deteriorated indicating that the economy’s resilience to external shocks is eroded.
The third risk factor is the continuing weak investment environment which remains weak because of a number of factors such as cost and time overruns, high leverage, deteriorating cash flows, erosion of asset quality and muted credit confidence.
The final risk factor is something that has sort of stuck, which is the supply constraints in the economy. There are a number of supply constraints especially in the food and infrastructure sectors which affect growth and inflation.
Guidance
RBI is caught in a classic ‘impossible trinity’ trilemma (more about it here). It has to forfeit economy’s growth inflation dynamic, informed monetary policy stance, in order to take care of external concerns.
RBI will roll back liquidity-tightening measures in a calibrated manner as forex markets stabilizes.
Q&A
Kaushik Das (DB): Hi, my question is regarding India’s reserve adequacy. As per the latest data, reserves can still cover about 6-7-months of imports but particularly worrying is the sharp increase in the short-term external debt on a residual maturity basis, which has touched $172 billion odd. So how concerned is RBI about this reserve adequacy position of India, especially when reserves are down further due to FX intervention?
The second question is regarding the potential growth rate of economy. Last year the expectation was that the potential growth rate has come down to about 6.5 to 7%. Does RBI think that the potential growth rate has fallen further in the wake of the developments of the last few months?
Dr. Urjit Patel (Dy. Guv): We actually feel that our reserves are adequate; 6.5 to 7-month of import cover is good, our short-term debt has increased but the short-term debt has been comfortably rolled over and refinanced over the last 3 years despite the high CAD. Even IMF, by the criteria they use, feels that our reserve position is adequate and comfortable.
On the potential growth, the RBI’s calculations and models suggest that it is about 7% now.
Sonal Varma (Nomura): I wanted to ask what is the risk that these tightening measures can precipitate into a bigger problem for the banking system, because of asset quality stress. What is the RBI’s view on that?
Dr. K. C. Chakrabarty: Anyhow, RBI will not be able to protect banks’ asset quality. Suppose, if you allow the exchange rate to depreciate, then the corporates, who have gone for ECB borrowings will default and banks asset quality will deteriorate. And if the rate has gone up then definitely because of the portfolio depreciation, they will be affected. We feel that HTM is more manageable because banks must understand the risk and we allow lot of amount to be put in the HTM category so this is a better option, which is our assessment.
Simon Flint (Dymon Asia Capital): Governor, you suggested that because of the large current account deficit, the rupee depreciation in some senses would be warranted. On the other hand, you do have some economists, I think including some in the Ministry of Finance who have argued that if you compare the present value of the rupee to the real effective exchange rate (REER), let us say which prevailed over 2004-2005, then the rupee is actually overshooting and is now undervalued. So I guess can you give us a sense of where you see rupee today relative to its fair value.
Dr. D. Subbarao: My answer to your very well argued question is quite short, that the RBI does not take a position on the level of the exchange rate. The depreciation of the currency has costs for the economy, but that is a different matter. We do not take a position on the exchange rate; there are various ways of calculating it including the way that you have indicated from the Ministry of Finance. All we said yesterday was that because of the current account deficit, the rupee would have depreciated and that has not happened because we have been able to finance it, and now that there is capital flow issues, those strains are coming into play, and the rupee is depreciating.
Rajeev Malik (CLSA): RBI has consistently maintained that it does not target any particular level and it is really only concerned with the volatility. The government on the other hand, every time the rupee slips, begins to get palpitations partly although not entirely, because of the impact on the fiscal front. How do you marry the two? At the end of the day a lot of that worsening because of rupee depreciation also has a feedback loop into how monetary policy is being conducted.
Dr. D. Subbarao: Both the government and the RBI are really on the same page as far as larger objective is concerned which is to control volatility. Neither the government nor the Reserve Bank is targeting any particular rate. And that is the message I think everybody listening in must take away.
RBI kept all the policy rates unchanged; the repo rate, the reverse repo rate and the CRR. The MSF rate too stayed at 10.25% with a mark-up of 300 basis points above the repo rate.
Two key things on RBI's mind while drafting this policy: external sector concerns, especially those stemming from global financial markets over the last 10 weeks (read Fed stimulus tapering plans); the second was the standard concern of any central bank of maintaining growth and inflation balance.
On Growth
On the domestic front, the silver lining is that the monsoon so far has been above long term average. However, industrial production is lower than what RBI thought it was and services sector activity is subdued in part because of because of tepid global demand.
Keeping all this mind, RBI revised its FY14 GDP growth projections downwards from 5.7% to 5.5%.
On Inflation
The biggest risk to inflation is from the depreciation of the rupee and the any pass-through from there. RBI’s recent study shows that the coefficient of pass-through has increased and now every 10% depreciation results in a 1.2% increase in inflation vs. 1.1% earlier.
Vulnerabilities
RBI discussed four risk factors in which biggest is vulnerability in the external sector, in particular sudden stop and reversal of capital flows seen over the last 10 weeks.
The second risk factor is the large CAD, which has stayed above the sustainable level for 3 years in a row and has affected external payment situation. Most external vulnerability indicators have deteriorated indicating that the economy’s resilience to external shocks is eroded.
The third risk factor is the continuing weak investment environment which remains weak because of a number of factors such as cost and time overruns, high leverage, deteriorating cash flows, erosion of asset quality and muted credit confidence.
The final risk factor is something that has sort of stuck, which is the supply constraints in the economy. There are a number of supply constraints especially in the food and infrastructure sectors which affect growth and inflation.
Guidance
RBI is caught in a classic ‘impossible trinity’ trilemma (more about it here). It has to forfeit economy’s growth inflation dynamic, informed monetary policy stance, in order to take care of external concerns.
RBI will roll back liquidity-tightening measures in a calibrated manner as forex markets stabilizes.
Q&A
Kaushik Das (DB): Hi, my question is regarding India’s reserve adequacy. As per the latest data, reserves can still cover about 6-7-months of imports but particularly worrying is the sharp increase in the short-term external debt on a residual maturity basis, which has touched $172 billion odd. So how concerned is RBI about this reserve adequacy position of India, especially when reserves are down further due to FX intervention?
The second question is regarding the potential growth rate of economy. Last year the expectation was that the potential growth rate has come down to about 6.5 to 7%. Does RBI think that the potential growth rate has fallen further in the wake of the developments of the last few months?
Dr. Urjit Patel (Dy. Guv): We actually feel that our reserves are adequate; 6.5 to 7-month of import cover is good, our short-term debt has increased but the short-term debt has been comfortably rolled over and refinanced over the last 3 years despite the high CAD. Even IMF, by the criteria they use, feels that our reserve position is adequate and comfortable.
On the potential growth, the RBI’s calculations and models suggest that it is about 7% now.
Sonal Varma (Nomura): I wanted to ask what is the risk that these tightening measures can precipitate into a bigger problem for the banking system, because of asset quality stress. What is the RBI’s view on that?
Dr. K. C. Chakrabarty: Anyhow, RBI will not be able to protect banks’ asset quality. Suppose, if you allow the exchange rate to depreciate, then the corporates, who have gone for ECB borrowings will default and banks asset quality will deteriorate. And if the rate has gone up then definitely because of the portfolio depreciation, they will be affected. We feel that HTM is more manageable because banks must understand the risk and we allow lot of amount to be put in the HTM category so this is a better option, which is our assessment.
