Nifty Sensex in a new bull zone: Weekly Market Report

Nifty is showing no sign of weakness as yet but the chances of a continued strong rally is even

Although the week opened weak, from Tuesday the indices gained an upward momentum. The BSE 30-share Sensex rose 513.29 points (or 2.48%) to close the week at 21,196.81, while the Nifty closed at 6,307.20, rose 162.30 points (or 2.64%).


On Monday, the markets opened in the green, but the optimism didn’t last long. The indices declined continuously, throughout the entire trading session, with the bears taking control, emphasising the inherent weakness exposed last week. The breadth of the market was widely negative, declines outpacing advances. The sentiment was negative.


Tuesday was an interesting day. It was the day the markets reversed, though the circumstances at which reversal took place merits examination. It was the day that RBI governor was to announce policy rates. The markets opened in the red, continuing its downtrend from Monday. However, at 10:45 am, the markets suddenly saw volumes and volatility, shot up within a few seconds—all this before Raghuram Rajan announced policy rates. Please refer to the fully story published here. After that, the bulls took control and sent the markets up through the rest of the trading session, well above Monday’s critical support level.


On Wednesday, the market opened in the positive and remained above Tuesday’s close throughout the session, and stayed above Tuesday’s highs, indicating sustained strength. However, the market lacked breadth. The global market rose, driven by encouraging quarterly results from top companies like Volkswagen, Europe’s biggest carmaker, and Barclays underscored Euro region’s recovery. German 10-year bunds rose for a seventh day, the longest winning streak in more than two years. The US markets continued to see positive economic data, with 150,000 workers added to the payrolls.


On Thursday, the markets remained positive throughout much of the session before a late rally extended the market rally to end positive for the third day in a row, amidst heavy volumes on the derivatives expiry day. However, the breadth of the market was barely even, with slightly more advances than declines, signifying resistance. The key moment for markets, the decision of the US Federal Reserve to maintain status quo in its bond purchase program, came and went without much fanfare as the outcome was expected. But many were disappointed. A reading between-the-lines of the Federal Open Markets Committee statement indicates a vague idea of tapering some time in the future based on data.


The market completed four days of positive upmove on Friday. The bulls are in control now. They ignored the negative news back home, where the Indian factories cut production in October, with overall manufacturing activity contracting for the third straight month, as order books shrank at a quicker pace, a survey showed on Friday, 1 November 2013.


Out of 1,273 stocks on the NSE, 775 were up, 457 were down and 41 were unchanged for this week.


Among the other indices on the NSE, the top two gainers were PSU Bank (11%) and Bank (7%) while the top two losers were IT Sector (0.15%) and FMCG (2%).


Among the Nifty-50 stocks, the top five gainers were Punjab National Bank (15%); Bank of Baroda (13%); I C I C I Bank (11%); I D F C (10%) and State Bank of India (9%) while the top five losers were I T C (4%); Power Grid Corp of India (2%); Ambuja Cements (2%); Infosys (2%) and Sun Pharma (1%).


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


Top ML sectors


Worst ML sectors




software & it services


financial services


lifestyle & leisure


telecom services








non-ferrous metals






Nifty, Sensex on an uptrend: Friday closing report

The first sign of weakness in Nifty will be below 6,270. Until then, bulls have the ball

After a volatile session on the bourses both the Sensex and the Nifty closed Friday at their all-time highs. Both Sensex and Nifty opened marginally lower at 21,159 and 6,290, respectively. Soon they hit their respective high at 21,294 and 6,333.  During the noon session both the indices hit their day’s low at 21,141 and 6,287. However, they managed to recover immediately from that level and come back into the positive. After a session, where the trading happened mostly in the green the Sensex closed at 21,197 (up 32 points or 0.15%) and Nifty closed at 6,307 (up 8 points or 0.13%). The National Stock Exchange (NSE) recorded a massive volume of 88.99 crore shares, among the highest ever. However, since this was not accompanied by a significant advance, the bulls should be cautious if today’s high is not crossed quickly.


Out of 1,225 stocks on the NSE, 771 were up, 401 were down and 53 were unchanged.


Fiscal deficit was Rs4.12 lakh crore during April-September 2013, or 76% of the full-year target, government data showed on Thursday, 31 October 2013. In the annual budget presented in February, Finance Minister P Chidambaram had committed to narrow the fiscal deficit to 4.8% of gross domestic product (GDP) this fiscal year from 4.9% a year ago.


Indian factories cut production in October with overall manufacturing activity contracting for the third straight month as order books shrank at a quicker pace, a survey showed on 1 November 2013. The HSBC Manufacturing PMI compiled by Markit was unchanged at 49.6 in October, remaining below the watershed 50 mark that separates growth from contraction. The new orders sub-index fell to 48.9 last month from 49.6 in September, its fifth month below 50. The PMI survey showed input costs grew last month at their quickest pace since June 2012. Output costs also rose at the fastest rate since February.


The stock exchanges will hold a special live trading session on Sunday, 3 November, 2013, as Muhurat trading on Diwali. The trading will start at 18:15 IST and will end at 19:30 IST on that day. The stock market remains closed on Monday, 4 November 2013, on account of Diwali-Balipratipada.


Asian indices had a mix performance. Seoul Composite was the top gainer (0.46%) while Jakarta Composite was the top loser (1.73%).


A Chinese manufacturing gauge The Purchasing Managers' Index rose more than estimated to an 18-month high of 51.4 in October as output strengthened, adding to evidence the nation's economic recovery is sustaining momentum.


US indices closed in the negative for the second day yesterday. Fewer Americans filed applications for unemployment benefits last week as a backlog in California's reporting cleared. Jobless claims decreased by 10,000 to 340,000 in the week ended Oct. 26 from 350,000 the prior period, the Labor Department reported Thursday in Washington. European indices were trading mostly in the red while US Futures were trading in the green.


Stagflation coming?

Inflationary pressures are rising sharply, suggesting a stagflation-type scenario in the economy with domestic consumption and investment likely to remain weak in FY14, says Nomura in its research note on manufacturing PMI data for October 2013.

The manufacturing PMI averaged 49.4 in Q3 2013 and October data suggests that Q4 is also starting on a weaker note. Exports and agriculture growth will be a tailwind, but domestic consumption and investment are likely to remain weak due to pro-cyclical fiscal and monetary policies. In this tug of war, growth may not fall much, but neither will it rise substantially, indicating a very prolonged period of sub-par growth. However, even with a negative output gap, inflationary pressures are rising sharply, suggesting a stagflation-type scenario in the economy. This is according to a research note by Nomura on manufacturing PMI data for October 2013.


India’s manufacturing PMI was unchanged at 49.6 in October 2013. The price indices related to input cost pressure on the PMI are shown in the chart below:


The input price index rose to a 16-month high of 64.5 from 63.5 in September, continuing the steep uptrend of the last four to five months. The rupee has appreciated over the last two months, yet the continued rise in input costs suggests broader cost pressures. The output price index rose to 55.3 from 51.1, suggesting that firms have started to pass-on higher input costs to consumers to protect margins. The ratio of output/input price – a proxy for margins – improved this month, points out Nomura.


According to the research note, despite reduced new orders, backlogs of work rose to 52.6 from 50.7 in September, as firms complained of power cuts. Domestic demand remains weak, but cyclone Phailin also led to lower orders this month. Even as new orders fell, inventories rose this month. As a result, the new orders-to-inventory ratio fell to 0.94 in October – the lowest since January 2009 – from 0.98 in September, suggesting scope for manufacturing output to be cut further as firms may need to destock inventory if demand does not recover.


The table of Manufacturing PMIs at a glance is given below:



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