What might appear to be a dull week was actually quite interesting. Sensex tried to regain its old glory by rising within a handshake distance of all time high. In early 2008, when Sensex was at its peak, everybody (almost) believed India could do no wrong. Today investors are more cautious than ever.
Some bulls reason that current rally is sustainable due to good corporate results. This is not true. Markets are rallying as US Fed decided to defer its QE tapering decision and India benefits as it gets its share of global portfolio allocation.
Better than expectations result (was expectations low or results were actually better) helped the bulls find a fundamental story in the yarn they were already weaving.
Anyways, not all sectors have posted good results. Most of the cement stocks, the sector that should be the early riser in case of recovery, posted 50-80% decline in their quarterly profits.
We believe we want to believe.
Sensex lost 1.0%, Nifty lost 0.7% and CNX Midcap was up by 0.3% this week.
Monday – Sensex up by 0.1%, Nifty up by 0.3%, Midcap up by 1.0%
Markets are range bound, as investors get concerned about valuation levels. Easy liquidity flow continued to prop up the market levels.
Tuesday - Sensex down by 0.1%, Nifty flat, Midcap up by 0.4%
Investors continued to stay cautious as global markets wait for release of US jobs data later in the day. Jobs numbers are one of the critical figures, which US Fed looks out for to decide on its tapering plans.
Wednesday – Sensex down by 0.5%, Nifty down by 0.4%, Midcap down by 0.2%
Weak US jobs data firmly pushed expectations for the tapering of Federal Reserve stimulus into next year. Markets opened higher earlier in the day but lost all gains as interest rate sensitive stocks see selling pressure ahead of RBI meeting on Oct 29.
Thursday – Sensex down by 0.2%, Nifty down by 0.2%, Midcap flat
Sensex continues to see resistance as most of the stocks stayed in high valuation range while investor’s fear of another rate hike of 25 bps by RBI led to selling in rate sensitive stocks.
Friday – Sensex down by 0.2%, Nifty down by 0.3%, Midcap down by 1.0%
Sensex ended the day in negative after a brief rally during the day. India’s economic fundamentals do not support the current market levels. Investors continued to book profits in IT companies.
Sunday, October 27, 2013
Saturday, October 19, 2013
Weekly Market Commentary - Oct 14 - Oct 18, 2013
So far, earnings season continues to surprise Indian investors to the upside. As Sensex continues to hover around its all time high, most investors will do well to realize that expectation investing can come as an handy tool a bit before earnings season is about to start. Most investors do not use DCF while analyzing a stock/company. I do though. With so many assumptions and complexities built into it, DCF does not act as a quick tool to help investors/speculators make money. In such a scenario, they can resort to what Michael J. Mauboussin calls Expectation Investing.
Expectation Investing is also knows as Reverse DCF. In this method, instead of trying to value a company (stock) by forecasting free cash flows into the future and then discounting them to current period, you do it the other way round.
You look at the current stock price and then try to find out what assumptions market is building into the price. The analyst can review these assumptions and see whether expectations are excessively high or too low to arrive at the decision of investing in that particular company or not.
The biggest advantage of this method, is as you can see, is it eliminated the need of forecasting. However, this method does not provide a quick way to analyse stocks but when formalized into a framework it can help an investor to make a quick decision.
Finally, as a noted statistician George Box said “All models are wrong; some are useful.”
I urge my readers to share with us their experience with Reverse DCF process, if they have tried it in the past.
Sensex gained 3.1%, Nifty gained 3.2% and CNX Midcap was up by 2.3% this week.
Monday – Sensex up by 0.4%, Nifty up by 0.3%, Midcap up by 0.6%
Market party over good Infosys results (guidance) ended early as inflation played spoilsport. September WPI was 6.46% against 6.1% in August and 46 bps above the street estimate of 6%. Surge in inflation has put RBI in a fix and investors on back foot as RBI now will find it difficult to lower interest rates and even may lead to rate hikes to contain the inflationary pressure.
Tuesday - Sensex down by 0.3%, Nifty down by 0.4%, Midcap down by 1.2%
Yesterday’s high inflation numbers led to selling in banking and other rate sensitive stocks. HDFC lost some ground as bank reported its slowest growth quarter in a decade. HDFC earnings increased 27% y-o-y against its record 30% growth in every quarter in last decade.
Wednesday – Markets closed on Eid.
Thursday – Sensex down by 0.6%, Nifty down by 0.7%, Midcap down by 0.4%
Markets were down as investors resorted to profit booking as Infosys and TCS good results quickly became the story of the past. The market did not move much on the news of deal on US shutdown and debt ceiling. Most talked about event of recent times continued to be ignored by investors in the Indian markets.
Friday – Sensex up by 2.3%, Nifty up by 2.4%, Midcap up by 1.4%
A good close to a rather mute week. Markets went up as corporate earnings continued to surprise. L&T, the capital goods major, reported a 7% rise in quarterly profit beating the analyst estimates. Market sentiment was also boosted by the news that LIC will invest Rs. 40,000 crores ($1.28 billion) into the markets in FY14.