Simon Flint (Dymon Asia Capital): Governor, you suggested that because of the large current account deficit, the rupee depreciation in some senses would be warranted. On the other hand, you do have some economists, I think including some in the Ministry of Finance who have argued that if you compare the present value of the rupee to the real effective exchange rate (REER), let us say which prevailed over 2004-2005, then the rupee is actually overshooting and is now undervalued. So I guess can you give us a sense of where you see rupee today relative to its fair value.
Dr. D. Subbarao: My answer to your very well argued question is quite short, that the RBI does not take a position on the level of the exchange rate. The depreciation of the currency has costs for the economy, but that is a different matter. We do not take a position on the exchange rate; there are various ways of calculating it including the way that you have indicated from the Ministry of Finance. All we said yesterday was that because of the current account deficit, the rupee would have depreciated and that has not happened because we have been able to finance it, and now that there is capital flow issues, those strains are coming into play, and the rupee is depreciating.
Rajeev Malik (CLSA): RBI has consistently maintained that it does not target any particular level and it is really only concerned with the volatility. The government on the other hand, every time the rupee slips, begins to get palpitations partly although not entirely, because of the impact on the fiscal front. How do you marry the two? At the end of the day a lot of that worsening because of rupee depreciation also has a feedback loop into how monetary policy is being conducted.
Dr. D. Subbarao: Both the government and the RBI are really on the same page as far as larger objective is concerned which is to control volatility. Neither the government nor the Reserve Bank is targeting any particular rate. And that is the message I think everybody listening in must take away.
Saturday, August 3, 2013
Weekly Market Commentary - Jul 29 - Aug 2, 2013
Markets continued to weigh down by RBI policy actions, which have raised the cost of doing business on the country. Banks, realty, metals, all rates sensitive stocks, were badly hit this week. RBI’s battle against the falling rupee has been futile as currency is back at 61 against the dollar. Sensex was down 3%, Nifty was down 3.5% and CNX Midcap 5.9% this week.
Monday - Sensex down by 0.8%, Nifty down by 0.9%, Midcap down by 1.3%
Markets continued their downward trend with investors acing cautious ahead of RBI meeting on Tuesday. RBI has tightened liquidity environment in a bid to save rupee from falling further. Many investors are nervous wondering whether RBI will continue its stance and increase the rates to make rupee investment attractive for FIIs, as SBI chairman suggested. Investors are also anticipating announcement related to sovereign debt offering country might plan to plug the deficit gap.
Tuesday - Sensex down by 1.3%, Nifty down by 1.3%, Midcap down by 2.4%
In its policy announcement, RBI kept all key rates unchanged (repo rate at 7.25%, CRR at 4%), but revised the country’s GDP growth projection for FY14 downwards from 5.5% to 5.7%. RBI also indicated its reservation about issuing of sovereign debt, calling the timing now not right. Markets plunged after the policy announcement and rupee tumbled down to 61 mark.
Wednesday - Sensex down by 0.0%, Nifty down by 0.2%, Midcap up by 0.2%
Sensex ended up flat after falling almost 220 points in its initial sessions. FM who indicated more liberalization policies are under consideration and encouraged PSUs to borrow from abroad saved the markets. Govt is also considering raising import duty on non-essential luxury items to contain CAD.
Bharti Airtel was among the top gainer, with the company showing growth signs in its ARPUs, which increased, to INR200 for 1Q14, +16 y-o-y, EBITDA margin increased to 32.3% from 29.6% a year back.
Thursday - Sensex down by 0.1%, Nifty down by 0.2%, Midcap down by 1.4%
Indian markets rallied during their early sessions with their Asian peers as China reported better than expected PMI data while US GDP growth also beating street estimates. However, later in the day, weaker manufacturing data put the brakes on the rally and drag down the markets back in the red zone.
Financial Technologies, promoter of MCX, leading commodity exchange of the country, tanked by 65% today as govt asked its National Spot Exchange to not to launch new products, following with firm (NSEL) decided to suspend trading and postponed settlement of all 1 day forward contracts.
Friday - Sensex down by 0.8%, Nifty down by 0.9%, Midcap down by 1.1%
Markets saw heavy selling across metals, power, realty and PSUs as concerns over rise in cost of operations in tight monetary environment has made investors bearish over these counters.
Financial Technologies fell another 23% as crisis over National Spot Exchange has dealt to commodity investors sentiments. Power Grid Corp fell 11% after firm announced plans to dilute equity to fund its investment plans.
Monday - Sensex down by 0.8%, Nifty down by 0.9%, Midcap down by 1.3%
Markets continued their downward trend with investors acing cautious ahead of RBI meeting on Tuesday. RBI has tightened liquidity environment in a bid to save rupee from falling further. Many investors are nervous wondering whether RBI will continue its stance and increase the rates to make rupee investment attractive for FIIs, as SBI chairman suggested. Investors are also anticipating announcement related to sovereign debt offering country might plan to plug the deficit gap.
Tuesday - Sensex down by 1.3%, Nifty down by 1.3%, Midcap down by 2.4%
In its policy announcement, RBI kept all key rates unchanged (repo rate at 7.25%, CRR at 4%), but revised the country’s GDP growth projection for FY14 downwards from 5.5% to 5.7%. RBI also indicated its reservation about issuing of sovereign debt, calling the timing now not right. Markets plunged after the policy announcement and rupee tumbled down to 61 mark.
Wednesday - Sensex down by 0.0%, Nifty down by 0.2%, Midcap up by 0.2%
Sensex ended up flat after falling almost 220 points in its initial sessions. FM who indicated more liberalization policies are under consideration and encouraged PSUs to borrow from abroad saved the markets. Govt is also considering raising import duty on non-essential luxury items to contain CAD.
Bharti Airtel was among the top gainer, with the company showing growth signs in its ARPUs, which increased, to INR200 for 1Q14, +16 y-o-y, EBITDA margin increased to 32.3% from 29.6% a year back.
Thursday - Sensex down by 0.1%, Nifty down by 0.2%, Midcap down by 1.4%
Indian markets rallied during their early sessions with their Asian peers as China reported better than expected PMI data while US GDP growth also beating street estimates. However, later in the day, weaker manufacturing data put the brakes on the rally and drag down the markets back in the red zone.
Financial Technologies, promoter of MCX, leading commodity exchange of the country, tanked by 65% today as govt asked its National Spot Exchange to not to launch new products, following with firm (NSEL) decided to suspend trading and postponed settlement of all 1 day forward contracts.
Friday - Sensex down by 0.8%, Nifty down by 0.9%, Midcap down by 1.1%
Markets saw heavy selling across metals, power, realty and PSUs as concerns over rise in cost of operations in tight monetary environment has made investors bearish over these counters.
Financial Technologies fell another 23% as crisis over National Spot Exchange has dealt to commodity investors sentiments. Power Grid Corp fell 11% after firm announced plans to dilute equity to fund its investment plans.
Wednesday, July 31, 2013
RBI's Trilemmas: What the fuss is all about?
