Saturday, December 17, 2011
It was a stressful week with the markets reacting to a constant flow of news. The Sensex dropped 4.45% and the Nifty fell 4.42% in this week
Headlines for the week
October IIP at -5.1% versus 1.9% in September
November inflation at 9.11% vs 9.73% in October
RBI leaves key interest rates unchanged
Rupee hits new record low past 54 per dollar
The Reserve Bank of India (RBI)'s announcement after a mid-quarter monetary policy review on Friday, 16 December 2011, that its future policy action will be to reverse the monetary-tightening cycle due to the risks to growth, could provide support to share prices which have been battered over the past few months. The RBI has raised rates 13 times since March 2010.
Traders will start building positions based on Q3 December 2011 results which will start trickling from the second week of January 2012. As per reports, advance taxes for the third quarter from corporates headquartered in Mumbai have risen 10%. Cements and pharma companies have reported surge in advance tax payment for the third quarter. Advance taxes are collected in four installments -- 15% by 15 June; 40% by 15 September; 75% by 15 December and 100% by 15 March.
Key benchmark indices tumbled to hit their lowest level in more than two years after the Reserve Bank of India (RBI) spoiled sentiments by keeping cash reserve ratio (CRR) unchanged, despite tight liquidity in the system, in its much awaited mid-quarter monetary policy review on Friday (16 December 2011). Data showing higher-than-expected inflation reading for November 2011 and a decline in industrial production in October 2011 also dampened sentiment.
Data showing selling by foreign funds recently also spooked investors. Foreign institutional investors (FIIs) sold shares worth Rs 323.28 crore on Thursday, 15 December 2011, as per the provisional data from the stock exchanges. FII outflow totaled Rs 1701.09 crore in five trading sessions from 9 to 15 December 2011, as per provisional data from the stock exchanges. The recent outflow followed sustained inflow early this month.
Key benchmark indices tumbled to hit their lowest level in more than two years led by a decline in capital goods stocks. The market fell for the third consecutive trading session. Index heavyweight Reliance Industries (RIL) dropped more than 3%. The barometer index, BSE Sensex, fell below the psychological 16,000 level, having alternately moved above and below that mark in intraday trade. Interest rate sensitive banking, auto and realty stocks declined after Reserve Bank of India (RBI) kept cash reserve ratio (CRR) and short-term lending rate steady after mid-quarter monetary policy review today.