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Market indecisive: Weekly Market Report

The Nifty has to break the range of 5,230 and 5,340 for further direction

The market settled higher this week following the Reserve Bank of India’s (RBI) 50 basis point (bps) cut in key rates earlier this week. The benchmarks, which settled in the positive on four trading days, closed lower on the last trading day of the week.

Gains in rate-sensitive sectors helped the market brush aside early nervousness associated with the March inflation numbers and close in the green on Monday. A boost from the RBI’s 50 bps rate cut helped the market extend its gains on Tuesday. A lower opening of the European indices saw the domestic indices paring their gains, but the market managed a positive close on Wednesday.

On Thursday, the market treaded water till noon but received a boost in the second half with positive cues from Europe, settling in the green for the fourth day in a row. The benchmarks witnessed a sharp fall in the second half of trade on Friday, but the loss was reduced as the indices bounced back from their lows.

Overall, the market settled 2% higher with the Sensex climbing 279 points at 17,374 and the Nifty closing the week at 5,291, a gain of 83 points. The market is expected to remain range-bound with the Nifty having to break the range of 5,230 and 5,340 for further direction.

BSE Auto (up 6%) and BSE Metal (up 3%) were the top sectoral gainers in the week. There were no losers in the sectoral space.

Tata Motors (up 10%), Coal India (up 7%), Hero MotoCorp (up 6%), Maruti Suzuki and Mahindra & Mahindra (up 5% each) were the key gainers on the Sensex. The losers were BHEL (down 5%), Reliance Industries (down 3%) and NTPC (down 1%).

The top Nifty performers were Tata Motors (up 9%), Coal India (up 7%), Hero MotoCorp, HCL Technologies (up 6% each) and Maruti Suzuki (up 5%). BHEL (down 5%), IDFC, Reliance Industries, ACC (down 3% each) and Ambuja Cements (down 1%) were the key losers on the index.

On Tuesday, the RBI, in its annual credit policy, surprised everyone by cutting the repo rate and bank rate by 50 bps. This is the first time after a gap of three years that the central bank has reduced repo rates. The reduction in the repo rate is based on an assessment of growth having slowed below its post-crisis trend rate which, in turn, is contributing to a moderation in core inflation, the RBI said. The cut is expected to reduce cost of home, auto and corporate loans.

With crude oil and gold alone accounting for over 44% of total import bill of $489 billion and exports losing steam mid-way, India ended the fiscal 2011-12 with the highest ever trade deficit of $185 billion causing a ‘serious’ challenge for the economy. Exports touched $303.7 billion for the just-concluded fiscal registering 21% expansion. The situation on widening trade deficit can go worse in the current fiscal, commerce secretary Rahul Khullar said, adding exports would need to grow 28% to maintain even the present position.

Among corporates, private sector lender HDFC Bank reported 30.4% jump in net profit at Rs1,453.10 crore for the January-March quarter compared to Rs1,114.70 crore in the corresponding quarter of the previous fiscal. The main drivers of increase in profit were better than system loan growth, stable margin and improvement in asset quality, HDFC Bank executive director Paresh Sukhtankar told reporters. Total income of the bank rose 32.1% to Rs8,880 crore in the reporting quarter, from Rs6,724.30 crore in the year-ago period.

Oil and gas major Reliance Industries reported a 21.2% drop in net profit to Rs 4,236 crore for the quarter ended 31 March 2012 compared to Rs5,376 crore in the year-ago period. Global recession coupled with lower refining margins have led to a dip in profits, the company said. In the reporting quarter, RIL reported a gross refining margin of $7.6 for every barrel of crude oil it processed, compared with $9.2 in the corresponding year-ago period.

The decline in net profit in the quarter was arrested by a near 150% rise in other income to Rs2,295 crore (Rs917 crore in Q4-FY2011) and the lower tax outgo.

Earnings news, economic data and concerns about the European debt crisis is expected to drive the global markets next week.


FM to G-20: Need policies to create jobs, support investment

Credible action for both short- and medium-term policies to create jobs and employment needs to be a cornerstone of the G20 Framework

Washington: As global economy moves ahead on the path of recovery, Indian Finance Minister Pranab Mukherjee has asked G-20 countries to push for policies that creates jobs and step up efforts to support investment in real sector, reports PTI.

In an intervention made at the G-20 finance ministers and central bank governors, being held on the sidelines of the Spring meeting of the IMF and the World Bank, he said credible action for both short- and medium-term policies to create jobs and employment needs to be a cornerstone of the G20 Framework.

Mr Mukherjee said there is general concern over the global employment scenario, especially the falling labour participation rate and growing youth unemployment.

"Leaders had consequently tasked us to mainstream jobs and employment issues into the framework exercise. Persistent high unemployment tends to have significant long-lasting detrimental impacts on the economy, holding back economic recovery further, adding to social tensions and adversely affecting productivity and growth in the medium to long-term," he said.

The Finance Minister said the world has been pre-occupied with dealing with the problems in the financial sector, which was need of the hour.

"However, keeping in view the emergent situation, some members have been stressing the need to step up efforts to support investment in the real sector, and especially in infrastructure, at a global level to help revive global growth and support demand and job creation," he argued.

"This route to reviving global growth has not received the attention that it merits. To the extent that much of this investment, including in infrastructure, will occur in developing countries, it would also help rebalance global demand, as also, redirect savings," he said.

Some developed countries also need to increase investment and upgrade their infrastructure, he added.

"While construction works would stimulate local growth and job creation, the large demand for capital goods created for modern infrastructure would also stimulate private investment and job creation globally," he said.

G-20 countries, he said, will need to develop a framework to assess the progress made on G20 commitments.

"Since the time between the Cannes and Los Cabos Summits is quite short, this would be an important component of our Action Plan. It is also critical for our own credibility in the eyes of the world," he said.

The Framework Working Group has indicated that assessment in some areas is complicated by the lack of a common framework to assess progress, he said.

Mr Mukherjee said BRICS might have a big impact in the decision making process of the world today and it could no longer be ignored.

"I would not say that they are having a big impact in the decision making process of the world today, but surely they have a place and they can't be ignored," the Finance Minister said responding to a question at the Peter G Peterson Institute for International Economics.

"If you look at the characters of BRICS, it represents Asia, Europe, South Africa and Latin America. Its total contribution in the world output today is substantial. As per the latest world outlook by IMF and the forecast, two countries which are being mentioned they also from the group," Mr Mukherjee said.

Responding to questions, he said the established financial institutions are not moving fast enough to address the issues of the current world. "Established institutions which are 60 years old, the Bretton Wood Institutions, they should move little faster". They are moving in the right direction, but not at the expected speed, he added.

Mr Mukherjee said that emerging markets now account for half of the world economy. "Roughly 15 years ago emerging and developing economies accounted for 35.5% of the total world output. They now account for almost 50% of the total world output. Such a big shift in less than two decades has rarely been witnessed in the world."

"Indeed, we are witnessing an emerging new world order, where there is a higher degree of interdependence among nations and, hopefully, there is also a more dynamic and equitable arrangement for global prosperity," he said.

Just as the rise of Europe and North America and, subsequently, Japan was a great human achievement, so is it going to be with the rise of Asia, the Finance Minister said.


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