Every economist and newspaper is talking about Impossible Trinity (aka Trilemma) these days. What is all this hoo-ha all about? Let’s find out.
Wikipedia defines Impossible Trinity as “a trilemma in international economics which states that it is impossible to have all three of the following at the same time: A fixed exchange rate; free capital movement (absence of capital controls) and; an independent monetary policy.
In simple words, an economy cannot have an independent monetary authority (i.e. independent of external influence) if it tries to play its hand in managing its exchange rate in order to (or not just to) control the fund flows.
Maximum, you can choose any two of these three options.
Let’s say a nation adopts fixed exchange rate mechanism (presumably low, to achieve export competitiveness) and opens up its capital account to foreign flow. This will eventually lead to more forex earnings and surge in central bank’s reserves in the short term. To maintain the required exchange rate, a central bank has to buy local currency (reduce money supply aka monetary tightening) via bond purchases, increasing bank’s regulatory/statutory reserves with central bank (CRR) etc etc. If continue using this strategy, then over the period of time, its official forex reserves will come under stress, and the central bank has to devalue the currency (or let go off its control on the exchange rate) to reduce the excess demand for foreign currency
.
In India’s case, this surge in demand for monetary tightening arose after US Fed statement regarding tapering of stimulus measures led to increase in US bond yields, which in turn led to foreign investors fleeing Indian debt. Rupee has declined by more than 12% since Fed announcement.
Our RBI got into action, setting aside its earlier focus on inflation, and started tightening its monetary policy by depriving the banks of funds available and sucking out the “excess” liquidity from the system via its bond purchases (which ominously auctioned at max yield of ~11%).
Now, rupee after moving up for some time against the dollar is back again at the level pre-RBI measures and not to say, we are few millions short on foreign reserves. I have already highlighted in my earlier post that RBI is playing with fire. If RBI insisted on targeting exchange rate by curtailing the funds available to the banks, its actions will have serious implications for India’s growth story. And, let’s just not talk about employment levels.
RBI should just STOP its "rupee stabilizing" measures right now. And let the currency find its own ground.
Wikipedia defines Impossible Trinity as “a trilemma in international economics which states that it is impossible to have all three of the following at the same time: A fixed exchange rate; free capital movement (absence of capital controls) and; an independent monetary policy.
In simple words, an economy cannot have an independent monetary authority (i.e. independent of external influence) if it tries to play its hand in managing its exchange rate in order to (or not just to) control the fund flows.
Maximum, you can choose any two of these three options.
Let’s say a nation adopts fixed exchange rate mechanism (presumably low, to achieve export competitiveness) and opens up its capital account to foreign flow. This will eventually lead to more forex earnings and surge in central bank’s reserves in the short term. To maintain the required exchange rate, a central bank has to buy local currency (reduce money supply aka monetary tightening) via bond purchases, increasing bank’s regulatory/statutory reserves with central bank (CRR) etc etc. If continue using this strategy, then over the period of time, its official forex reserves will come under stress, and the central bank has to devalue the currency (or let go off its control on the exchange rate) to reduce the excess demand for foreign currency
.
In India’s case, this surge in demand for monetary tightening arose after US Fed statement regarding tapering of stimulus measures led to increase in US bond yields, which in turn led to foreign investors fleeing Indian debt. Rupee has declined by more than 12% since Fed announcement.
Our RBI got into action, setting aside its earlier focus on inflation, and started tightening its monetary policy by depriving the banks of funds available and sucking out the “excess” liquidity from the system via its bond purchases (which ominously auctioned at max yield of ~11%).
Now, rupee after moving up for some time against the dollar is back again at the level pre-RBI measures and not to say, we are few millions short on foreign reserves. I have already highlighted in my earlier post that RBI is playing with fire. If RBI insisted on targeting exchange rate by curtailing the funds available to the banks, its actions will have serious implications for India’s growth story. And, let’s just not talk about employment levels.
RBI should just STOP its "rupee stabilizing" measures right now. And let the currency find its own ground.
Saturday, July 27, 2013
Weekly Market Commentary - Jul 22 - Jul 26, 2013
Not a very good week for the markets, as weak earnings announcement from key companies disappointed the investors. L&T is facing declining margins, ITC missed sales estimates and HUL posted fall in profits. On top of that, RBI made money more expensive continuing its tight monetary stance. Sensex was down 2%, Nifty was down 2.4% and CNX Midcap 3.9% this week.
Monday - Sensex up by 0.05%, Nifty up by 0.04%, Midcap down by 0.24%
Markets pared the gains it made in its early trades post L&T results announcement. L&T, along with BHEL results, are widely seen as barometer of new investment activity by the broader market. Company’s disappointing 1Q results pushed down the investor sentiment as it reported 12.5% decline in standalone net profit, largely due to margin pressures. The stock fell 7% during the day and had a ripple effect across the broader market. Company is facing tough competition from South Korean and European firms in its stronghold West Asian markets, which is leading to squeeze in margins.
Tuesday - Sensex up by 0.7%, Nifty up by 0.8%, Midcap up by 0.2%
Indian stocks went up with their global peers as China reassured the markets that they are committed to restructuring their economy to continue their growth momentum. ITC and HUL led the surge in Sensex. There was also some buying seen in banking after PC came out and assuage the fears of monetary tightening, calling the phase temporary. RBI’s move to tighten rules on gold import to ease the pressure on rupee and widening CAD further boosted the investor sentiment.
Wednesday - Sensex down by 1.0%, Nifty down by 1.4%, Midcap down by 1.9%
RBI delivered another blow to the markets as it moved the short-term interest rates further up. RBI, in its ongoing battle against the rupee volatility, struck again, reducing the Liquidity Adjustment Facility (LAF) from 1.0% to 0.5% and thus cutting down on the amount of money banks can borrow from the central bank. RBI also increased the limit of daily CRR balance banks need to maintain with RBI from 75% to 99% sucking out few extra thousand crores from banks.
I have already highlighted that this RBI adventure, in hope of replicating 98’ Jalan experiment, is totally not required. I have only one explanation for this. After the POSCO and Arcelor-Mittal debacle and not getting single foreign retailers move here after their big bang FDI in retail announcement, maybe the policymakers have realized that none of this is going to have any benefit in the near term. Therefore, they have decided to move their focus to falling currency. PC should have something to show for, for all his efforts to reverse the damage done to the economy by his govt.
Have to win atleast one fight!
Thursday - Sensex down by 1.4%, Nifty down by 1.4%, Midcap down by 1.0%
Markets continued to lose ground as investor fear that the current bout of monetary tightening will continue in the near term. Renowned economist Raghuram Rajan, in an interview with Moneycontrol.com, indicated that RBI focus is on getting the rupee to stabilize as too much volatility is hurting the investment climate in the country.
Friday - Sensex down by 0.3%, Nifty down by 0.4%, Midcap down by 1.1%
Markets continued to remain under pressure as investors turned cautious ahead of RBI meeting coming Tuesday. Street is expecting RBI to maintain its monetary tightening stance and maintain status quo on rates front.
