Stocks
Market highly overbought – Weekly closing report

Fresh gains may be hard to come by

The BSE 30-share Sensex closed the week that ended on 6th June, at 25,396 (up 1,179 points or 4.87%), while the NSE’s 50-share Nifty closed at 7,583 (up 353 points or 4.89%) for the week. We had mentioned in our previous week’s report that the Nifty will move in a sideways churn with the index moving weekly in the range of 7,200-7,400.

The losses of the past two trading session were wiped off with the gain on Monday. The new government's efforts for bringing in quickness and appropriateness in decision making was cheered by the market. Nifty closed at 7,363 (up 133 points or 1.83%) on Monday.

To expedite the process of decision making and usher in greater accountability in the system, the prime minister's office on Saturday announced that the Prime Minister has decided to abolish all the existing nine empowered group of ministers and twenty-one groups of ministers.

Up marginally from 51.3 in April to 51.4 in May, the seasonally adjusted HSBC India Purchasing Managers' Index (PMI) pointed to a slight improvement in operating conditions and was weaker than the series average.

On Tuesday, RBI's monetary policy review was in line with market anticipation, which helped the indices rise further. Nifty closed at 7,416 (up 53 points or 0.72%).

The RBI kept its main lending rate viz. the repo rate unchanged while cutting the statutory liquidity ratio by 50 basis points after a monetary policy review.

On Wednesday, indices witnessed a struggle to move higher. Nifty closed at 7,402 (down 14 points or 0.18%). Markit Economics said its seasonally adjusted HSBC India Composite Output index edged up to 50.7 in May from 49.5 in April to 50.7 in May, indicating growth in India's private sector output for the first time in three months. Reports were making rounds that the new government could allow foreign direct investment in the e-commerce sector as early as next month.

On Thursday, the market witnessed a gradual recovery. Nifty closed at 7,474 (up 72 points or 0.97%). Prime Minister Modi was reported to be on course to  visit Washington to meet President Barack Obama in September, signalling a fresh start in ties with a leader once denied a visa by the United States.

Market opened with full optimism on Friday. After opening with the highest opening gap since 26 May 2014 the Nifty closed at 7,583 (up 109 points or 1.46%). Sugar stocks were in focus after the Food Minister was quoted as saying, that the government will examine raising import tax on sugar to support local prices and help mills clear dues to cane growers which are estimated at Rs11,000 crore. Government officials said that the oil ministry has to decide on gas pricing issue by 1 July 2014 and that more clarity on the issue may be reached next week.

For the week, among the other indices on the NSE, the top two performers were Realty (12%) and PSE (12%) while the worst two performers were Pharma (1%) and IT (0.28%).

 Among the Nifty stocks, the top five stocks for the week were ONGC (23%); BPCL (20%);
Tata Steel (18%); Hero MotoCorp (14%) and Hindalco (14%) while the top five losers were HCL Technologies (6%); Dr. Reddy's Lab (4%); TCS (3%); Sun Pharma (2%) and ITC (1%).

 Of the 1,466 companies on the NSE, 1,272 companies closed in the green, 186 companies closed in the red while 8 companies closed flat.

 Out of the 27 main sectors tracked by Moneylife, the top five and the bottom five sectors for this week were:
 

ML Top sector

 

ML Worst sector

 

Steel

14%

Pharma

-1%

Textiles

12%

Software & IT Services

-1%

Non-Ferrous Metals

10%

Foods & Beverages

1%

Sugar

10%

Shipping

2%

Hotels

9%

Lifestyle & Leisure

2%

 


 

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India may not be affected much by ECB rate cuts
In the event of growth in the Euro zone slowing down, Indian exports would tend to get affected – though the impact will not be too severe, says CARE Ratings
 
The European Central Bank (ECB) on Thursday announced unprecedented measures in its monetary policy review meeting to continue its ongoing stimulus programme, in a bid to promote growth and deter the region from entering the deflationary trap. There were significant reductions in interest rates even as banks were signalled to increase lending. However, India may not be affected much, though slow growth in Euro region will affect our exports in a limited manner, says CARE Ratings in a report.
 
It said, "The crisis in Europe is to a large extent driven by low consumption and investment, which cannot be reversed easily by lowering interest rates, especially when the longer term refinancing operations (LTRO), which injected a lot of liquidity, did not quite succeed to turn the economy around."
 