Expectation Investing is also knows as Reverse DCF. In this method, instead of trying to value a company (stock) by forecasting free cash flows into the future and then discounting them to current period, you do it the other way round.
You look at the current stock price and then try to find out what assumptions market is building into the price. The analyst can review these assumptions and see whether expectations are excessively high or too low to arrive at the decision of investing in that particular company or not.
The biggest advantage of this method, is as you can see, is it eliminated the need of forecasting. However, this method does not provide a quick way to analyse stocks but when formalized into a framework it can help an investor to make a quick decision.
Finally, as a noted statistician George Box said “All models are wrong; some are useful.”
I urge my readers to share with us their experience with Reverse DCF process, if they have tried it in the past.
Sensex gained 3.1%, Nifty gained 3.2% and CNX Midcap was up by 2.3% this week.
Monday – Sensex up by 0.4%, Nifty up by 0.3%, Midcap up by 0.6%
Market party over good Infosys results (guidance) ended early as inflation played spoilsport. September WPI was 6.46% against 6.1% in August and 46 bps above the street estimate of 6%. Surge in inflation has put RBI in a fix and investors on back foot as RBI now will find it difficult to lower interest rates and even may lead to rate hikes to contain the inflationary pressure.
Tuesday - Sensex down by 0.3%, Nifty down by 0.4%, Midcap down by 1.2%
Yesterday’s high inflation numbers led to selling in banking and other rate sensitive stocks. HDFC lost some ground as bank reported its slowest growth quarter in a decade. HDFC earnings increased 27% y-o-y against its record 30% growth in every quarter in last decade.
Wednesday – Markets closed on Eid.
Thursday – Sensex down by 0.6%, Nifty down by 0.7%, Midcap down by 0.4%
Markets were down as investors resorted to profit booking as Infosys and TCS good results quickly became the story of the past. The market did not move much on the news of deal on US shutdown and debt ceiling. Most talked about event of recent times continued to be ignored by investors in the Indian markets.
Friday – Sensex up by 2.3%, Nifty up by 2.4%, Midcap up by 1.4%
A good close to a rather mute week. Markets went up as corporate earnings continued to surprise. L&T, the capital goods major, reported a 7% rise in quarterly profit beating the analyst estimates. Market sentiment was also boosted by the news that LIC will invest Rs. 40,000 crores ($1.28 billion) into the markets in FY14.
Sunday, October 13, 2013
Weekly Market Commentary - Oct 7 - Oct 11, 2013
Infosys results started the Indian earnings season in style, with markets welcoming the raising of lower limit of FY14 revenue guidance. Meanwhile economic slowdown, falling capex spending and low consumer confidence is leading to muted expectations from 2QFY14 earnings. Sensex companies are expected to grow their earnings by 5-7% led by export-oriented sectors that are going to benefit from rupee depreciation.
Sensex gained 3.1%, Nifty gained 3.2% and CNX Midcap was up by 2.3% this week.
Monday – Sensex down by 0.1%, Nifty down by 0.0%, Midcap up by 0.7%
Concerns over US shutdown led to muted trading in global markets. If fighting political parties did not reach the solution soon, it may considerably dent the ongoing recovery in US economy.
Tuesday - Sensex up by 0.4%, Nifty up by 0.4%, Midcap up by 0.1%
RBI tried to undo its liquidity tightening measures it introduced when US tapering announcement led to crash in rupee value against major currencies. RBI reduced the MSF rates by another 50 bps to 9% in addition to increasing the duration of lending to the banks from current one day to 7 and 14 days.
Wednesday – Sensex up by 1.3%, Nifty up by 1.3%, Midcap up by 1.0%
Indian markets struggled in early sessions as IMF reduced the country’s growth projection to 3.8% in FY14. IMF also sees global growth falling to lowest since financial crisis. Markets recouped all its losses when data showed that trade gap narrowed to the lowest level in 30 months. The trade deficit narrowed to $6.76 billion in September from $10.9 billion in August. Main reason for the fall was govt. moves on tightening gold import which has led to decline in gold and silver imports to just $0.8 billion vs. $4.6 billion a year ago.
Thursday – Sensex up by 0.1%, Nifty up by 0.2%, Midcap up by 0.4%
Investors stayed cautious head of the beginning of earnings season on Friday with IT bellwether Infosys results announcement. Street is not expecting any surprises this earning season and is choosing to be selectively bullish this season.
Friday – Sensex up by 1.3%, Nifty up by 1.2%, Midcap flat
Most of the Asian markets closed in green as US political leaders showed some signs of compromise on US shutdown crisis. Infosys results cheered the market as company increased its FY14 guidance to 9-10% from 6-10% guidance previous quarter. Investors also cheered the new draft regulations allowing the establishment of real estate investment trusts in India.