Monday - Sensex up by 0.05%, Nifty up by 0.04%, Midcap down by 0.24%
Markets pared the gains it made in its early trades post L&T results announcement. L&T, along with BHEL results, are widely seen as barometer of new investment activity by the broader market. Company’s disappointing 1Q results pushed down the investor sentiment as it reported 12.5% decline in standalone net profit, largely due to margin pressures. The stock fell 7% during the day and had a ripple effect across the broader market. Company is facing tough competition from South Korean and European firms in its stronghold West Asian markets, which is leading to squeeze in margins.
Tuesday - Sensex up by 0.7%, Nifty up by 0.8%, Midcap up by 0.2%
Indian stocks went up with their global peers as China reassured the markets that they are committed to restructuring their economy to continue their growth momentum. ITC and HUL led the surge in Sensex. There was also some buying seen in banking after PC came out and assuage the fears of monetary tightening, calling the phase temporary. RBI’s move to tighten rules on gold import to ease the pressure on rupee and widening CAD further boosted the investor sentiment.
Wednesday - Sensex down by 1.0%, Nifty down by 1.4%, Midcap down by 1.9%
RBI delivered another blow to the markets as it moved the short-term interest rates further up. RBI, in its ongoing battle against the rupee volatility, struck again, reducing the Liquidity Adjustment Facility (LAF) from 1.0% to 0.5% and thus cutting down on the amount of money banks can borrow from the central bank. RBI also increased the limit of daily CRR balance banks need to maintain with RBI from 75% to 99% sucking out few extra thousand crores from banks.
I have already highlighted that this RBI adventure, in hope of replicating 98’ Jalan experiment, is totally not required. I have only one explanation for this. After the POSCO and Arcelor-Mittal debacle and not getting single foreign retailers move here after their big bang FDI in retail announcement, maybe the policymakers have realized that none of this is going to have any benefit in the near term. Therefore, they have decided to move their focus to falling currency. PC should have something to show for, for all his efforts to reverse the damage done to the economy by his govt.
Have to win atleast one fight!
Thursday - Sensex down by 1.4%, Nifty down by 1.4%, Midcap down by 1.0%
Markets continued to lose ground as investor fear that the current bout of monetary tightening will continue in the near term. Renowned economist Raghuram Rajan, in an interview with Moneycontrol.com, indicated that RBI focus is on getting the rupee to stabilize as too much volatility is hurting the investment climate in the country.
Friday - Sensex down by 0.3%, Nifty down by 0.4%, Midcap down by 1.1%
Markets continued to remain under pressure as investors turned cautious ahead of RBI meeting coming Tuesday. Street is expecting RBI to maintain its monetary tightening stance and maintain status quo on rates front.
Saturday, July 20, 2013
Weekly Market Commentary - Jul 15 - Jul 19, 2013
Markets were focusing on RBI actions, Fed comments on the macro front, while company's results and inflation numbers were eyed closely on the street. Sensex and Nifty ended this week up by 1.0% 0.3% respectively, while CNX Midcap was down by 0.7%.
Monday - Sensex up by 0.4%, Nifty up by 0.4%, Midcap up by 1.2%
Indian markets continued its upward movement for third consecutive day as inflation numbers released on Friday came within the markets’ expectation and comfort zone of RBI. WPI gain for June was 4.86%, slightly higher than May figure of 4.7%. CPI climbed to 9.87% in June from 9.31% in May.
This upward movement in inflation numbers has increased the problems for RBI, which is facing a dilemma of whether announcing a rate cut to stimulate investments, which may lead to more inflation, or go for a rate hike to help falling rupee, which will lower import cost and hence inflation. We will get to see what RBI does on July 30. My bet is small changes in the underlying rates, or there might be a cut in CRR.
Asian markets were up largely owing to release of Chinese GDP data that matched the forecast of 7.5%.
Tuesday - Sensex down by 0.9%, Nifty down by 1.3%, Midcap down by 1.3%
RBI went undercover (sort of) yesterday evening and increased the marginal borrowing rates for banks by 2% from 8.25% to 10.25% through Marginal Standing Facility (MSF). RBI, in its attempt to halt the declining rupee is trying every trick in trade available to it, led to sell off in the markets as borrowing became more expensive. RBI’s belief that excessive liquidity in the system is leading to rupee volatility also hurts the rate cut expectations.
Wednesday - Sensex up by 0.5%, Nifty up by 0.3%, Midcap down by 0.8%
Mixed day for markets as investors sentiment got a boost as govt gave a green signal to FDI in almost a dozen sector, including telecom and defence sector. Global sentiment was little cautious ahead of Fed meeting where all eyes were on Fed comments on timing of their plan of cutting down on bond purchases. Investors also focused on value picking the FMCG stocks while avoiding the banks and other interest rate sensitive space. Street was not very happy with HDFC Bank results, as its net profit grew by 30% y-o-y but gross NPA levels increased to 16% q-o-q indicating stress on their balance sheet. Stock went down 2.4%.
Thursday - Sensex up by 0.9%, Nifty up by 1.1%, Midcap up by 1.0%
Markets went up further after Fed comments on being flexible about the timing of cut in stimulus spending boosted the sentiments. Global markets went up largely as Fed suggests that it may not be too aggressive with tapering plans and will depend upon the performance of underlying economy.
Friday - Sensex up by 0.1%, Nifty down by 0.1%, Midcap down by 0.8%
The mood stayed positive for second consecutive day boosted by Fed comments. Bank stocks continued to face volatility as market is concerned about RBI current stance of monetary tightening. Street is worried that instead of rate cut may raise CRR. IT major TCS rallied by 5%, as it beat the street expectation of revenue growth while sustaining its margins, which reflect strong account management and execution capabilities.
Monday - Sensex up by 0.4%, Nifty up by 0.4%, Midcap up by 1.2%
Indian markets continued its upward movement for third consecutive day as inflation numbers released on Friday came within the markets’ expectation and comfort zone of RBI. WPI gain for June was 4.86%, slightly higher than May figure of 4.7%. CPI climbed to 9.87% in June from 9.31% in May.
This upward movement in inflation numbers has increased the problems for RBI, which is facing a dilemma of whether announcing a rate cut to stimulate investments, which may lead to more inflation, or go for a rate hike to help falling rupee, which will lower import cost and hence inflation. We will get to see what RBI does on July 30. My bet is small changes in the underlying rates, or there might be a cut in CRR.
Asian markets were up largely owing to release of Chinese GDP data that matched the forecast of 7.5%.
Tuesday - Sensex down by 0.9%, Nifty down by 1.3%, Midcap down by 1.3%
RBI went undercover (sort of) yesterday evening and increased the marginal borrowing rates for banks by 2% from 8.25% to 10.25% through Marginal Standing Facility (MSF). RBI, in its attempt to halt the declining rupee is trying every trick in trade available to it, led to sell off in the markets as borrowing became more expensive. RBI’s belief that excessive liquidity in the system is leading to rupee volatility also hurts the rate cut expectations.
