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.
Saturday, July 6, 2013
Saturday, June 29, 2013
Weekly Market Commentary - Jun 24 - Jun 28, 2013
Monday - Sensex down by 1.2%, Nifty down by 1.4%, Midcap down by 2.6%
Market extended their losses from previous week as the global stocks continue to slid post Fed announcement of curtailing its bond buying program. Market seems to be ignoring the ifs and buts in the announcement and is running havoc with no plan in sight. Markets were also nervous when Chinese central bank made comments to the effect that liquidity in the system is reasonable, when China is facing liquidity squeeze. Central bank suggested fine tuning the system, which market assumed as reducing liquidity. Shanghai went down more than 5%.
Indian markets mirroring their global peers, are also under pressure due to rising CAD worries and fall in currency value. Brokers are of the view that FIIs have sold over $5 billion of debt and equities in June so far.
Tuesday - Sensex up by 0.5%, Nifty up by 0.3%, Midcap down by 0.6%
The Indian stocks went up in early trade as China tries to soothe investors’ nerves, short covering as F&O expiry nears. Markets also bought oil and gas stocks ahead of pending decision on gas price revision. Gas price were supposed to be revised previous week itself but the decision was deferred as Oil Minister was out for an official tour.
Wednesday - Sensex down by 0.4%, Nifty down by 0.4%, Midcap down by 0.0%
The Chinese central bank move to provide liquidity to some parts of its financial system to stabilize money market rates cheered the global market. Indian markets had a rangebound session as good news from China, short covering due to nearing F&O expiry was completely offset by rupee playing a spoilsport sliding below 60/$ level.
Thursday - Sensex up by 1.7%, Nifty up by 1.7%, Midcap up by 0.7%
Sensex and Nifty rallied as investors cheered the downward revision on US GDP data from 2.4% to 1.8%, which eased the concerns of reduced Fed spending. RBI also took advantage of this news and advanced its release of CAD data by one day. India's March quarter CAD came at $18.1 billion, 3.6% of GDP vs. consensus estimate of $21.7 billion or 4.4% of GDP. Corresponding figure for December quarter was 6.7%. The FY13 CAD stood at $88.2 billion and the Q4 Balance of Payments (BoP) stood at a surplus of $300 billion versus a $600 billion deficit year-on-year. Short coverings on the last expiry day of June series also buoyed the market.
Friday - Sensex up by 2.8%, Nifty up by 2.8%, Midcap up by 2.9%
Indian markets rallied as govt got its act together and approved doubling of gas prices from current $4.2/mmbtu to $8.4/mmbtu. The gas price decision was in limbo for several months now as various govt ministries, such as fertilizer, power and oil quarrel over the impact on their respective sectors. This decision was in tandem with the recent approval to power producers to pass on the imported coal cost to the consumers. The new gas pricing will get into force from April 1, 2014 and will work to attract investments in the sector as it makes several projects, big or small, across the country even more economical.
Rupee also rebounded to 59 levels after govt announced reforms to attract investments in the country and reduce country's dependence on imported gas (fuel). Govt has also initiated towards setting up of a coal regulator to settle disputed over quality and quantity of coal sold in the Indian markets. The poor quality of coal has led to squabbling between the country's premier energy producer NTPC and largest coal producer Coal India.
Saturday, June 22, 2013
Ben Bernanke - Calling early victory?
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. Investors should keep in mind that Ben's term is getting over in
January, and maybe the biggest reason of tapering down of QE is that he
does not want to go down in history as the person who threw the world
economy into deflation. He does not want to end up like his predecessor
Alan Greenspan. Maybe that explains the call for early victory.
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.
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