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Fortnightly Market View: Money Talks

Liquidity triumphs growth prospects

 
Last fortnight, while expressing doubts about whether anything has changed fundamentally and assuming that we will not have a runaway rally, I was looking for clues that could, indeed, support a case for a rally. I wrote at the end of the piece: “Is there anything else, hidden from our view, that can take the market higher? It is the unknown...
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Weekly Market Report: Will the Nifty, Sensex rise for the 5th week in a row?

Watch out for the previous week’s low to be violated before a downtrend starts. There is a lot of liquidity bringing in buyers on every dip

 
The Indian market closed higher this week, making it the fourth weekly close in the positive. Inflows from foreigners and supportive global cues aided the gains. Barring a negative close on Thursday, the market closed higher on the other four trading days of the week. Investors will focus on the headline inflation numbers, due on Monday, for fresh directions for the market.
 
The Sensex finished 507 points (2.59%) higher at 20,083, its best close since 28 January 2013. The Nifty settled at 6,095, a gain of 151 points (2.54%), its highest closing level since 4 January 2011. Watch out for the previous week’s low to be violated before a downtrend starts. There is a lot of liquidity bringing in buyers on every dip.
 
Gains in blue chips and IT stocks in late trade helped the market close higher on Monday. The benchmarks ended in the green on Tuesday after the Centre announced plans to divest 10% stake in Coal India. Strong quarterly earnings from leading mortgage lender HDFC and pharma major Lupin saw the market extending its gains for the third day.
 
The market snapped its three-day winning streak on Thursday as it settled lower on profit taking and unsupportive global cues. An uptick in industrial production growth for March helped the market close in the green on Friday.
 
BSE Fast Moving Consumer Goods and BSE Auto (up 4% each) were the top sectoral gainers. There were no losers in the week.
 
The top Sensex gainers were Tata Motors, Hindalco Industries (up 8% each), ITC (up 7%), Hero MotoCorp (up 6%) and TCS (up 5%). The losers were led by Coal India (down 6%), Sun Pharmaceutical Industries (down 5%), NTPC (down 3%), Jindal Steel & Power (down 2%) and Cipla (down 1%).
 
The top performers on the Nifty were Tata Motors, Hindalco Ind, IndusInd Bank (up 8% each), ITC (up 7%) and Hero MotoCorp (up 6%). Coal India (down 6%), Sun Pharma (down 5%), NTPC (down 3%), JSPL (down 2%) and Ranbaxy Laboratories (down 1%) were the noteworthy losers on the benchmark.
 
India’s industrial growth bounced back to 2.5% in March on better performance of manufacturing and power sectors coupled with higher output of capital goods. However, factory output, as measured in terms of Index of Industrial Production (IIP), grew by just 1% in 2012-13 compared to a growth of 2.9% in previous fiscal.
 
Indian services sector growth eased during April as new orders came in at a much slower pace. The HSBC Services Purchasing Managers’ Index fell to 50.7 in April 2013 from 51.4 in March 2013.
 
Car sales in India fell for the sixth month in a row in April, the longest stretch of decline since industry body SAIM started collating data in 1997-1998, as weak consumer sentiments, high interest costs and other macro-economic factors continued to hurt demand. 
 
Domestic passenger car sales declined by 10.43% to 1,50,789 units in April this year compared to 1,68,354 units in the same month of 2012. Motorcycle sales fell by 2.06% to 8,43,889 units from 8,61,608 units in the same month previous year. 
 
In international news, US indices closed higher for the third week in a row with the Dow and the S&P 500 closing at record highs boosted by positive earnings reports and as central banks across the world lowered key interest rates. Meanwhile, investors are eyeing the outcome of the meeting of finance ministers and central bank heads of the Group of Seven industrialised nations for announcements on new measures to support growth.
 

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Sensex, Nifty still on an uptrend: Friday Closing Report

However, any previous day’s low has to be watched out for a reversal 

 
The market settled higher on support from the auto sector despite reporting sluggish sales figures for April. However, any previous day’s low on the Nifty has to be watched out for a reversal. The National Stock Exchange (NSE) reported a volume of 51.83 crore shares and advance-decline ratio of 700:712.
 
The market opened marginally in the negative as cautiousness prevailed ahead of the release of the factory output data for March. Markets across Asia also were weak in morning trade tracking the US markets which closed lower as tech stocks Apple Inc and IBM disappointed investors.
 
The Nifty opened four points down at 6,046 and the Sensex started the day at 19,911, down 28 points from its previous close. Buying in consumer durables, auto, realty and power stocks supported the gains on the indices in early trade.
 
However, news of domestic auto sales dropping 10.43% in April 2013 pushed the market to its low in mid-morning trade. The Nifty fell to 6,046 and the Sensex slipped to 19,909 at their respective lows. The benchmarks remained range-bound near their previous closing levels till noon trade. 
 