Sensex gained 3.1%, Nifty gained 3.2% and CNX Midcap was up by 2.3% this week.
Monday – Sensex down by 0.1%, Nifty down by 0.0%, Midcap up by 0.7%
Concerns over US shutdown led to muted trading in global markets. If fighting political parties did not reach the solution soon, it may considerably dent the ongoing recovery in US economy.
Tuesday - Sensex up by 0.4%, Nifty up by 0.4%, Midcap up by 0.1%
RBI tried to undo its liquidity tightening measures it introduced when US tapering announcement led to crash in rupee value against major currencies. RBI reduced the MSF rates by another 50 bps to 9% in addition to increasing the duration of lending to the banks from current one day to 7 and 14 days.
Wednesday – Sensex up by 1.3%, Nifty up by 1.3%, Midcap up by 1.0%
Indian markets struggled in early sessions as IMF reduced the country’s growth projection to 3.8% in FY14. IMF also sees global growth falling to lowest since financial crisis. Markets recouped all its losses when data showed that trade gap narrowed to the lowest level in 30 months. The trade deficit narrowed to $6.76 billion in September from $10.9 billion in August. Main reason for the fall was govt. moves on tightening gold import which has led to decline in gold and silver imports to just $0.8 billion vs. $4.6 billion a year ago.
Thursday – Sensex up by 0.1%, Nifty up by 0.2%, Midcap up by 0.4%
Investors stayed cautious head of the beginning of earnings season on Friday with IT bellwether Infosys results announcement. Street is not expecting any surprises this earning season and is choosing to be selectively bullish this season.
Friday – Sensex up by 1.3%, Nifty up by 1.2%, Midcap flat
Most of the Asian markets closed in green as US political leaders showed some signs of compromise on US shutdown crisis. Infosys results cheered the market as company increased its FY14 guidance to 9-10% from 6-10% guidance previous quarter. Investors also cheered the new draft regulations allowing the establishment of real estate investment trusts in India.
Sunday, October 6, 2013
Weekly Market Commentary - Sept 30 - Oct 4, 2013
Indian markets gained this week primarily due to US shutdown, which inadvertently threw FIIs dollars in its direction. Nothing much has changed in Indian fundamentals though: CAD is still high; cost of funds has not gone down; consumer and business sentiment as reflected by weak PMI data. Even then, market is trading near its highs; is expensive and is very volatile. Though I continue to seek out the reasons to explain these anomalies, and I focus on most important ones, the economy and markets have too many moving parts. Every now and then, in order to explain the movements, I give in to recency effect and attentional bias.
Recency effect is nothing but one’s inclination to explain the process/event occurred, by whatever fresh news/story/event comes to mind. For e.g. markets went up as new RBI governor sworn in.
Attentional bias, on the other hand, is using your current subject under study: one you are most closely paying attention to, to explain every event occurring. For e.g. US shutdown is leading to global market rally as dollar investors have nowhere to go.
However, both examples used above may explain the market movements or state of the economy to some extent but the point is they are not the only ones.
Sensex gained 1.0%, Nifty gained 1.3% and CNX Midcap was up by 1.5% this week.
Monday – Sensex down by 1.8%, Nifty down by 1.7%, Midcap down by 0.8%
Indian markets were under pressure ahead of current account data release expected later in the day. An ET poll is estimating CAD to average $23 billion for Apr-Jun quarter vs. $18.1 billion a quarter earlier. Investors are worried that bad CAD data may force RBI to intervene in the market again and may escalate the cost of doing business in the near term.
Tuesday - Sensex up by 0.7%, Nifty up by 0.8%, Midcap up by 0.6%
Markets went up as RBI promised to infuse liquidity into the system via Rs. 10,000 crores purchase of government securities. Also, CAD figures released previous day came out to be little lower than what market participants were expecting. Gold and oil imports pushed 1Q14 CAD to $21.8 billion i.e. 4.9% of GDP. Indian govt plans to reduce the current account deficit to 3.7% of the GDP in FY14 to meet its $70 billion target.
Wednesday – Markets closed on occasion of Gandhi Jayanti
Thursday – Sensex up by 2.0%, Nifty up by 2.2%, Midcap up by 1.6%
Indian markets rose, as they became the target of FIIs dollars as current political crisis in United States has led to a shutdown of non-essential govt functionaries. Investors are worried that shutdown may prolong and will jeopardize any recovery of US economy.
Friday – Sensex up by 0.1%, Nifty flat, Midcap up by 0.2%
Markets ended flat as US dollars continued to flow in leading to increase in the value of Indian currency. The gain was capped as investors were disappointed by weak HSBC PMI data, which fell to 46.1 vs. 47.6 in August indicating contraction in private economy. Realty, auto and consumers gained as govt. decided to infuse funds into PSU banks to help them offer cheaper loans to public and industry.