Wednesday - Sensex up by 0.5%, Nifty up by 0.3%, Midcap down by 0.8%
Mixed day for markets as investors sentiment got a boost as govt gave a green signal to FDI in almost a dozen sector, including telecom and defence sector. Global sentiment was little cautious ahead of Fed meeting where all eyes were on Fed comments on timing of their plan of cutting down on bond purchases. Investors also focused on value picking the FMCG stocks while avoiding the banks and other interest rate sensitive space. Street was not very happy with HDFC Bank results, as its net profit grew by 30% y-o-y but gross NPA levels increased to 16% q-o-q indicating stress on their balance sheet. Stock went down 2.4%.
Thursday - Sensex up by 0.9%, Nifty up by 1.1%, Midcap up by 1.0%
Markets went up further after Fed comments on being flexible about the timing of cut in stimulus spending boosted the sentiments. Global markets went up largely as Fed suggests that it may not be too aggressive with tapering plans and will depend upon the performance of underlying economy.
Friday - Sensex up by 0.1%, Nifty down by 0.1%, Midcap down by 0.8%
The mood stayed positive for second consecutive day boosted by Fed comments. Bank stocks continued to face volatility as market is concerned about RBI current stance of monetary tightening. Street is worried that instead of rate cut may raise CRR. IT major TCS rallied by 5%, as it beat the street expectation of revenue growth while sustaining its margins, which reflect strong account management and execution capabilities.
Wednesday, July 17, 2013
RBI: Picking up fights it cannot win
In his famous book Thinking Fast and Slow, Daniel Kahnemann cites a study conducted on football goalkeepers. That study deduced that a goalkeeper would be able to save more goals, if he chose to stay standing at one place. However, a goalkeeper, like most of us, will rather risk a goal than to face embarrassment (however imaginary) of audience seeing him not doing anything. Our RBI governor Subbarao seems to be in that position.
Subbarao, in his fresh bid to boost rupee has indirectly led to hike in interest rates. Apparently, every other central banker in emerging market is busy raising the interest rates to stem the fall of their currencies. RBI has also announced that it is soon going to sell bonds to suck out the excessive liquidity from the markets, which it believes to be responsible for volatile rupee.
Indian businesses and citizens are facing less than comfortable investment climate, delays in policy implementations, which has led to higher unemployment or stagnant wages, and not to mention RBI’s key enemy, the one on which it was focused on till now, high inflation. Then, Fed Chairman Ben Bernanke issued a statement talking about tapering of bond purchases i.e. reducing stimulus spending which led to FIIs started exiting emerging markets in droves, taking the rupee down with them. Apparently, the yield gap between US debt and Indian debt has been reducing, making the Indian debt less attractive.
Now, if you are RBI governor, would you rather focus on spending your reserves on fighting off fall in your currency, which is not just India-specific phenomena or you rather try to polish bright the India investment story (by way of easing off liquidity). It is a classic buyback stocks vs. invest in your own plant situation. I will choose the latter. What inflows you lose from debt markets, you can counter them from inflows in stocks or FDIs if you start rebuilding your fundamental story. And that will in turn will help the rupee, by way of improved sovereign ratings, investment climate etc. etc. But, that is just me.
No doubt, that RBI’s current actions have impeded the case for rate cut announcement on coming July 30 meeting, but my guess is that RBI is going to announce some compensatory measure in the form of small rate cut or cut in mandatory CRR, now the inflation data is largely range-bound and within RBI’s comfort zone of sub 5%.
Subbarao, in his fresh bid to boost rupee has indirectly led to hike in interest rates. Apparently, every other central banker in emerging market is busy raising the interest rates to stem the fall of their currencies. RBI has also announced that it is soon going to sell bonds to suck out the excessive liquidity from the markets, which it believes to be responsible for volatile rupee.
Indian businesses and citizens are facing less than comfortable investment climate, delays in policy implementations, which has led to higher unemployment or stagnant wages, and not to mention RBI’s key enemy, the one on which it was focused on till now, high inflation. Then, Fed Chairman Ben Bernanke issued a statement talking about tapering of bond purchases i.e. reducing stimulus spending which led to FIIs started exiting emerging markets in droves, taking the rupee down with them. Apparently, the yield gap between US debt and Indian debt has been reducing, making the Indian debt less attractive.
Now, if you are RBI governor, would you rather focus on spending your reserves on fighting off fall in your currency, which is not just India-specific phenomena or you rather try to polish bright the India investment story (by way of easing off liquidity). It is a classic buyback stocks vs. invest in your own plant situation. I will choose the latter. What inflows you lose from debt markets, you can counter them from inflows in stocks or FDIs if you start rebuilding your fundamental story. And that will in turn will help the rupee, by way of improved sovereign ratings, investment climate etc. etc. But, that is just me.
No doubt, that RBI’s current actions have impeded the case for rate cut announcement on coming July 30 meeting, but my guess is that RBI is going to announce some compensatory measure in the form of small rate cut or cut in mandatory CRR, now the inflation data is largely range-bound and within RBI’s comfort zone of sub 5%.
Saturday, July 13, 2013
Weekly Market Commentary - Jul 8 - Jul 12, 2013
The highlight of this week was Fed comments on sustaining its bond purchases, aka stimulus spending until the moment it sees sustainable development in US economy. Markets across Asia and Europe cheered the statements and rallied as reversals of outflows have made their economies even more vulnerable. Indian markets had another reason to cheer as Infosys posted bested the street expectations. Sensex and Nifty ended this week up 2.4% each, while CNX Midcap was up by 1.1%.
Monday - Sensex down by 0.9%, Nifty down by 1.0%, Midcap down by 0.3%
Markets went down as Indian President agreed to passing of controversial Food Bill Ordinance, which provides 2/3rd of Indian population with legal right to cheap food grains. The food bill is expected to dent a big hole in Indian govt budgetary calculations. Strong US dollar on the back of positive US job data also led to rupee breaching 61 mark and causing nervousness among investors.
Tuesday - Sensex up by 0.6%, Nifty up by 0.8%, Midcap up by 0.8%
Investors’ mood turned positive after rupee recovered sharply as RBI and SEBI announced steps to curb currency speculation. Eurozone markets also rallied as Portugal moves closer to political stability and Greece got another bailout approval.
Wednesday - Sensex down by 0.7%, Nifty down by 0.7%, Midcap down by 0.5%
Markets slipped as investors turned cautious ahead of Fed meeting, commencement of earning season and release of a bunch of Indian economic data. Refinery stocks came under pressure as RBI in a bid to curb currency speculation directed all state oil companies to use one single bank for their dollar transaction.
Thursday - Sensex up by 2.0%, Nifty up by 2.0%, Midcap up by 0.7%
Markets regained their bullishness as Fed comments of continuing stimulus bolstered the investor sentiment. The comments allayed the fear of flight of foreign flows from emerging markets in hurry and hopefully will put a brake on it. Bank of Japan also reiterated its stance of keeping its bond purchase program unchanged as per market expectation.
Friday - Sensex up by 1.4%, Nifty up by 1.2%, Midcap up by 0.3%
Markets continue its upward movement as Infosys the leading IT company, announced results that beat market expectation. The company left its FY14 dollar sales growth guidance unchanged at 6-10%, which boosted the investor sentiment. India's trade deficit in June narrowed to $12.24bn from a 7 month high, helped by slowdown in gold imports. Lowering of trade deficit will hopefully provide a cushion to current account balance and rupee also.
