Global cues indicate a flat-to-positive opening for the Indian market today, however, domestic earnings will be keenly watched for further direction. Software giant TCS, will post its December quarter earnings on 17th January, followed Wipro and Reliance Industries’ third quarter numbers on 21st January.
The US market closed on a positive note on Friday on good earnings and economic indicators. The Asian pack was mixed in early trade, weighed down by the Chinese rate increase, announced on Friday. The SGX Nifty was up 15 points at 5,660 from its previous close of 5,645.
The Indian market closed lower for the second week in a row on the back of a massive pull-out by institutional investors, worried that the Reserve Bank of India (RBI) could increase interest rates to try and curb soaring inflation. Results announced by some heavyweights this week were marginally down from the previous quarter, but lower projections for the fourth quarter put a strain on the stocks. Overall the market closed the week with a loss of 4%, its worst weekly loss since May last year. The Sensex plunged 831.37 points and the Nifty declined 250.05 points.
Markets in Asia were mixed in early trade on Monday, weighed down by the Chinese rate increase announced on Friday, after the regional markets closed for trade. The People’s Republic Bank of China raised lenders' required reserves on Friday for the fourth time in over two months in a bid to curb rising prices. The 50-basis-point increase, effective from 20th January, will raise the reserve requirement ratio (RRR) for China's biggest banks to a record high of 19.5%. On the other hand, Japan’s benchmark index—Nikkei 225— was up on optimism in the US economy.
The Shanghai Composite tanked 0.92%, the Hang Seng was down 0.06%, the Jakarta Composite and the Straits Times shed 0.03% each and the Taiwan Weighted declined 0.52%. On the other hand, the KLSE Composite gained 0.15%, the Nikkei 225 rose 0.36% and the Seoul Composite was up 0.14%.
The US markets bounced back on Friday on the back of decent earnings reports from the financial stocks and the report of a rise in retail sales. JP Morgan reported that its income soared 47% in the fourth quarter. The Labor Department reported that consumer prices rose 0.5% last month, the largest increase since June 2009. However, 80% of the increase was due to higher gas prices, meaning that the risk of widespread inflation remains low.
In a separate report, the Commerce Department said retail sales rose in December for the sixth month in a row, driven by automobile and furniture sales. The National Retail Federation said Friday that US retailers enjoyed their best holiday sales in six years, rising 5.7% for a total of $462 billion in sales over November and December.
The Dow advanced 55.48 points (0.47%) to 11,787.38. The S&P 500 gained 9.48 points (0.74%) to 1,293.24 and the Nasdaq rose 20.01 points (0.73%) to 2,755.30.
The US markets will be closed today for a local holiday.
Back home, the Securities and Exchange Board of India (SEBI) is considering higher allocation of public offer shares for mutual funds in a bid to increase retail investors' participation in stock market. Initial and follow-on public offers have traditionally been a preferred route of stock market investment for mutual funds, but they do not get enough shares these days because of a surge in demand from foreign institutional investors.
Currently, all the Qualified Institutional Buyers, which includes a whole range of institutional investors including mutual funds, are together allocated 50% of shares being sold through IPOs and FPOs. But, there is no direct reservation for mutual funds (MFs).
Meanwhile, Anil Ambani on Sunday claimed that his two group firms—Reliance Infra and RNRL—settled the SEBI probe voluntarily and the regulator has not imposed any ban on the companies or their directors from participation in the capital market. Contesting media reports that the market regulator had barred two group firms and its directors from dealing in the capital market, Mr Ambani said, “SEBI has not banned R-Infra, RNRL, Anil Ambani, other directors from capital markets or from stock markets.”
Mr Ambani's clarification comes in the wake of SEBI passing a consent order on Friday to settle a probe into the alleged violation of regulations for foreign investment and unfair trade practices by Reliance Infra and RNRL.
The Indian market closed lower for the second week in a row on the back of a massive pull-out by institutional investors, worried that the Reserve Bank of India (RBI) could increase interest rates to try and curb soaring inflation. Results announced by some heavyweights this week were marginally down from the previous quarter, but lower projections for the fourth quarter put a strain on the stocks.
Last week, we had said that the Sensex may go down by another 1,000 points. It ended the week down 831 points. In fact, the upmove that started on 6th March was seriously damaged on Friday, with the Sensex crashing below 19,000 and Nifty below 5,900, following continuous selling by foreign investors. Friday’s move is significant because for the first time since the rally began in March 2009, the indices have made a lower top and a lower bottom.