Recency effect is nothing but one’s inclination to explain the process/event occurred, by whatever fresh news/story/event comes to mind. For e.g. markets went up as new RBI governor sworn in.
Attentional bias, on the other hand, is using your current subject under study: one you are most closely paying attention to, to explain every event occurring. For e.g. US shutdown is leading to global market rally as dollar investors have nowhere to go.
However, both examples used above may explain the market movements or state of the economy to some extent but the point is they are not the only ones.
Sensex gained 1.0%, Nifty gained 1.3% and CNX Midcap was up by 1.5% this week.
Monday – Sensex down by 1.8%, Nifty down by 1.7%, Midcap down by 0.8%
Indian markets were under pressure ahead of current account data release expected later in the day. An ET poll is estimating CAD to average $23 billion for Apr-Jun quarter vs. $18.1 billion a quarter earlier. Investors are worried that bad CAD data may force RBI to intervene in the market again and may escalate the cost of doing business in the near term.
Tuesday - Sensex up by 0.7%, Nifty up by 0.8%, Midcap up by 0.6%
Markets went up as RBI promised to infuse liquidity into the system via Rs. 10,000 crores purchase of government securities. Also, CAD figures released previous day came out to be little lower than what market participants were expecting. Gold and oil imports pushed 1Q14 CAD to $21.8 billion i.e. 4.9% of GDP. Indian govt plans to reduce the current account deficit to 3.7% of the GDP in FY14 to meet its $70 billion target.
Wednesday – Markets closed on occasion of Gandhi Jayanti
Thursday – Sensex up by 2.0%, Nifty up by 2.2%, Midcap up by 1.6%
Indian markets rose, as they became the target of FIIs dollars as current political crisis in United States has led to a shutdown of non-essential govt functionaries. Investors are worried that shutdown may prolong and will jeopardize any recovery of US economy.
Friday – Sensex up by 0.1%, Nifty flat, Midcap up by 0.2%
Markets ended flat as US dollars continued to flow in leading to increase in the value of Indian currency. The gain was capped as investors were disappointed by weak HSBC PMI data, which fell to 46.1 vs. 47.6 in August indicating contraction in private economy. Realty, auto and consumers gained as govt. decided to infuse funds into PSU banks to help them offer cheaper loans to public and industry.
Sunday, September 29, 2013
Weekly Market Commentary - Sept 23 - Sept 27, 2013
Overall, trades seeking to play the Fed-RBI announcement continued to unwind this week and took markets down with them. As second quarter results are upon us and street is not too excited with business environment and expects the results to be boring, indices are failing to find new catalyst to hold their ground. Sensex lost 2.6%, Nifty lost 3.0% and CNX Midcap was down by 0.5% this week.
Monday – Sensex down by 1.8%, Nifty down by 2.0%, Midcap down by 1.0%
Markets crumbled as investors’ sky-high expectations from the newly appointed RBI governor meets the realities on the ground. As Raghuram Rajan went on making inflation fighting his topmost priority and tightened liquidity, rate sensitives stocks such as banks took a heavy beating.
Tuesday - Sensex up by 0.1%, Nifty up by 0.0%, Midcap up by 0.2%
Banks continued to see heavy selling as Moody cut the SBI’s local currency and senior unsecured debt rating to lowest investment grade to Baa3 while changing the financial strength outlook to negative. Moody blamed the current weak financial position of bank’s promoter, Indian government as the reason for decline in asset quality, profitability and capital of public sector banks such as SBI.
Wednesday - Sensex down by 0.3%, Nifty down by 0.3%, Midcap up by 0.4%
Investors continue to square off the trades set up in the wake of Fed-RBI meetings previous week, ahead of derivative expiry on Thursday. Financial Technologies stock plunged as its auditor Deloitte Haskins bailed out on the firm and withdrew their audit report after claiming that firm’s financial statements are not reliable.
Thursday – Sensex up by 0.2%, Nifty up by 0.1%, Midcap down by 0.1%
Markets continued to stay volatile as investors unwind their positions on F&O expiry day but ended up little higher as RBI tried to give the market a reprieve by announcing a possibility of conducting OMO to ensure sufficient liquidity in the system.
Friday – Sensex down by 0.8%, Nifty down by 0.8%, Midcap flat
October F&O series started on a mute note with markets now turning to corporate earnings announcements expected in October to be low to modest, at best. Banks stayed under pressure as Raghuram went on questioning the strategy of central bankers around the world to keep the interest rates low to stimulate growth.
Monday – Sensex down by 1.8%, Nifty down by 2.0%, Midcap down by 1.0%
Markets crumbled as investors’ sky-high expectations from the newly appointed RBI governor meets the realities on the ground. As Raghuram Rajan went on making inflation fighting his topmost priority and tightened liquidity, rate sensitives stocks such as banks took a heavy beating.