According to CARE Ratings, as a fallout of ECB moves, the US dollar is expected to rise, which may put slight pressure on the Indian rupee. "When juxtaposed with the continued stimulus by the ECB and thereby higher Euro flows in the market, the US dollar is imminently expected to rise against the Euro. The rise in the dollar in international markets will impose pressure on rupee to a slight extent. Indian rupee may witness volatility with slight risks of depreciation against the US dollar, if international forces (foreign institutional investors-FII flows) dominate over the prevailing domestic factors," it said.
 
As of FY13, India’s exports to the European Union were about 17%-20% of the total export basket. In the event of growth in the Euro zone slowing down exports would tend to get affected – though the impact will not be too severe, the ratings agency said.
 
CARE Ratings feels emerging economies are likely to remain the favoured destination for FIIs. It said, "Firstly, given the macro economic situation in the Euro zone with low growth and low inflation, it is unlikely that the Euro area will offer competition to the emerging economies as regards FII inflows. Extremely low interest rates will be a deterrent to foreign investment inflows in the region. Secondly, the Eurozone contributes to only 12%-13% of the total foreign currency inflows in India as majority foreign currency inflows come from the US. Hence, this scenario is unlikely to be changed going ahead." 

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Sensex, Nifty manage to sustain upward momentum – Friday closing report

Nifty moves higher on positive cues

Indian markets opened Friday with the highest gap up since 26 May 2014. Positive closing of the US indices on Thursday helped the upward momentum at home. The S&P BSE Sensex opened 25,205 (up 185 points) while the NSE 50-share Nifty opened at 7,522 (up 47 points). After a range bound session till 2.00 pm, during which they hit their intra-day lows of 25,130 and 7,498. After around 2.00 pm the benchmark indices started rising and hit a high of 25,419 and 7,593, and closed almost near the intra-day high. Sensex closed at 25,396 (up 377 points or 1.51%) while the Nifty closed at 7,583 (up 109 points or 1.46%). The NSE recorded a volume of 164.52 crore shares. India VIX rose 3.46% to close at 15.9825.
 

Except for Metal (0.46%) and IT (0.44%) all the other Asian indices closed in the green. The top five gainers were Realty (5.03%), CPSE (4.92%), Energy (4.11%), PSE (3.91%) and Dividend Opportunities (2.57%).
 
Of the 50 stocks on the Nifty, 40 ended in the green. The top five gainers were ONGC (10.56%), Gail (7.66%), DLF (6.40%), Hero MotoCorp (4.17%) and Kotak Mahindra Bank (3.86%). The top five losers were Sesa Sterlite (2.64%), NMDC (1.39%), Infosys (1.35%), TCS (0.91%) and Hindalco (0.91%).
 
Of the 1,603 companies on the NSE, 1,081 companies closed in the green, 483 companies closed in the red while 39 companies closed flat.


Monsoon rains reached the Kerala coast, weather officials reportedly said. India's weather office had forecast a delayed onset for this year's monsoon on around 5th June, instead of the normal onset date on 1st June.

Food Minister Ram Vilas Paswan was quoted as saying, that the government will examine raising import tax on sugar to support local prices and help mills clear dues to cane growers which are estimated at Rs11,000 crore.

Government officials on Thursday, reportedly said that the oil ministry has to decide on gas pricing issue by 1 July 2014 and that more clarity on the issue may be reached next week. ONGC (10.57%) was the top gainer in the Sensex 30 pack.

Prasad Thrikutam is the latest addition to the series of exits from Infosys, he was the the global head for sales and marketing. The stock was among the top two losers (1.26%) among the Sensex 30 stock.

Tata Global Beverages (11.23%) top gainer in the ‘A’ group on the BSE. The scheme of amalgamation of Mount Everest Mineral Water Limited with the company was approved by the shareholders in the meeting held on 4 June, 2014.

Muthoot Finance (2.74%) was the top loser in the ‘A’ group on the BSE. The company was in the news recently after the Government of Singapore picked up a 1.06% stake in the company. This share purchase transaction was part of the recent institutional placement programme by the company raising Rs418 crore.

Asian indices showed a mixed performance. Among the indices which were trading today, Straits Times    (0.60%) was the top gainer, while Hang Seng (0.69%) was the top loser.

European indices were trading in the green. US Futures were also trading a little higher.
European Central Bank on Thursday cut its benchmark interest rates to unprecedented lows, spurring speculation that the decision will accelerate capital inflows.

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