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Sunday, June 05, 2011

Markets end action-packed week with modest gains


Indian markets ended its two-week loosing streak by pulling the shutters down in green witnessing a roller-coaster ride throughout the week. Sensex ended at 18,376, up 110 points and Nifty at 5516, up 40 points.

Major news for the week:

Q4FY2011 GDP at 7.8% vs 8.3% in Q3FY2011

April exports up 34.42%, imports up 14.13%

Food inflation at 8.06% vs 8.55%

Economy may grow by 8.5% in FY12

Bank credit grows 22.3% in May



Indian indices

Indian markets witnessed a week full of action, news hovering around vario us scrips that ca used major stock movements and a flurry of economic data flowing. The indices started the week on a cautio us note carrying forward previo us week's gains but soon ended the first trading session with modest losses. Then the benchmark indices surged on Tuesday and Wednesday but entered in the negative territory due to an all-round selling pressure on the last two trading sessions of the week. Global economic slowdown coupled with worries over the ongoing 2G scam and the most awaited RIL's AGM played the spoilsport for the week.

A widening probe into the 2G scam and a disappointing Reliance Ind ustries AGM ca used major action in scrips. Stocks linked to the newsflow witnessed tremendo us pressure. Shares of Sun TV plunged over 28% while SpiceJet declined 16% after media reports said that a Public Interest Litigation (PIL) had been filed against DMK leader and former Union Telecom Minister Dayanidhi Maran to probe allegations of bribery and corruption. The scrips though bounced back on the next day after a sharp fall post news. RIL too witnessed action on Friday when the Chairman said the company will be debt free this year and made some important announcements. RIL stock stayed weak though the expectations were otherwise. On the other hand, stocks from the ADA group rallied on the news that a CBI court on Thursday evening had rejected a plea by the investigating agency to take into c ustody the group's chairman Anil Ambani for his alleged role in the 2G telecom spectrum scam.

Below estimated Q4 GDP numbers, and disappointing reports on the core sector and manufacturing also weighed on Dalal Street's sentiments. However, a drop in food inflation and steady inflows from the FIIs provided a handy support to the Indian indices.

The GDP growth slowed down to 7.8% in March, lower than the anticipated 8.3%. The manufacturing sector grew 5.5% in January-March from a year earlier, while farm output rose by an annual 7.5%. Food inflation eased slightly to 8.06% for the week ended May 21, from 8.55% last week. Headline inflation for April at 8.66% continued to remain above the central bank's comfort level which would put pressure on the Reserve Bank of India to raise rates.

The Sensex swung around473 points between a high of 18673 and a low of 18200 and closed the week at 18376, up by 110 points or 0.60%. The Nifty swung about 146 points between a high of 5605 and a low of 5459 and shut the week at 5516, up 41 points or 0.74%.

Global indices

On the global front, domestic markets managed to close with modest gains along with China's Shanghai Composite. All the other major indices ended the week in the negative territory on heightened concerns about the global economic outlook. Nasdaq, Dow Jones and Dax 100 indices slid over 2% each during the week. While, other indices ended the week lower in the range of 0.30-1.53%.

Sectoral and stock screening

The BSE Consumer Durables (CD) surged by 3.61% outperforming other sectoral indices with quite ease. The sectors like BSE Fast Moving Consumer Goods (FMCG) and BSE Healthcare (HC) rose by 2.83% and 2.75% respectively. On the flip side, BSE Auto declined the most with losses of 1.94%, followed by BSE Oil & Gas that slid by 0.78% and BSE Metal slipped by 0.59%.

Among 'A' group stocks; Rajesh Exports surged the most with gains of 10.46%, followed by Manappuram General Finance & Leasing that advanced by 10.22% and Reliance Communications jumped by 9.88%. Among the losers, Sun TV Network slid by 26.98%, followed by Tata Motors that declined by 5.84% and Mahindra & Mahindra fell by 4.97%.

FII/MF activity

Despite of concerns on global economic recovery, foreign institutional investors ( FIIs) continued its buying activity, purchased stocks worth Rs2,474 crore during the week substantially higher than Rs626 crore from the previo us week. On the other hand, domestic institutional investors (DIIs) buying slowed down this weak, bought equities worth Rs117.2 crore as compared to Rs335.1 in the last week.

Outlook

In coming week, the biggest factor that will decide the market's future course is the progress of the monsoons rains an ind ustrial production data for April 2011 on June 10, 2011.

Global economy recovery will be another key factor and also the most important is the FIIs flows in the Indian market.