Tuesday - Sensex up by 0.1%, Nifty up by 0.0%, Midcap up by 0.2%
Banks continued to see heavy selling as Moody cut the SBI’s local currency and senior unsecured debt rating to lowest investment grade to Baa3 while changing the financial strength outlook to negative. Moody blamed the current weak financial position of bank’s promoter, Indian government as the reason for decline in asset quality, profitability and capital of public sector banks such as SBI.
Wednesday - Sensex down by 0.3%, Nifty down by 0.3%, Midcap up by 0.4%
Investors continue to square off the trades set up in the wake of Fed-RBI meetings previous week, ahead of derivative expiry on Thursday. Financial Technologies stock plunged as its auditor Deloitte Haskins bailed out on the firm and withdrew their audit report after claiming that firm’s financial statements are not reliable.
Thursday – Sensex up by 0.2%, Nifty up by 0.1%, Midcap down by 0.1%
Markets continued to stay volatile as investors unwind their positions on F&O expiry day but ended up little higher as RBI tried to give the market a reprieve by announcing a possibility of conducting OMO to ensure sufficient liquidity in the system.
Friday – Sensex down by 0.8%, Nifty down by 0.8%, Midcap flat
October F&O series started on a mute note with markets now turning to corporate earnings announcements expected in October to be low to modest, at best. Banks stayed under pressure as Raghuram went on questioning the strategy of central bankers around the world to keep the interest rates low to stimulate growth.
Sunday, September 22, 2013
Weekly Market Commentary - Sept 16 - Sept 20, 2013
India, since Fed announced its tapering plans, got its act together and has done quite well in pushing some key reforms in parliament. RBI on its part took some controversial, but crucial steps to stem the decline in rupee that followed the Fed announcement. Now, when Fed has put a halt on its tapering plans, we all can just keep our fingers crossed and hope that Indian govt. does not become complacent and let go off this lifeline. We hope that reform momentum continues and we get our house in order before the next shitstorm hit us.
Sensex gained 2.7%, Nifty gained 2.8% and CNX Midcap was up by 1.3% this week.
Monday – Sensex flat at 0.0%, Nifty down by 0.2%, Midcap down by 0.5%
Investors were disappointed on Monday as RBI released its WPI inflation figures. RBI while formulating its policies uses WPI data along with CPI as an anchor. According to data released on Friday, retail inflation dropped in August. However unlike retail inflation, WPI rose to six month high to 6.1% in August (July – 5.79%). Market is anticipating that upturn in WPI will make it difficult for newly appointed RBI governor to cut rates.
Tuesday - Sensex up by 0.3%, Nifty up by 0.2%, Midcap down by 0.3%
Investors remain cautious ahead of two key events this week. On Sept 18, Fed will take decision on whether to continue to taper and by how much. Street is expecting tapering of $5-$10 billion every month. Anything above or below that range can cause sharp movements in the indices. Raghuram Rajan has decided to unveil its maiden policy on Sept 20 after getting a handle on Fed announcements. These two events together may hold key to future movements of Indian indices.
Wednesday - Sensex up by 0.8%, Nifty up by 0.8%, Midcap up by 0.5%
Expectations from Fed meeting continue to weigh on the markets. Markets closed higher as FIIs continue to build positions in the Indian markets.
Thursday – Sensex up by 3.4%, Nifty up by 3.7%, Midcap up by 2.9%
Fed surprised the market with announcement of deferring its tapering plans and instead decided to continue with its stimulus amid weak economic growth in US. I already highlighted in June that how the timing of tapering is suspicious as US economy, and with it global economy, continues to struggle. Markets celebrated the decision as day of reckoning for many of emerging economies like India, has deferred to some unknown date in the future.
Friday – Sensex down by 1.9%, Nifty down by 1.7%, Midcap down by 1.3%
In his maiden policy, Raghuram Rajan stumped the investors with a repo rate hike. Repo rate is now 7.25%. Rajan made it clear that fighting the inflation and exchange rate management is his top priority, so there is a need of liquidity tightening. RBI, in a bid to lower the cost of capital of banks, reduced the MSF by 75 bps from 10.25% to 9.5% and slashed the minimum daily CRR requirement from 99% to 95%.
Sensex gained 2.7%, Nifty gained 2.8% and CNX Midcap was up by 1.3% this week.
Monday – Sensex flat at 0.0%, Nifty down by 0.2%, Midcap down by 0.5%
Investors were disappointed on Monday as RBI released its WPI inflation figures. RBI while formulating its policies uses WPI data along with CPI as an anchor. According to data released on Friday, retail inflation dropped in August. However unlike retail inflation, WPI rose to six month high to 6.1% in August (July – 5.79%). Market is anticipating that upturn in WPI will make it difficult for newly appointed RBI governor to cut rates.
Tuesday - Sensex up by 0.3%, Nifty up by 0.2%, Midcap down by 0.3%
Investors remain cautious ahead of two key events this week. On Sept 18, Fed will take decision on whether to continue to taper and by how much. Street is expecting tapering of $5-$10 billion every month. Anything above or below that range can cause sharp movements in the indices. Raghuram Rajan has decided to unveil its maiden policy on Sept 20 after getting a handle on Fed announcements. These two events together may hold key to future movements of Indian indices.