Monday - Sensex down by 0.9%, Nifty down by 1.0%, Midcap down by 0.3%
Markets went down as Indian President agreed to passing of controversial Food Bill Ordinance, which provides 2/3rd of Indian population with legal right to cheap food grains. The food bill is expected to dent a big hole in Indian govt budgetary calculations. Strong US dollar on the back of positive US job data also led to rupee breaching 61 mark and causing nervousness among investors.
Tuesday - Sensex up by 0.6%, Nifty up by 0.8%, Midcap up by 0.8%
Investors’ mood turned positive after rupee recovered sharply as RBI and SEBI announced steps to curb currency speculation. Eurozone markets also rallied as Portugal moves closer to political stability and Greece got another bailout approval.
Wednesday - Sensex down by 0.7%, Nifty down by 0.7%, Midcap down by 0.5%
Markets slipped as investors turned cautious ahead of Fed meeting, commencement of earning season and release of a bunch of Indian economic data. Refinery stocks came under pressure as RBI in a bid to curb currency speculation directed all state oil companies to use one single bank for their dollar transaction.
Thursday - Sensex up by 2.0%, Nifty up by 2.0%, Midcap up by 0.7%
Markets regained their bullishness as Fed comments of continuing stimulus bolstered the investor sentiment. The comments allayed the fear of flight of foreign flows from emerging markets in hurry and hopefully will put a brake on it. Bank of Japan also reiterated its stance of keeping its bond purchase program unchanged as per market expectation.
Friday - Sensex up by 1.4%, Nifty up by 1.2%, Midcap up by 0.3%
Markets continue its upward movement as Infosys the leading IT company, announced results that beat market expectation. The company left its FY14 dollar sales growth guidance unchanged at 6-10%, which boosted the investor sentiment. India's trade deficit in June narrowed to $12.24bn from a 7 month high, helped by slowdown in gold imports. Lowering of trade deficit will hopefully provide a cushion to current account balance and rupee also.
Saturday, July 6, 2013
Weekly Market Commentary - Jul 1 - Jul 5, 2013
Indian markets have become more sensitive to global and domestic macros rather than stock fundamentals in recent times, which is in fact good news for stock pickers who follow bottom up strategy rather than top down. Sensex ended this week up 0.5%, while Nifty gained 0.4% and CNX Midcap was up by 0.5%.
Monday - Sensex up by 0.9%, Nifty up by 1.0%, Midcap up by 2.3%
Markets continued their bullish momentum from previous week as govt paced up the reforms. The recent gas price hike will attract more investments into country's oil and gas space. Investors are closely watching every govt move and expect more reforms before elections. News of above average monsoon expectations also kept the mood buoyant.
Tuesday - Sensex down by 0.6%, Nifty down by 0.7%, Midcap down by 0.6%
Investors booked profits after 3 days rallies in the stocks. Almost all sectors end up in red. Tata Motors went down 1% after company announced 16.4% fall in domestic sales of Commercial and Passenger vehicles to 48,712 units and 34.2% decline in exports in June 2013 over June 2012.
Wednesday - Sensex down by 1.5%, Nifty down by 1.5%, Midcap down by 2.1%
Markets slipped as rising crude prices and weak rupee brought back the focus on current account deficit. Ouster of Egyptian President Mohammad Morsi and subsequently army coming back to power has raised tension in one of the biggest Middle East countries, which led to increased volatility in crude prices. On the other hand, FIIs continued to offload their rupee assets further deteriorating the rupee exchange rate against the dollar.
Thursday - Sensex up by 1.2%, Nifty up by 1.1%, Midcap up by 0.7%
Investors turned to value buying, as sentiment has turned positive after recent reform announcement. Also, falling rupee has turned investors bullish on IT stocks. Meanwhile, the government on Wednesday finally cleared an ambitious Rs 1.25 lakh crore food security plan, promising subsidized food to two out of every three Indians. The move will help the Congress party gain significant political support in the run-up to the 2014 general election, although it may stretch the government's fiscal deficit. Food bill is expected to increase from 85,000 crores to 1.5 trillion rupees.
Friday - Sensex up by 0.4%, Nifty up by 0.5%, Midcap up by 0.3%
Markets went up globally as central bankers in Europe assured investors that there is no hurry to wind down stimulus. Overall, mood in Indian markets remained positive though FIIs has turned net sellers amid increasing rupee volatility.
Monday - Sensex up by 0.9%, Nifty up by 1.0%, Midcap up by 2.3%
Markets continued their bullish momentum from previous week as govt paced up the reforms. The recent gas price hike will attract more investments into country's oil and gas space. Investors are closely watching every govt move and expect more reforms before elections. News of above average monsoon expectations also kept the mood buoyant.
Tuesday - Sensex down by 0.6%, Nifty down by 0.7%, Midcap down by 0.6%
Investors booked profits after 3 days rallies in the stocks. Almost all sectors end up in red. Tata Motors went down 1% after company announced 16.4% fall in domestic sales of Commercial and Passenger vehicles to 48,712 units and 34.2% decline in exports in June 2013 over June 2012.
Wednesday - Sensex down by 1.5%, Nifty down by 1.5%, Midcap down by 2.1%
Markets slipped as rising crude prices and weak rupee brought back the focus on current account deficit. Ouster of Egyptian President Mohammad Morsi and subsequently army coming back to power has raised tension in one of the biggest Middle East countries, which led to increased volatility in crude prices. On the other hand, FIIs continued to offload their rupee assets further deteriorating the rupee exchange rate against the dollar.
Thursday - Sensex up by 1.2%, Nifty up by 1.1%, Midcap up by 0.7%
Investors turned to value buying, as sentiment has turned positive after recent reform announcement. Also, falling rupee has turned investors bullish on IT stocks. Meanwhile, the government on Wednesday finally cleared an ambitious Rs 1.25 lakh crore food security plan, promising subsidized food to two out of every three Indians. The move will help the Congress party gain significant political support in the run-up to the 2014 general election, although it may stretch the government's fiscal deficit. Food bill is expected to increase from 85,000 crores to 1.5 trillion rupees.
Friday - Sensex up by 0.4%, Nifty up by 0.5%, Midcap up by 0.3%
Markets went up globally as central bankers in Europe assured investors that there is no hurry to wind down stimulus. Overall, mood in Indian markets remained positive though FIIs has turned net sellers amid increasing rupee volatility.
Saturday, June 22, 2013
Weekly Market Commentary - Jun 17 - Jun 21, 2013
This week begin with the RBI's decision to maintain status-quo on key policy rates and ended with the new gameplan from Ben Bernanke to taper down its bond purchase program.
I think chances of rate cut announcement in next RBI meeting in July have increased as inflation, trade deficit are trending downward and will move into RBI's comfort zone. Once the rupee worry is out of the way, I expect RBI to cut interest rates by at least 50bps.
Market reaction to Fed announcement of reducing easy liquidity it has splashed the markets with, has not come as a surprise to lot of investors. It is the timing, which caught few investors off-guard. US markets are not yet out of the rut, unemployment is still not back to pre-crisis range, business confidence has not improved significantly meaning none of the objectives of the QE has been achieved so far, in my view.
