Nifty, Sensex may rally: Weekly Market Report

Nifty has to remain above 6650 and close above 6740 for a rally

The BSE 30-share Sensex closed the week that ended on 2nd May, at 22403.89 (down 284 points or 1.25%), while the NSE’s 50-share Nifty closed at 6694.80 (down 88 points or 1.30%) for the week. We had mentioned in the past week  that this reporting week may see some more decline. During the week the market closed lower on every trading session though the fall was a gradual one.

On Monday the weakness on the bourses continued with the Nifty closing at 6,761 (down 21 points or 0.32%). The negative move throughout the global indices played on the sentiments back home as well. The domestic indices continued to be weak on Tuesday inspite of its Asian counterparts closing in the green. Nifty closed at 6,715 (down 46 points or 0.68%). A report by the National Association of Realtors showed residential real estate were starting to stabilise as contracts to purchase previously owned US homes climbed in March by the most in almost three years. Back home the Supreme Court of India indicated it would pass an interim order on a plea for stopping illegal mining activities in Odisha and the priority before it would be to halt 40 out of 56 iron ore mines operating under deemed-renewed leases.

On Wednesday, the market closed in the negative for the fourth consecutive session. The oil ministry will declare new gas prices only after the Election Commission (EC) formally notifies the election result. The new gas price formula approved by the cabinet last year, may almost double the rate. Nifty closed the day at 6,697 (down 19 points or 0.28%).

US consumer confidence dipped in April but remained near a six-year high, while home prices rose in February.

The stock market remains closed on Thursday, 1 May 2014, on account of May Day.

After a holiday, the Indian market opened Friday on a positive note but the indices could not sustain the momentum. This resulted in the fifth consecutive session when the indices closed in the negative. Nifty closed at 6,695 (down 2 points or 0.02%).

HSBC India Manufacturing PMI (PMI) for April 2014 remained unchanged from March's reading of 51.3, the seasonally adjusted PMI indicated a further improvement in operating conditions during April. News from US showed that unemployment benefits climbed to a nine-week high last week, while consumer spending surged in March by the most in almost five years. But the US added 288,000 jobs in April - the biggest increase in more than two years, way above the consensus figure of 210,000, that suggests the economy is accelerating after weak first-quarter growth.


For the week, among the other indices on the NSE, the only top performers was Pharma (2%) while the worst two performers were Metal (6%) and Realty (5%).
Among the Nifty stocks, the top five stocks for the week were Dr. Reddy's Laboratories (4%); Oil & Natural Gas Corp (3%); Cipla (2%); HDFC (2%) and Tech Mahindra (2%) while the top five losers were Jindal Steel & Power (13%); D L F (9%); Tata Steel  (9%); Hindalco  (8%) and Sesa Sterlite (7%).
Of the 1,423 companies on the NSE, 460 companies closed in the green, 933 companies closed in the red while 30 companies closed flat.
Out of the 27 main sectors tracked by Moneylife, top five and the bottom five sectors for this week were:
Top ML sectors   Worst ML sectors  
Farm & Farm Inputs 4% Steel -5%
Pharma 2% Con_EPC_Infra -5%
Oil & Gas 1% Real Estate -5%
Software & I T Services 0% Telecom Services -5%
Industrial Intermediates 0% Non-Ferrous Metals -4%



Nifty, Sensex headed for a small jump

Nifty has to stay above 6650 for a short rally

The S&P BSE Sensex opened Friday with a highest opening gap since 2 April 2014. However, the gap up opening was used by investors to sell. Each effort of reviving was followed with the indices moving lower. In the last few minutes of the session the benchmarks entered in the negative zone and finally closed marginally lower.

The Sensex opened at 22,494 while the NSE 50-share Nifty opened at 6,710. Sensex moved lower to the level of 22,387 after reaching upto 22,576 and closed at 22,404 (down 14 points or 0.06%). Nifty hit a high of 6,738 and moved lower to the level of 6,690 and closed at 6,695 (down 2 points or 0.02%). The NSE recorded a low volume of 67.35 crore shares.

Eight core sector industries increased their output by 2.5% in March as against 7% in the same month in 2013. On account of higher output from coal, petroleum, steel and electricity, the eight key infrastructure industries grew by 2.5% in March. The core sectors grew by 4.5% in February, while in January, the industries had grown by 1.6%. Overall, the core sector industries grew by 2.6% in FY14 compared to the 6.5% in FY13.
Coal production grew by 0.7% in March 2014 compared to the same month in 2013. Steel production and electricity generation also grew by 5.4% each in March 2014 compared to March 2013.