Wednesday - Sensex up by 0.8%, Nifty up by 0.8%, Midcap up by 0.5%
Expectations from Fed meeting continue to weigh on the markets. Markets closed higher as FIIs continue to build positions in the Indian markets.
Thursday – Sensex up by 3.4%, Nifty up by 3.7%, Midcap up by 2.9%
Fed surprised the market with announcement of deferring its tapering plans and instead decided to continue with its stimulus amid weak economic growth in US. I already highlighted in June that how the timing of tapering is suspicious as US economy, and with it global economy, continues to struggle. Markets celebrated the decision as day of reckoning for many of emerging economies like India, has deferred to some unknown date in the future.
Friday – Sensex down by 1.9%, Nifty down by 1.7%, Midcap down by 1.3%
In his maiden policy, Raghuram Rajan stumped the investors with a repo rate hike. Repo rate is now 7.25%. Rajan made it clear that fighting the inflation and exchange rate management is his top priority, so there is a need of liquidity tightening. RBI, in a bid to lower the cost of capital of banks, reduced the MSF by 75 bps from 10.25% to 9.5% and slashed the minimum daily CRR requirement from 99% to 95%.
Sunday, September 15, 2013
Weekly Market Commentary - Sept 9 - Sept 13, 2013
Receding fears of war with Syria led to cooling of oil prices that in turn led to strengthening of rupee against the global currencies. Rupee also gained strength as FIIs continued to buy Indian shares after newly appointed RBI governor Raghuram Rajan charted out plans to get the country out of its current mess. Sensex gained 2.4%, Nifty gained 3.0% and CNX Midcap was up by 3.4% this week.
Monday – Markets closed on occasion of Ganesh Chaturthi
Tuesday - Sensex up by 3.8%, Nifty up by 3.8%, Midcap up by 1.8%
Markets remained buoyant from last week sentiment boost they received from Raghuram Rajan appointment and his maiden speech as RBI governor. Global markets also took respite from the news that Russia has persuaded Syria to put its chemical weapons under international inspection, which worked to shelve the fears of US strike on Syria and led to global rally in stocks.
Telecoms were the major gainers today as TRAI reduced the base price by 37%, from Rs. 2,379cr to Rs. 1,496cr per MHz of pan India spectrum. TRAI also recommended that a flat spectrum usage (SUC) of 3% of gross revenue from 2-8% earlier. Telecom companies are expected to save around 60-80,000cr over a 20-year period.
Wednesday - Sensex up by 0.0%, Nifty up by 0.3%, Midcap up by 1.6%
Markets opened lower as some investors rushed to book profits after previous day’s rally, which was biggest gain in Sensex in four years. Market recouped its losses as day progressed as tension over Syria eased leading to cooling of oil price momentum. Also, consistent recovery in rupee is helping boost the Indian investor sentiment.
Thursday – Sensex down by 1.1%, Nifty down by 1.1%, Midcap down by 0.7%
Investors turned a little cautious and booked profits ahead of IIP and CPI inflation data release expected on Friday.
Friday – Sensex down by 0.2%, Nifty down by 0.0%, Midcap up by 0.7%
Stocks tumbled after PM’s economic panel raised its doubt over Govt. achieving its fiscal deficit target of 4.8% of GDP in current year. Investors also continued to cut positions ahead of US Fed meeting and RBI first meeting under Rajan next week. Market is keenly awaiting Fed’s decision on tapering and RBI’s response to it.
Bulls did get some respite in form of better-than-expected July 2013 IIP data (+2.6% yoy) and fall in retail inflation to 9.52% in August from 9.64% in July. August WPI data, an anchor used by RBI to decide on its policy decisions, will release on Monday.
Monday – Markets closed on occasion of Ganesh Chaturthi
Tuesday - Sensex up by 3.8%, Nifty up by 3.8%, Midcap up by 1.8%
Markets remained buoyant from last week sentiment boost they received from Raghuram Rajan appointment and his maiden speech as RBI governor. Global markets also took respite from the news that Russia has persuaded Syria to put its chemical weapons under international inspection, which worked to shelve the fears of US strike on Syria and led to global rally in stocks.
Telecoms were the major gainers today as TRAI reduced the base price by 37%, from Rs. 2,379cr to Rs. 1,496cr per MHz of pan India spectrum. TRAI also recommended that a flat spectrum usage (SUC) of 3% of gross revenue from 2-8% earlier. Telecom companies are expected to save around 60-80,000cr over a 20-year period.
Wednesday - Sensex up by 0.0%, Nifty up by 0.3%, Midcap up by 1.6%
Markets opened lower as some investors rushed to book profits after previous day’s rally, which was biggest gain in Sensex in four years. Market recouped its losses as day progressed as tension over Syria eased leading to cooling of oil price momentum. Also, consistent recovery in rupee is helping boost the Indian investor sentiment.