Sensex extended its losses and ended this week down 2.1%, while Nifty and CNX Midcap lost 2.4% and 2.3% respectively.
Monday - Sensex up by 0.8%, Nifty up by 0.7%, Midcap up by 0.6%
Market gave a thumbs up to the RBI decision of keeping the interest rates unchanged. RBI kept the repo rate intact at 7.25% while CRR was also unchanged at 4%. Although some investors were expecting the rate cut but overall the decision was considered prudent in wake of recent slump in value of Indian currency. Not only the rate cut would have done little to stimulate the domestic economy, I think capital inflows would have incurred more damage making the Indian rupee even less attractive in comparison to US dollar.
Tuesday - Sensex down by 0.5%, Nifty down by 0.6%, Midcap up by 0.5%
Once the market has chewed and digested comments from RBI meeting and decisions taken, the focus has now turned to Fed meeting, which has started today. Market is moving cautiously as Fed comments on tapering off of quantitative easing will be the next catalyst to decide market direction in short term.
Govt released its May trade deficit number which rose to $20.1bn from $17.1bn in April. Deficit widened as gold imports rose by 90% to $8.4bn while exports contracted.
Wednesday - Sensex up by 0.1%, Nifty up by 0.1%, Midcap up by 0.5%
Investors stayed largely nervous and markets remained flat for the day as focus stayed on Fed meeting. Fed will decide on whether they are going ahead with their plans to taper off QE and what will be the timelines. Market is expecting it to stay on until end of this year at least. Many investors hold QE responsible for excessive froth in the market and expect markets to return to normal after excessive liquidity is withdrawn.
Thursday - Sensex down by 2.7%, Nifty down by 2.9%, Midcap down by 2.4%
Sensex registered its biggest drop in 2 years as Fed discussed its timeline to taper down its bond purchase program (aka QE) later this year. Indian rupee also slumped and touched its new low of 59.93 to a dollar. Though timeline is little more aggressive than expected, and is replete with lots of ifs and buts, I believe we will return to normal markets where fundamentals will be the biggest drivers in stock and index values.
Friday - Sensex up by 0.3%, Nifty up by 0.2%, Midcap down by 1.5%
Market indices bounced back a little from yesterday's low amid FM's assurance that govt will do all it can to curtail the rupee fall.
Govt cleared a proposal that will allow power companies to pass on the cost of imported coal to customers. The move is a big relied to power generation companies struggling with high losses.
I think chances of rate cut announcement in next RBI meeting in July have increased as inflation, trade deficit are trending downward and will move into RBI's comfort zone. Once the rupee worry is out of the way, I expect RBI to cut interest rates by at least 50bps.
Market reaction to Fed announcement of reducing easy liquidity it has splashed the markets with, has not come as a surprise to lot of investors. It is the timing, which caught few investors off-guard. US markets are not yet out of the rut, unemployment is still not back to pre-crisis range, business confidence has not improved significantly meaning none of the objectives of the QE has been achieved so far, in my view.
Sensex extended its losses and ended this week down 2.1%, while Nifty and CNX Midcap lost 2.4% and 2.3% respectively.
Monday - Sensex up by 0.8%, Nifty up by 0.7%, Midcap up by 0.6%
Market gave a thumbs up to the RBI decision of keeping the interest rates unchanged. RBI kept the repo rate intact at 7.25% while CRR was also unchanged at 4%. Although some investors were expecting the rate cut but overall the decision was considered prudent in wake of recent slump in value of Indian currency. Not only the rate cut would have done little to stimulate the domestic economy, I think capital inflows would have incurred more damage making the Indian rupee even less attractive in comparison to US dollar.
Tuesday - Sensex down by 0.5%, Nifty down by 0.6%, Midcap up by 0.5%
Once the market has chewed and digested comments from RBI meeting and decisions taken, the focus has now turned to Fed meeting, which has started today. Market is moving cautiously as Fed comments on tapering off of quantitative easing will be the next catalyst to decide market direction in short term.
Govt released its May trade deficit number which rose to $20.1bn from $17.1bn in April. Deficit widened as gold imports rose by 90% to $8.4bn while exports contracted.
Wednesday - Sensex up by 0.1%, Nifty up by 0.1%, Midcap up by 0.5%
Investors stayed largely nervous and markets remained flat for the day as focus stayed on Fed meeting. Fed will decide on whether they are going ahead with their plans to taper off QE and what will be the timelines. Market is expecting it to stay on until end of this year at least. Many investors hold QE responsible for excessive froth in the market and expect markets to return to normal after excessive liquidity is withdrawn.
Thursday - Sensex down by 2.7%, Nifty down by 2.9%, Midcap down by 2.4%
Sensex registered its biggest drop in 2 years as Fed discussed its timeline to taper down its bond purchase program (aka QE) later this year. Indian rupee also slumped and touched its new low of 59.93 to a dollar. Though timeline is little more aggressive than expected, and is replete with lots of ifs and buts, I believe we will return to normal markets where fundamentals will be the biggest drivers in stock and index values.
Friday - Sensex up by 0.3%, Nifty up by 0.2%, Midcap down by 1.5%
Market indices bounced back a little from yesterday's low amid FM's assurance that govt will do all it can to curtail the rupee fall.
Govt cleared a proposal that will allow power companies to pass on the cost of imported coal to customers. The move is a big relied to power generation companies struggling with high losses.
Friday, June 14, 2013
Weekly Market Commentary - Jun 10 - Jun 14, 2013
Market movements this week were dominated by currency related headlines. Rupee has slumped lower versus dollar and has raised the fears of inflation making a comeback via expensive imports. The selling, which was till recently going on in large cap stocks has spread to midcap stocks as well. Sensex ended this week with a loss of 1.3%, while Nifty and CNX Midcap lost 1.2% and 4.0% respectively.
Monday - Sensex up by 0.1%, Nifty down by 0.1%, Midcap down by 1.3%
Market traded under the pressure of depreciating currency. Rupee touched a low of 58 versus dollar and stoked inflation fears among the investors. IT stocks went higher will most of the midcap stocks slumped as currency traded lower.
Tuesday - Sensex down by 1.5%, Nifty down by 1.5%, Midcap down by 1.9%
Markets sentiments continued to be weighed down by currency depreciation. Recent good news from RBI related to decline in inflation as shown by downward movement in WPI and CPI have been totally offset by fears of inflation strengthening again as rupee continues to slide against the dollar. FIIs continued to sell Indian bonds as yield difference with US bonds lessen.
Wednesday - Sensex down by 0.5%, Nifty down by 0.5%, Midcap down by 0.4%
Markets were volatile as the rupee found support in the Economic Affairs Ministry's comments that the fall is a temporary phase and news that RBI has intervened by selling dollars. There were also reports that govt may raise FDI limits to finance CAD.
India also released its IIP and CPI numbers. While IIP growth came lower at 2% in April vs 3.4% in March, May CPI came in at 9.31% vs 9.39% in April. Decline in IIP growth has raised concerns whether RBI will cut rates in an attempt to stimulate growth although RBI's hands will be tied as rupee continues its slump.
Thursday - Sensex down by 1.1%, Nifty down by 1.1%, Midcap down by 1.9%
Market traded lower as selling continued among no rate cut hopes, rising CAD and higher inflationary expectations.
