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Fortnightly Market View: Critical Juncture

The easy money policy of the US, it is feared, is about to end, causing turmoil in the calm...

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Bulls will find the going tough: Weekly Market Report
Market rallies will probably meet with strong selling next week, unless the Nifty and Sensex cross the week's highs
 
The market snapped its five-week winning spree and ended lower this week mainly on global cues. Feedback from various US Federal Reserve members about reducing its asset buying programme, and weak flash manufacturing output data from China impacted sentiments. Disappointing results from largest government-owned lender State Bank of India and engineering giant Larsen & Toubro also added to the woes. Events for next week include release of the GDP data for the March 2013 quarter expiry of the May Futures & Options contract.
 
The Sensex dropped 582 points (2.87%) to 19,704 and the Nifty ended the week at 5,984, a cut of 204 points (3.29%). The market was in the red for the first four days but managed a positive close on the last trading day of the week. Market rallies will probably meet with strong selling next week, unless the Nifty and Sensex cross the week's highs.
 
The market ended lower on Monday on pressure from the pharmaceutical sector on concerns about the new drug price order. Selling in auto and banking stocks led the indices lower on Tuesday.  The indices pared their early gains and ended off the lows on Wednesday.
 
The market closed down 2% on Thursday on weak results from SBI and dismal global cues as concerns about the tapering of the quantitative easing by the US Federal Reserve saw markets worldwide close lower. The market snapped its four-day losing streak and settled marginally higher on Friday on buying in select blue chips.
 
BSE IT and BSE Fast Moving Consumer Goods both settled flat while BSE Realty tumbled 12% and BSE Capital Goods declined 8%. There are no gainers in the sectoral space.
 
Coal India (up 4%) was the lone gainer in the Sensex list. The losers were led by SBI (down 11%); L&T (down 10%), NTPC, Jindal Steel & Power and Reliance Industries (down 6% each).
 
Coal India (up 4%) and HCL Technologies (up 2%) settled higher on the Nifty this week. The key losers were Jaiprakash Associates, Ranbaxy Laboratories (down 17% each), DLF (down 15%), Reliance Infrastructure (down 12%) and SBI (down 11%).
 
In the corporate news, India's banking giant SBI on Thursday posted nearly 19% year-on-year drop in its fourth quarter net profit at Rs3,300 crore. Higher provisions against non-performing assets and marginal growth in other income impacted the bank's profit margin. Net interest income slipped more than 5% y-o-y o Rs11,080 crore. Provisions against NPAs jumped 40% y-o-y to about Rs4,000 crore. Total provisions increased 33% to Rs4,180 crore during the same period.
 
Engineering major L&T’s net profit for the March quarter fell 6.9% year-on-year to Rs1,788 crore on a steep rise in interest cost. Total income rose 10% y-o-y to Rs20,294 crore during the quarter.
 
Tata Steel reported a consolidated net loss of Rs6,528.51 crore for the quarter ended March 2013, as it took a Rs8,355.91 crore one-time impairment on non-current assets, primarily related to its European operations. The Tata group company had reported a consolidated net profit of Rs433.46 crore for the same quarter of 2011-12.
 
The company’s consolidated net sales rose less than 1% during the quarter at Rs34,180.05 crore as compared to net sales of Rs33,860.08 crore of January-March period of FY12 due to subdued steel demand, particularly in Europe.
 
In international news, concern that the Fed will reduce its monthly bond purchases grew as a report showed orders for US durable goods increased more than forecast in April, pointing to gains in business investment that will help manufacturing rebound in the second half of the year.
 

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COMMENTS

Suiketu Shah

4 years ago

Yr weekly analysis of where the markets are heading are very accurate and super guide.Keep it up!

RIL-BP combine announces huge gas discovery in KG-D6 block

Though RIL-BP did not put any reserves to the discovery, the find may possibly be the largest single discovery in the country. The discovery, which was notified to the regulatory authorities yesterday afternoon, has been named D-55

Reliance Industries (RIL) and its partner BP Plc of the UK on Friday announced a huge natural gas discovery, possibly the biggest find ever, in the flagging eastern offshore KG-D6 block that will be key to arresting falling output. RIL and BP encountered 155 metres of gas pay zone in the first exploration well drilled on the block in more than five years.

 

The well was drilled two kilometres below the existing producing D1 and D3 fields. “The KGD6-MJ1 well was drilled in a water depth of 1,024 metres—and to a total depth of 4,509 metres (4.5 kilometres below the seabed),” RIL-BP said in a statement. The well was drilled to explore the prospectivity of a Mesozoic synrift clastic reservoir lying over 2,000 metres below the already producing reservoirs in the Dhirubhai-1 and 3 (D1&D3) gas fields.

 

“Formation evaluation indicates a gross gas and condensate column in the well of about 155 metres in the Mesozoic reservoirs,” the statement said adding the well flowed 30.6 million standard cubic feet per day of gas during testing.

 

Though RIL-BP did not put any reserves to the discovery, the find may possibly be the largest single discovery in the country. The discovery, which was notified to the regulatory authorities yesterday afternoon, has been named D-55.

 

Sources said the resource found may be significantly more than a pre-drill best case gross prospective resource of 819 billion cubic feet of gas and 56 million barrels of liquids for the well. RIL-BP had drilled MJ-1 well in early March after the government permitted companies to drill exploration wells in areas where exploration period had long expired.

 

Dhirubhai-1 and 3 (D1&D3) gas fields, the largest among the 18 gas finds on KG-D6 block, have proved to be more difficult to produce than previously predicted. D1&D3 reservoir has seen sharper-than-expected drop in pressure and water and sand ingress in production wells, leading to a drop in output.

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