Thursday – Sensex down by 1.1%, Nifty down by 1.1%, Midcap down by 0.7%
Investors turned a little cautious and booked profits ahead of IIP and CPI inflation data release expected on Friday.
Friday – Sensex down by 0.2%, Nifty down by 0.0%, Midcap up by 0.7%
Stocks tumbled after PM’s economic panel raised its doubt over Govt. achieving its fiscal deficit target of 4.8% of GDP in current year. Investors also continued to cut positions ahead of US Fed meeting and RBI first meeting under Rajan next week. Market is keenly awaiting Fed’s decision on tapering and RBI’s response to it.
Bulls did get some respite in form of better-than-expected July 2013 IIP data (+2.6% yoy) and fall in retail inflation to 9.52% in August from 9.64% in July. August WPI data, an anchor used by RBI to decide on its policy decisions, will release on Monday.
Saturday, September 7, 2013
Weekly Market Commentary - Sept 2 - Sept 6, 2013
Raghuram Rajan joined at a time when India is reeling under worsening deficit situation, falling forex reserves (lowest in three years) and deteriorating investment climate. Markets gave a warm welcome to his taking charge as it expects liberal policies and easing of monetary policies. Sensex zoomed 3.5% while Nifty gained 3.8% and CNX Midcap was up by 2.7% this week.
Monday - Sensex up by 1.4%, Nifty up by 1.4%, Midcap up by 1.7%
Markets continued their positive momentum as global stocks rose amid Chinese PMI data increase. Recent spate of reforms introduced in the economy by Finance Minister has buoyed the investor sentiment.
Tuesday - Sensex down by 3.4%, Nifty down by 3.8%, Midcap down by 2.3%
Ongoing crisis in Syria reached a new low as Russia reported missile firing by Israel on its ally. The news led to oil zooming, rupee falling and bloodbath in domestic markets. Indian market was also impacted by S&P credit downgrade warning of Indian economy owing to rising deficits and weaker currency, which again crossed 68 levels against the dollar. The rating agency said there is one in three chances of rating downgrade. To add to India’s misery, Goldman Sachs also cut India’s growth forecast to 4% from 6% earlier and predicted fall of rupee to 72 against the USD.
Wednesday - Sensex up by 1.8%, Nifty up by 2.0%, Midcap up by 1.0%
Markets recovered after previous day’s carnage with some value buying across the industries. The missile firing reports also turned out to be tests rather than war cry as Russian media reported. Realty stocks fell as RBI asks banks not to disburse the full loan amount for an under construction property. It said loan disbursal should be linked to construction schedule of the property.
Thursday – Sensex up by 2.2%, Nifty up by 2.7%, Midcap up by 1.7%
Markets gave a big welcome to Raghuram Rajan as he took charge of RBI. Rajan hit the ground running and announced steps to defend the falling value of Indian currency and measures to unshackle the overall economy. You can read his full speech here.
Friday – Sensex up by 1.5%, Nifty up by 1.6%, Midcap up by 0.6%
Overall market sentiment remained positive as RBI announcements indicated strengthening rupee and easing monetary tightening introduced by RBI recently.
Monday - Sensex up by 1.4%, Nifty up by 1.4%, Midcap up by 1.7%
Markets continued their positive momentum as global stocks rose amid Chinese PMI data increase. Recent spate of reforms introduced in the economy by Finance Minister has buoyed the investor sentiment.
Tuesday - Sensex down by 3.4%, Nifty down by 3.8%, Midcap down by 2.3%
Ongoing crisis in Syria reached a new low as Russia reported missile firing by Israel on its ally. The news led to oil zooming, rupee falling and bloodbath in domestic markets. Indian market was also impacted by S&P credit downgrade warning of Indian economy owing to rising deficits and weaker currency, which again crossed 68 levels against the dollar. The rating agency said there is one in three chances of rating downgrade. To add to India’s misery, Goldman Sachs also cut India’s growth forecast to 4% from 6% earlier and predicted fall of rupee to 72 against the USD.
Wednesday - Sensex up by 1.8%, Nifty up by 2.0%, Midcap up by 1.0%
Markets recovered after previous day’s carnage with some value buying across the industries. The missile firing reports also turned out to be tests rather than war cry as Russian media reported. Realty stocks fell as RBI asks banks not to disburse the full loan amount for an under construction property. It said loan disbursal should be linked to construction schedule of the property.
Thursday – Sensex up by 2.2%, Nifty up by 2.7%, Midcap up by 1.7%
Markets gave a big welcome to Raghuram Rajan as he took charge of RBI. Rajan hit the ground running and announced steps to defend the falling value of Indian currency and measures to unshackle the overall economy. You can read his full speech here.
