Market in a range : Weekly market report

If the Nifty goes below 5,700, expect a downturn

The market ended the holiday-shortened trading week with marginal gains, on mixed corporate earnings and a downward revision in the growth outlook. The Indian Meteorological Department (IMD) predicted a normal monsoon for this year, while exports in the just-concluded fiscal recorded the highest-ever growth of 37.5%. However, food inflation for the week ended 9th April shot up to 8.74%, reversing a three-week decline.

The bourses closed the week with a 1% gain. The Sensex was 215 points up at 19,602, and the Nifty was up 60 points at 5,885. If the Nifty which is currently at around 5,900 levels falls below 5,700, a downtrend may follow.

In the Sensex space, ONGC, Mahindra & Mahindra (up 6% each), Hindalco Industries, Hindustan Unilever (up 5% each) and Sterlite Industries (up 4%) were the top performers. On the other hand, BHEL (down 8%), Infosys Technologies (down 3%), Hero Honda (down 2%), Larsen & Toubro and Reliance Communications (down 1% each) topped the losers for the week.

Among the sectoral gauges, BSE Oil & Gas gained 3% and BSE Auto rose 2%, while BSE Capital Goods and BSE Power lost 2% each.

On Tuesday, the IMD announced that it expects a normal monsoon this year for a second consecutive year, boosting prospects of the agriculture sector. Quantitatively, the monsoon season rainfall is likely to be 98% of the long period average (LPA) with a model error of plus or minus 5%, IMD director-general Ajit Tyagi said. However, according to weather scientists, some pockets, particularly the north-western region, could see a deficit in rainfall.

The government said exports grew by 37.5% to $245.9 billion in 2010-11, demonstrating a robust demand for Indian merchandise not just in western economies, but in new markets like Latin America as well. Imports, on the other hand grew at a slower pace of 21.5% to $350.3 billion, despite increasing pressure on crude oil prices. The country's total merchandise trade has almost touched $600 billion-half of India's gross domestic product (GDP) of $1.2 trillion.

Food inflation shot up to 8.74% for the week ended 9th April from 8.28% in the previous week, and this could put more pressure on the government as headline inflation for March also overshot its forecast of 8% to 8.98%.

Earlier this week, Goldman Sachs also slashed India's growth forecast for this fiscal to 7.8%, on account of a rise in interest rates. The estimate is way below the government's forecast of 9% growth in 2011-12. The global financial major also raised its inflation forecast for FY10-12 to 7.5%, from 6.7%, due to the recent large upside surprise in core prices. Goldman Sachs expects the Reserve Bank of India (RBI) will continue with its tight monetary policy this year to control inflationary pressures.

Among key corporates that declared their results this week, Reliance Industries' (RIL) Q4 results, which came after the market closed on Thursday, lagged expectations. Net profit increased to Rs5,376 crore from Rs4,710 crore, while total sales rose 26.2% to Rs72,674 crore from Rs57,570 crore in the previous corresponding period.

Hindustan Zinc reported a 42.96% jump in Q4 net profit at Rs1,771.27 crore, on the back of the highest ever production of sliver and zinc. Net sales of the company rose by 27.95% in the quarter at Rs3,197.02 crore, compared to Rs2,498.47 crore on a year-on-year basis.

Tata Consultancy Services (TCS) announced a 31.1% y-o-y increase in fourth-quarter net profit to Rs2,623 crore in the three months to 31 March 2011, according to Indian GAAP. Revenues also grew by 31.3% y-o-y to Rs10,157 crore in the March quarter.

IDBI Bank announced a 62% growth in net profit to Rs516 crore in the quarter ended March 2011 from Rs318 crore in the previous corresponding quarter. IDBI's net interest income in the fourth quarter increased by 45% to Rs1,109 crore as against Rs 762 crore in the previous corresponding quarter.

Private sector lender Yes Bank posted a 45% jump in net profit at Rs203.4 crore. Power Finance Corporation's net profit grew marginally by 1% to Rs606.74 crore. HCL Technologies posted a better-than-expected 33% increase in net profit at Rs468.2 crore for the quarter ended 31 March 2011.

HDFC Bank reported a 33.2% jump in net profit to Rs1,114.70 crore for the fourth quarter ended March 2011, driven by increase in loans. The bank's total income rose by 24% to Rs6,724.30 crore in the January-March quarter of 2010-11 from Rs5,003.80 crore in the year-ago period.

On the international front, Japan's exports fell more than expected in March as shipments of automobiles declined in the wake of the earthquake. Overseas shipments declined 2.2% from a year earlier, the first drop since November 2009. Reserve rates in China were increased once again this week, pushing the requirement to a record 20.5% for the biggest lenders. The move comes less than two weeks after an interest rate increase.


Blackberry: Something is missing!

One can understand Blackberry’s desire to not be seen as a tool for only the serious corporate types, to expand its market, but the route they have chosen to do so is very un-interesting and hackneyed

Blackberry has released four new commercials themed: 'Are you missing something?'. The objective is to hawk the Blackberry messenger service (BBM). I, unfortunately, don't possess the Berry, but I believe BBM helps people keep in touch with each other all the time. (All the more reason I don't want it!)

I don't know if the Blackberry suits have been able to sort out their security issues with the Indian agencies. But the brand sure has been trying very hard not to be perceived as something only corporate sahibs own and use. I recall an ad they ran last year titled 'The Blackberry Boys'. The commercial featured CEOs and other corporate types moving and shaking to a track. As they self-praised their cool suits and shiny shoes. Soon, much to their dismay, all sorts of people joined them in the fun. Young babes, dudes, hippies, vagabonds, freaks and other assorted losers. So the 'downgrade' (hehe) was underway.

With the messenger service, the 'youthification' drive is now full on. In these new ads, we get to watch teens in action. So they bond, hit on each other, exchange BBM codes in public places, share music through the messenger service, ask each other out on dates, congratulate a pal when he buys a new car, blah and blah. All the commercials set to a laid-back, relaxed, country music sort of a track.

Since I was a teen some five hundred years ago, am not sure how the kids will react to these ads. Of course, they'll want the messenger (teens like to be hooked up 24X7), but will they connect with the creative? The music is sleepy, and the situations very boring. In fact, the entire execution is the sort of teen imagery we have seen in commercials over and over again, so that makes the ads a very dull watch. It's mighty predictable stuff.

So while one can understand Blackberry's desire to not be seen as a tool for only the serious corporate types, and to expand its market, the route they have chosen to do so is very un-interesting and hackneyed, when some really scintillating commercials can be executed with teenagers connecting on the BBM. I'd go a step further and say these boring creatives may, in fact, reinforce the popular perception that the Blackberry is only for the serious types.

Net net: A sound effort in terms of the marketing strategy. But the creative is, well, missing something.


Collecting: Madness, method & money

Successful investing in collectibles demands not just passion but also a canny method, Moneylife...

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