Monday’s Market Preview: Cautious opening likely

The Indian market is likely to open on a cautious note today on the back of mixed cues from the global arena. The US markets closed mixed on Friday with the financial sector leading the losses. Markets in Asia were also trading mixed in the absence of any supportive triggers from the US. The SGX Nifty was down eight points at 6,072 from its previous close of 6,080.

Meanwhile, a slew of corporate results for the September quarter, response to the much-hyped Coal India Ltd (CIL) initial public offer (IPO), due to open on Monday (18th October) and global economic triggers will provide direction to the domestic market this week.

The market ended lower for the week ended 15th October — the second week in a row — mainly on profit taking by institutional investors, unsupportive global cues and tardy economic triggers on the domestic front. The market closed the week with a cut of 1% — the Sensex was down 125.21 points at 20,125 and the Nifty settled 40.80 points lower at 6,062.

The US markets ended mixed on Friday with financial stock tanking the most. Stocks rose in early trade after Federal Reserve chief Ben Bernanke’s statement but tardy economic data results in the indices paring their gains. Mr Bernanke made a case for the central bank to take new initiatives to spur economic growth, stating that inflation is likely to remain below the Fed's 2% target and the economy is on a course to grow too slowly to bring down unemployment. His comments were seen as confirmation that the Fed will likely announce after its 2-3 November meeting that it will resume buying US Treasury bonds.

The Dow lost 31.79 points (0.29%) to 11,062. The S&P 500 gained 2.38 points (0.20%) to 1,176. The Nasdaq added 33.39 points (1.37%) to 2,468.

Markets in Asia were mixed in early trade today on fears that the rise in unemployment in the US will hurt exporters in the region, thus slowing economic recovery. While some analysts see the Fed’s action boosting investments in Asia, others opine that the weak US economy will impact the regional bourses.

The Shanghai Composite was up 0.68%, the Nikkei 225 gained 0.50% and the Straits Times added 0.09%. Conversely, the Hang Seng was down 0.56%, the KLSE Composite was down 0.34%, Seoul Composite was down 0.43% and Taiwan Weighted tumbled 1.01%.

Although the government expects inflation to moderate to about 5.5% by next March, a survey by the Reserve Bank of India (RBI) has found that households expect it to rise to almost 12% by June 2011.

They also see inflation remain in double digits for the foreseeable future. Wholesale price index (WPI) inflation for September stood at 8.62%, the second consecutive month when it had been in single digits.

According to the survey issued in the latest bulletin by the apex bank, households believe that prices of food, housing and services are going to be up and fuel the rise in overall inflation.

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Weekly Market Report: Pressure builds up on the bulls

The market ended lower for the week ended 15th October - the second week in a row - mainly on profit taking by institutional investors, unsupportive global cues and tardy economic triggers on the domestic front.

The indices ended with modest gains on Monday amid jittery and range-bound trade. A positive opening of the European market helped the market push the key benchmarks above the day's lows. The market settled lower on poor global cues and a fall in industrial growth for the month of August. The indices ended nearly three-quarters of a percent lower.

Supportive global cues and all-round buying interest sent the market on a higher trajectory on Wednesday. The indices closed the session with gains of around 1.3%. Nearly half the gains accrued on Wednesday were erased on Thursday as the market closed nearly a percent lower, despite good global cues. Institutional sell-off was seen as the main reason for the decline. The slide became more prominent on the last trading day of the week, prompted by weak monthly and weekly inflation data released by the government on Friday.

The market closed the week with a cut of 1% - the Sensex was down 125.21 points at 20,125 and the Nifty settled 40.80 points lower at 6,062.

The top gainers during the week were Tata Motors (up 5%), Sterlite Industries (up 3%), Wipro (up 2%), Tata Steel and HDFC (up 1% each). NTPC, Bharti Airtel (down 5% each), Reliance Communications (RCom), Larsen & Toubro (L&T) (down 3% each) and State Bank of India (SBI) (down 2%) were the prominent losers.

BSE Metal and BSE Auto (up 1% each) were the top performers in the sectoral space while BSE Power and BSE Capital Goods (CG) (down 2% each) down were the sectoral laggards in the week.

Driven by higher prices of essential items, the wholesale price index (WPI) based inflation moved up to 8.62% in September, with experts saying that it will prompt the Reserve Bank of India (RBI) to hike its short-term lending and borrowing rates at next month's policy review.

This is the second consecutive month in which the overall inflation has stayed in single digits. It had remained over 10% for five months till July.

Inflation was 8.51% in August. Meanwhile, the government has revised the July figure upwards to 10.31% from the early provisional figure of 9.97%.

Besides, food inflation numbers released by the government on Friday showed a marginal increase of 0.13 percentage points to 16.37% for the week ended 2nd October from 16.24% in the previous week.

The Index of Industrial Production (IIP) nosedived to 5.6% in August from 10.6% a year ago, mainly on account of decline in output of capital goods, a sector which reflects fresh investments in the economy. Capital goods production declined by 2.6%, manufacturing grew by 5.9%, mining decelerated to 7% and electricity generation to 1%.

India's foreign exchange (forex) reserves went up by $1.63 billion to $295.79 billion on the back of a healthy jump in foreign currency assets, making it the fourth consecutive weekly rise in the kitty.

Foreign currency assets, a major component of the forex pie, shot up nearly $1.59 billion to $268.10 billion for the week ended 8th October, data released by the Reserve Bank of India (RBI) said.

A slew of corporate results for the September quarter, the response to the much-hyped Coal India Ltd (CIL) initial public offer (IPO), due to open on Monday (18th October) and global economic triggers will provide direction to the domestic market next week.
 

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