Friday – Sensex up by 1.5%, Nifty up by 1.6%, Midcap up by 0.6%
Overall market sentiment remained positive as RBI announcements indicated strengthening rupee and easing monetary tightening introduced by RBI recently.
Friday, August 30, 2013
Weekly Market Commentary - Aug 23 - Aug 30, 2013
This week witnessed the most productive parliament in recent history (pardon the oxymoron) where Govt was able to pass two landmark bills viz. Food Security Bill and Land Acquisition Bill. While the jury is still out on whether these bills will be able to help the poor and farmers of the nation or are simple vote fetching attempts of ruling party and will forever drown our poor under behemoth of Indian bureaucracy and corruption, we can be sure of one thing: Rising cost of living.
Sensex gained a little 0.5%, Nifty was flat and Midcap lost 0.8% this week.
Monday - Sensex up by 0.2%, Nifty up by 0.1%, Midcap up by 0.7%
Markets went up as FM tried to convince investors to expect some good decisions in next one week to attract capital flows to finance our rising current account deficit. In addition, a slump in US home sales allayed the fears of tapering in Fed stimulus spending which boosted the investor sentiment.
Tuesday - Sensex down by 3.2%, Nifty down by 3.5%, Midcap down by 2.4%
Mayhem in the markets as Govt was successful in passing Food Security Bill in Lok Sabha (Lower House of the Parliament). Food subsidy is now expected to cost around 1% of GDP to the exchequer, according to Govt calculations but analysts estimates it to be 3% of the GDP. See my recent post on subsidy bill calculation here. Rupee made all-time low of 68.80 against the dollar as FIIs scrambled for exit.
Wednesday - Sensex up by 0.2%, Nifty flat, Midcap down by 1.1%
Markets recovered a bit from yesterday’s crash as investors hunt for bargains in IT, Capital Goods and Healthcare sector. India’s largest insurer Life Insurance Corporation of India did some buying and provided support to the falling indices. Stocks remained under pressure as sabre rattling in Syria sent the crude price higher and rise in credit risks across the emerging markets.
Thursday - Sensex up by 2.2%, Nifty up by 2.3%, Midcap up by 1.5%
Benchmark index rose dramatically as investors cover their shorts on the last Thursday of the month. Also, RBI’s move to start a forex swap facility to help PSU oil companies meet their daily dollar demand provided support to rupee which gained by 2.5% against the dollar.
Friday - Sensex up by 1.2%, Nifty up by 1.2%, Midcap up by 0.6%
Markets continued their previous day’s upside momentum as Prime Minister Manmohan Singh clearly stated in his speech in parliament that he will take all measures to fight country’s deficit without bringing in capital controls and reversal of reforms. He also made clear that his Govt is going ahead with reforms including subsidy reduction and implementation of GST.
Sensex gained a little 0.5%, Nifty was flat and Midcap lost 0.8% this week.
Monday - Sensex up by 0.2%, Nifty up by 0.1%, Midcap up by 0.7%
Markets went up as FM tried to convince investors to expect some good decisions in next one week to attract capital flows to finance our rising current account deficit. In addition, a slump in US home sales allayed the fears of tapering in Fed stimulus spending which boosted the investor sentiment.
Tuesday - Sensex down by 3.2%, Nifty down by 3.5%, Midcap down by 2.4%
Mayhem in the markets as Govt was successful in passing Food Security Bill in Lok Sabha (Lower House of the Parliament). Food subsidy is now expected to cost around 1% of GDP to the exchequer, according to Govt calculations but analysts estimates it to be 3% of the GDP. See my recent post on subsidy bill calculation here. Rupee made all-time low of 68.80 against the dollar as FIIs scrambled for exit.
Wednesday - Sensex up by 0.2%, Nifty flat, Midcap down by 1.1%
Markets recovered a bit from yesterday’s crash as investors hunt for bargains in IT, Capital Goods and Healthcare sector. India’s largest insurer Life Insurance Corporation of India did some buying and provided support to the falling indices. Stocks remained under pressure as sabre rattling in Syria sent the crude price higher and rise in credit risks across the emerging markets.
Thursday - Sensex up by 2.2%, Nifty up by 2.3%, Midcap up by 1.5%
Benchmark index rose dramatically as investors cover their shorts on the last Thursday of the month. Also, RBI’s move to start a forex swap facility to help PSU oil companies meet their daily dollar demand provided support to rupee which gained by 2.5% against the dollar.
Friday - Sensex up by 1.2%, Nifty up by 1.2%, Midcap up by 0.6%
Markets continued their previous day’s upside momentum as Prime Minister Manmohan Singh clearly stated in his speech in parliament that he will take all measures to fight country’s deficit without bringing in capital controls and reversal of reforms. He also made clear that his Govt is going ahead with reforms including subsidy reduction and implementation of GST.
Friday, August 23, 2013
Weekly Market Commentary - Aug 19 - Aug 23, 2013
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.
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.
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.
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
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.
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.
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 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
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%.
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