The recent top at 20,664 (6,181 in Nifty) was lower than the previous top of 21,108 (6,338) while Friday’s low of 18,812 (5,640 in Nifty) is lower than the previous low of 18,954 (5,690). In fact, the indices are now trading at a level that is very close to the end of the two-year bull market. There will be short rallies, but unless the recent highs are crossed, the decline will continue after bouts of rallies. The breach of 19,000 has been seriously damaging for the bulls.
The market was down on Monday, following across-the-board selling and all sectoral indices ended in the red. A mixed opening and choppiness were the main features of trading on Tuesday. Bargain hunting at lower prices helped the indices recover from the day’s lows, but the market ended lower for a sixth consecutive day.
Positive global cues supported a green opening on Wednesday, but a sharp fall in industrial output numbers for November dragged the indices lower for some time. Institutional buying late session, ensured a positive close.
Lower-than-expected third quarters results declared by IT bellwether Infosys Technologies before the opening bell on Thursday, put pressure on the market throughout the day. The weekly food inflation figures added to the woes and forced the government to assure more steps to curb rising prices.
The Sensex fell below the 19,000 mark on a bout of institutional selling in the last half-hour of trade on Friday, to its lowest close since 9 September 2010. Earlier in the day, the higher wholesale price-based inflation for December put pressure on interest-sensitive sectors like banking, realty, metal and auto.
Overall the market closed the week with a loss of 4%, its worst weekly loss since May last year. The Sensex plunged 831.37 points and the Nifty declined 250.05 points.
Bharti Airtel (up 1%) was the only gainer on the Sensex in the week. Sterlite Industries and Mahindra & Mahindra ended flat, while HDFC Bank (down 9%), Jaiprakash Associates (down 8%) and Larsen & Toubro (down 7%) were the major losers in the week ended 14th January.
All sectoral indices closed in the red with BSE Capital Goods (down 6%) and BSE Realty (down 5%) leading the losers.
Inflation shot up to 8.43% in December from 7.48% in the previous month, as prices of certain food and non-food items continued to show an upward trend. After moderating somewhat in November, the overall inflation—measured on the basis of wholesale prices—rose in December, as vegetables like onions, and other protein-based items became expensive.
With inflation showing no signs of moderating, it is widely expected that the RBI will raise key policy rates at its quarterly review of monetary policy on 25th January.
Industrial growth plunged to an 18-month low of 2.7% in November 2010 from over 11% recorded in the previous month. The sharp deceleration in November figures was because of a mere 2.3% growth in manufacturing, which constitutes around 80% of the Index of Industrial Production (IIP), which measures the expansion in factory production.
Food inflation declined, but stayed at an elevated level of 16.91% for the week ended 1st January, prompting the government to assure more steps to rein in prices of essential items. Even as food inflation showed a meagre decline, vegetable prices were up 3.84% during the week, with onion prices rising by 1.73%.
On the corporate front, the third quarter results of Infosys, the country’s No.2 services exporter, lagged expectations, pulling the stock down nearly 5% on Thursday. The company’s Q3FY11 net profit at Rs1,780 crore and net sales at Rs7,106 crore were at the lower end of expectations of the market. Volume growth at just around 3% was lower than the 6%+ expected and its revenue guidance for FY11 at $6.04-6.06 billion and an EPS of Rs118.68-Rs118.90 were also below expectations. Analysts had estimated an EPS of Rs120 EPS.
With no major economic triggers expected next week, investors will be keenly watching corporate results to place their bets on the markets. Besides, participation of institutional investors will also guide the market going forward.
Mumbai: The Bombay Stock Exchange (BSE) today said it has resolved 632 complaints for the month of December 2010, against 329 listed firms. However, overall, as of end of the year there were still a large number of complaints pending before the exchange, reports PTI.
A total of 472 complaints were received during the month of December against 261 listed companies, BSE said.
Meanwhile, during the period, BSE resolved 632 complaints against 329 firms, a release issued by the exchange said.
It added that as on 31 December 2010, 1,060 complaints were pending against Vatsa Corporation, 172 against Mukerian Papers, 161 against Enkay Texfoods Industries, 153 against Panchmahal Cement, 139 against Montari Industries, 105 against Eastern Mining & Allied, 103 against Arihant Industries, 97 against Montari Leather, 94 against Padmini Technologies and 88 against Prakash Fortran Softech, the release added.