Friday - Sensex up by 1.9%, Nifty up by 1.9%, Midcap up by 1.4%
Markets took a reprieve from continuous selling it was witnessing from past few sessions as investors hinged their hopes on rate cut from RBI next week after May WPI came lower at 4.7%.
Monday - Sensex up by 0.1%, Nifty down by 0.1%, Midcap down by 1.3%
Market traded under the pressure of depreciating currency. Rupee touched a low of 58 versus dollar and stoked inflation fears among the investors. IT stocks went higher will most of the midcap stocks slumped as currency traded lower.
Tuesday - Sensex down by 1.5%, Nifty down by 1.5%, Midcap down by 1.9%
Markets sentiments continued to be weighed down by currency depreciation. Recent good news from RBI related to decline in inflation as shown by downward movement in WPI and CPI have been totally offset by fears of inflation strengthening again as rupee continues to slide against the dollar. FIIs continued to sell Indian bonds as yield difference with US bonds lessen.
Wednesday - Sensex down by 0.5%, Nifty down by 0.5%, Midcap down by 0.4%
Markets were volatile as the rupee found support in the Economic Affairs Ministry's comments that the fall is a temporary phase and news that RBI has intervened by selling dollars. There were also reports that govt may raise FDI limits to finance CAD.
India also released its IIP and CPI numbers. While IIP growth came lower at 2% in April vs 3.4% in March, May CPI came in at 9.31% vs 9.39% in April. Decline in IIP growth has raised concerns whether RBI will cut rates in an attempt to stimulate growth although RBI's hands will be tied as rupee continues its slump.
Thursday - Sensex down by 1.1%, Nifty down by 1.1%, Midcap down by 1.9%
Market traded lower as selling continued among no rate cut hopes, rising CAD and higher inflationary expectations.
Friday - Sensex up by 1.9%, Nifty up by 1.9%, Midcap up by 1.4%
Markets took a reprieve from continuous selling it was witnessing from past few sessions as investors hinged their hopes on rate cut from RBI next week after May WPI came lower at 4.7%.
Friday, June 7, 2013
Weekly Market Commentary - Jun 3 - Jun 7, 2013
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.
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.
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.
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.
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.
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.
Friday, April 26, 2013
Weekly Market Commentary - Apr 22 - 26, 2013
Markets continued its upward momentum this week and recorded gain of 1.4% in Sensex, Nifty gaining 1.5% while CNX Midcap rising 1.2%
Monday - Sensex up 0.8%, Nifty up 0.9%, Midcap up 1.8%
The cool-off in inflation has raised the expectations of rate cut and turned the investor tone bullish. Banking stocks gain. FIIs bought 915.8 crores as reported by stock exchanges.
Tuesday - Sensex and Nifty flat at 0.0%, Midcap slightly down by 0.4%
Markets had a choppy session with RIL gaining on the news of govt. clearing oil blocks, while SBI and HDFC losing on profit booking ahead of RBI review meeting.
Wednesday - Markets closed on the occasion of Mahavir Jayanti
Thursday - Sensex up 1.2%, Nifty up 1.4%, Midcap up 0.6%
Markets gained as last thursday of the month saw derivative expiries. FIIIs bought 226 crores while domestic investors sold 528 crores of equity.
Friday - Sensex down 0.6%, Nifty down 0.8%, Midcap down 0.8%
Markets continued to be range bound with domestic investors still staying away, as FIIs continued to build their stakes. The Sensex has dropped 1.3 percent this year, and is valued at 12.9 times projected 12-month profits, compared with the MSCI Emerging Markets Index’s 10.3 times.
Monday - Sensex up 0.8%, Nifty up 0.9%, Midcap up 1.8%
The cool-off in inflation has raised the expectations of rate cut and turned the investor tone bullish. Banking stocks gain. FIIs bought 915.8 crores as reported by stock exchanges.
Tuesday - Sensex and Nifty flat at 0.0%, Midcap slightly down by 0.4%
Markets had a choppy session with RIL gaining on the news of govt. clearing oil blocks, while SBI and HDFC losing on profit booking ahead of RBI review meeting.
Wednesday - Markets closed on the occasion of Mahavir Jayanti
Thursday - Sensex up 1.2%, Nifty up 1.4%, Midcap up 0.6%
Markets gained as last thursday of the month saw derivative expiries. FIIIs bought 226 crores while domestic investors sold 528 crores of equity.
Friday - Sensex down 0.6%, Nifty down 0.8%, Midcap down 0.8%
Markets continued to be range bound with domestic investors still staying away, as FIIs continued to build their stakes. The Sensex has dropped 1.3 percent this year, and is valued at 12.9 times projected 12-month profits, compared with the MSCI Emerging Markets Index’s 10.3 times.
Saturday, April 20, 2013
Weekly Market Commentary - Apr 15 - 19, 2013
Markets rebounded smartly this week on the back of low inflation data raising hope of RBI rate cut Sensex rising 4.2%, Nifty gaining 4.6% while CNX Midcap rising 2.76%
Monday - Sensex up 0.63%, Nifty up 0.72%, Midcap up 0.03%
March inflation data, WPI of 5.96%, which was lowest in 40 months, buoyed the market with the hopes of a rate cut from RBI. Also, inflation is expected to stay lower as crude oil prices have declined sharply in recent weeks.
Tuesday - Sensex up 2.11%, Nifty up 2.16%, Midcap up 1.39%
Markets continued to rise higher with previous day news of lower inflation data, which arrived during late trading hours, continued to instill confidence in expected RBI rate cut. Fall in gold prices also led to hopes of better current account deficit and benefited the market.
Wednesday - Sensex slightly down 0.07%, Nifty flat 0.00%, Midcap up slghtly by 0.23%
Two days of rally gave opportunity to book some profits.
Thursday - Sensex up 1.52%, Nifty up 1.66%, Midcap up 1.10%
Rate cut hopes on coming RBI meet on May 3, SC order to lift ban on nine iron ore mines and FII buyings led the sensex to cross 19K level.
Friday - Markets closed on occasion of Ram Navmi
Monday - Sensex up 0.63%, Nifty up 0.72%, Midcap up 0.03%
March inflation data, WPI of 5.96%, which was lowest in 40 months, buoyed the market with the hopes of a rate cut from RBI. Also, inflation is expected to stay lower as crude oil prices have declined sharply in recent weeks.
Tuesday - Sensex up 2.11%, Nifty up 2.16%, Midcap up 1.39%
Markets continued to rise higher with previous day news of lower inflation data, which arrived during late trading hours, continued to instill confidence in expected RBI rate cut. Fall in gold prices also led to hopes of better current account deficit and benefited the market.
Wednesday - Sensex slightly down 0.07%, Nifty flat 0.00%, Midcap up slghtly by 0.23%
Two days of rally gave opportunity to book some profits.
Thursday - Sensex up 1.52%, Nifty up 1.66%, Midcap up 1.10%
Rate cut hopes on coming RBI meet on May 3, SC order to lift ban on nine iron ore mines and FII buyings led the sensex to cross 19K level.
Friday - Markets closed on occasion of Ram Navmi
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