Car sales fell an annual 10.43% in April, according to SIAM data, marking the first time sales have fallen for six consecutive months since data was first compiled in 1997. Sales fell 7% in FY13, the first annual fall for a decade.
 
An uptick in the country’s industrial production in the month of March saw the market move higher at around 12.30pm. Support from auto, consumer durables, healthcare, banks, oil & gas sectors helped the market in its northward journey in noon trade. A green opening of the key European markets also boosted investor sentiment.
 
The market hit its day’s high in the late session on a rally in auto, consumer durables, banks and FMCG stocks. The Nifty touched 6,105 and the Sensex climbed to 20,119.
 
The benchmarks pared a small part of their gains but closed around 0.75% higher. The Nifty settled 45 points (0.74%) up at 6,095 and the Sensex finished the session at 20,083, up 144 points (0.72%) over its previous close.
 
While the broader indices also settled higher, they underperformed the Sensex today. The BSE Mid-cap index rose 0.19% and the BSE Small-cap index gained 0.22%.
 
Barring BSE Power (down 0.30%) and BSE Metal (down 0.22%) all other sectoral indices settled higher. The top gainers were BSE Auto (up 2.20%); BSE Consumer Durables (up 2.03%); BSE Fast Moving Consumer Goods (up 1.42%); BSE Bankex (up 1.23%) and BSE PSU (up 0.41%).
 
Eighteen of the 30 stocks on the Sensex closed in the positive. The chief gainers were Maruti Suzuki (up 3.99%); Tata Motors (up 2.92%); Hindalco Industries (up 2.71%); ITC (up 2.47%) and Mahindra & Mahindra (up 2.33%). The key losers were Coal India (down 2.96%); Jindal Steel & Power (down 2%); Sun Pharmaceutical Industries (down 1.40%); NTPC (down 0.83%) and Reliance Industries (down 0.73%).
 
The top two A Group gainers on the BSE were—Mphasis (up 7.76%) and TV18 Broadcast (up 7.63%).
The top two A Group losers on the BSE were—Wockhardt (down 5.87%) and Indraprastha Gas (down 4.92%).
 
The top two B Group gainers on the BSE were—ABC India (up 20%) and Damodar Threads (up 20%).
The top two B Group losers on the BSE were—Florence Investech (down 19.99%) and Indus Fila (down 19.96%).
 
Of the 50 stocks on the Nifty, 32 ended in the green. The key gainers were Maruti Suzuki (up 4.41%); IndusInd Bank (up 3.14%); Tata Motors (up 2.93%); ITC (up 2.79%) and ACC (up 2.46%). The major losers were Coal India (down 2.90%); JSPL (down 2.16%); Punjab National Bank (down 1.92%); NTPC (down 1.82%) and UltraTech Cement (down 1.59%).
 
Most Asian markets closed higher as a weakening yen boosted prospects for exporters. Markets in South Korea settled lower as the won rose to its highest against the yen in more than four years.
 
The Shanghai Composite climbed 0.62%; the Hang Seng gained 0.47%; the Jakarta Composite rose 0.33%; the KLSE Composite rose 0.36%; the Nikkei 225 jumped 2.93% and the Straits Times settled 0.32% higher. On the other hand, the Seoul Composite tanked 1.75% and the Taiwan Weighted lost 0.07%.
 
At the time of writing, the CAC 40 of France was up 0.59%; DAX of Germany gained 0.64% and UK’s FTSE 100 was trading 0.49% higher. At the same time, the US stock futures were in the positive, indicating a positive opening for US stocks later in the day.
 
Back home, foreign institutional investors were net buyers of shares amounting to Rs662.88 crore on Thursday while domestic institutional investors were net sellers of equities aggregating Rs476.69 crore.
 
Hyderabad-based bio-pharma major Suven Life Sciences has secured two product patents from Canada and one  product patent from Eurasia corresponding to the new chemical entities (NCEs) for the treatment of disorders associated with neurodegenerative diseases. These patents are valid through 2028. With these patents, Suven now has a total of 12 patents from Canada and 13 patents from Eurasia. The stock gained 2.26% to settle at Rs29.45 on the NSE.
 
Private sector telecom operator Reliance Communications today said it has made full payment of a syndicated ECB loan amounting to over Rs2,700 crore that was taken from a group of international banks in 2007.  The stock rose 0.27% to close at Rs110.05 on the NSE.
 
In a move to reach out to the first time home buyers, real estate promoter Parsvnath Developers has unveiled a variant of the subvention scheme now in vogue in the industry under which buyers making upfront payment of 25% cost would pay the balance only on possession. It said the scheme was different from the other subvention plans that were offered now in the realty market as it would not attract any EMIs as no bank loan was involved. The stock declined 0.42% to close at Rs35.40 on the NSE.
 

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