Market today awaited Markit Economics to unveil HSBC India Manufacturing PMI (PMI) for April 2014 today. Unchanged from March's reading of 51.3, the seasonally adjusted PMI indicated a further improvement in operating conditions during April.

Coal India was among the top three gainers in the Sensex 30 pack. Coal India clsoed 1.3% up at Rs295.5 on the BSE. The union government has set unrealistic targets for Coal India this year after the company fell 4.21% short of its production target to 462.53 million tonnes (mt) in 2013-14. The production and offtake targets for 2014-15 are 507 mt and 520 mt, respectively. The company’s performance grew only 2.3% and 1.4%, respectively, on these indicators in the last financial year.

Maruti Suzuki car sales in April 2014 fell by 11.40% over the year ago period. During the month, the carmaker  sold 86,196 units compared with 97,302 units in the corresponding month last year. The highest fall was witnessed in sales of SX4 while the compact segment comprising Swift, Estilo, Ritz and Celerio recorded a growth in sales of 9.9%. Maruti Suzuki was among the top five losers in the Sensex 30 stock. It ended 1.7% down at Rs1885.5 on the BSE.

After posting a marked growth in the revenue for March 2014 quarter Marico today came up a top gainer in ‘A’ group on the BSE.

Jindal Steel is in news for competing in talks to buy parts of insolvent Italian steelmaker Lucchini. Italy's steelmaker has tried to sell itself for years but has so far failed to attract investors. Jindal Steel was the top loser today in ‘A’ group on the BSE. Jindal Steel ended 6.5% down at Rs238.9 on the BSE.

US indices closed flat on Thursday.

Data showed applications for US unemployment benefits climbed to a nine-week high last week, while consumer spending surged in March by the most in almost five years as warmer weather brought shoppers back to auto-dealer lots and malls.
The US non-farm payrolls data is due later today.

The Institute for Supply Management's factory index rose to 54.9 in April from 53.7 in the prior month, the Tempe, Arizona-based group's report showed today. Readings above 50 indicate expansion. The ISM's factory gauge averaged 53.9 for all of last year.

Hang Seng (0.57%), NZSE 50 (0.46%) and Taiwan Weighted (0.86%) ended up. All all the other Asian indices trading today closed in the red. Straits Times (0.37%) was the top loser. China's official manufacturing purchasing managers' index rose to 50.4 in April.

European indices are trading in the green while US Futures are trading marginally higher. Euro-area manufacturing grew at the fastest pace in three months in April on accelerating expansion in Germany and Italy, evidence the currency bloc's recovery remains on track. A Purchasing Managers' Index increased to 53.4 from 53 in March, Markit Economics said in a statement today. That exceeded a preliminary reading of 53.3 published on April 23. The measure has exceeded the level of 50, indicating expansion, for the past 10 months.


Cummins US, sees sharp decline for its India unit sales

The parent company of Cummins India has guided for a very weak year ahead for India with an expectation of about 15% revenue decline in powergen segment

Cummins Inc, the parent company of Cummins India, while declaring its first quarter results has expressed worries over weak demand from powergen and mining segments from the country. "In the post-results conference call, Cummins Inc further mentioned that India powergen revenues declined 46% year-on-year in US dollar terms. The parent has also guided for a very weak year ahead for India and expects 15% revenue decline in powergen segment. We retain our Reduce rating on continued slowdown overhang and expensive valuation for Cummins India," says Nomura in a research note.


According to Nomura estimates, after adjusting for the currency impact, the parent's numbers imply about 38% decline in India powergen revenues. It said, "This compares with a 26% decline that we were building in for the segment in this quarter. Note that powergen segment contributes about 30% of total sales for Cummins India."


Separately, Cummins has also upped its own revenue growth guidance for CY14 on the back of strong North American market – this might not be too positive for its Indian unit exports as North America is less than 15% of total exports for the Cummins India.


According to Nomura, notably, Kirloskar Oil Engines, one of the key competitors for Cummins India, posted better-than-expected topline for March 2014 quarter. Revenues trend improved for Kirloskar Oil Engines improved in second half of FY14, as it grew by around 6.0% compared with a decline of about 9% during first half of FY14.


"This seems to be in contrast with the implied numbers for Cummins India and might suggest that growth in high low/ mid power segment is stabilising/ recovering, while that in high HP segment continues to face headwinds," Nomura added.


Nomura said it has retained its 'reduce' rating on Cummins India with a price target of Rs385 as against the company's closing price of Rs550 as on 29 April 2014.


Cummins India closed Friday 4.5% down at Rs523.8 on the BSE, while the 30-share Sensex ended the day marginally down at 22,403.


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