Nifty, Sensex may suffer further decline
Nifty may find support around 7,470

The S&P BSE 30-share Sensex closed the week that ended on 13th June at 25,228 (down 168 points or 0.66%), while the NSE’s 50-share Nifty closed at 7,542 (down 41 points or 0.54%) for the week. We had mentioned in our previous week’s report that the market is highly overbought and fresh gains may not come in easily. After hitting a new high on Monday, markets gave up most of the gains over the next four days.
On Monday, the day's highlight was the optimistic road map laid out by President Pranab Mukherjee's for the new government. The speech highlighted among other things, the need for containing food inflation, reforms to enhance the ease of doing business, rules for allocation of coal, minerals and telecoms spectrum, and infrastructure development programme. Nifty closed Monday at 7,655 (up 71 points or 0.94%).
As we anticipated last week, we observed the indices losing their strength to move higher. Indian Meteorological Department said late on Monday that rainfall over the country as a whole for the 2014 southwest monsoon season (June to September) is likely to be below normal. Nifty closed at 7,656 (up 2 points or 0.02%) on Tuesday.
On Wednesday, after hitting a new life time high the Nifty closed in the negative for the first time after four days of closing in the green. Nifty closed at 7,627 (down 30 points or 0.39%). Government data showed the trade deficit declining to $11.23 billion in May 2014, from $19.37 billion in May 2013. Trade deficit for the first two months of this financial year declined to $21.32 billion from $37.04 billion during the corresponding period in the previous year.
On Thursday, the Indian market recovered the previous day’s losses and closed in the positive. Nifty closed at 7,650 (up 23 points or 0.30%). Markit Economics said India's industrial output in April rose to 3.4% from previous -0.5%, while manufacturing output increased to 2.6% in April from previous -1.2% over the year.
The annual inflation rate based on combined consumer price index (CPI) for urban and rural India eased to 8.28% (provisional) in May 2014, from 8.59% (final) in April 2014, as indicated by the data released by the government after trading hours on Thursday.
On Friday after range bound movement in the morning session, Nifty was pulled in negative. Nifty closed at 7,542 (down 108 points or 1.41%). Rising tension in Iraq which threatened to affect the oil supplies affected market sentiment adversely.
For the week, among the other indices on the NSE, the top two performers were IT (6%) and Pharma (4%) while the worst two performers were Realty (7%) and PSU Banks (6%).
 Among the Nifty stocks, the top five stocks for the week were HCL Technologies (8%); Asian Paints (7%); Grasim Industries (7%); TCS (6%) and Infosys (6%) while the top five losers were DLF (12%); BHEL (10%); BPCL (9%); ONGC (9%) and Axis Bank (8%).
 Of the 1,486 companies on the NSE, 661 companies closed in the green, 810 companies closed in the red while 15 companies closed flat, as compared to the previous week's close.
 Out of the 27 main sectors tracked by Moneylife, top five and the bottom five sectors for this week were:

Top ML index


Worst ML index


Software & IT Services


Oil & Gas














Industrial Intermediates


Real Estate




Sensex, Nifty pulled lower on rising tensions in Iraq : Friday closing report
Weakening of the Nifty may be seen in days to come

The Indian indices witnessed a range bound session until around 11.45 am on Friday when the benchmarks were trading marginally higher than yesterdays close. The indices soon made an entry in the negative zone and saw a gradual slide down, ultimately closing in the red. Rising tension in Iraq, which threatened to affect oil supplies, affected market sentiment adversely.
The S&P BSE 30-share Sensex opened at 25,677 and moved from the high of 25,688 to a low of 25,172 and closed at 25,228 (down 348 points or 1.36%). The NSE 50-share Nifty opened at 7,668 and hit a high of 7,679 and moved lower the level of 7,525 and closed at 7,542 (down 108 points or 1.41%). The NSE recorded a volume of 132.96 crore shares. India VIX rose 5.09% to close at 17.7625.
The annual inflation rate based on combined consumer price index (CPI) for urban and rural India eased to 8.28% (provisional) in May 2014, from 8.59% (final) in April 2014, as shown by data released by the government after trading hours on Thursday. Within the consumer price index, food prices inflation eased to 9.56% in May 2014, from 9.83% in April 2014. The rate of inflation based on the core CPI, which excludes food and energy prices was 7.72% in May 2014, unchanged from the level in April 2014.
Hindustan Unilever (0.71%) was the top gainer in the Sensex 30 pack. Two senior executives have quit the modern trade division of Hindustan Unilever in recent weeks.
Hero MotoCorp (4.42%) was among the top two losers among the Sensex 30 stocks. Hero MotoCorp is planning to enter Brazil by 2016. It also plans to begin work on its manufacturing facility in Columbia in the next two months, investing $70 million.
Motherson Sumi (3.07%) was among the top two gainers in the ‘A’ group on the BSE, it was in news for planning to raise funds in the overseas bond market by issue of $500 million in euro-denominated bonds.
Jaiprakash Associates (8.30%), top loser in ‘A’ group on the BSE. The company has been in news in relation to involvement in talks with Ultratech Cement for selling off Jaiprakash’s cement assets.
US indices closed in the negative on Thursday. The retail sales rose 0.3% in May, half the growth rate forecasts were indicating. Americans' new claims for unemployment benefits unexpectedly rose last week.
Asian indices showed a mixed performance. Shanghai Composite (0.93%) was the top gainer while Seoul Composite (1.03%) was the top loser.
The Bank of Japan maintained record stimulus as Governor Haruhiko Kuroda strives to boost inflation that remains short of a 2% target. The central bank will continue to expand the monetary base at a pace of 60 trillion yen to 70 trillion yen ($688 billion) per year, it said in a statement today in Tokyo in line with estimates.
European indices were trading in the red while US Futures were also trading lower.


Iraq crisis: Militants capture entire chunk of Sunni heartland

The new development is the biggest threat to Iraq’s stability since the US withdrawal at the end of 2011, and has pushed the nation closer to a precipice that would partition it into Sunni, Shiite and Kurdish zones

The Shiite-led government of Iraq’s Prime Minister Nouri al-Maliki remained in paralysis on Friday, unable to form a coherent response after al-Qaeda-inspired militants blitzed and captured an entire chunk of the nation’s Sunni heartland this week, including major cities.


This new reality is the biggest threat to Iraq’s stability since the US withdrawal at the end of 2011, and it has pushed the nation closer to a precipice that would partition it into Sunni, Shiite and Kurdish zones.


Fighters from the militant group known as the Islamic State of Iraq and the Levant on Thursday vowed to march on Baghdad, joined by Saddam Hussein-era loyalists and other disaffected Sunnis.


Trumpeting their victory, the militants also declared they would impose Shariah law in Mosul, Iraq’s second-largest city, which they captured on Tuesday among other areas they seized.


In northern Iraq, Kurdish security forces moved to fill the power vacuum — taking over an air base and other posts abandoned by the army in the ethnically mixed city of Kirkuk.


Three planeloads of Americans were being evacuated from a major Iraqi air base in Sunni territory north of Baghdad, US officials said. Germany urged its citizens to immediately leave parts of Iraq, including Baghdad.


President Barack Obama said Iraq will need more help from the US, but he did not specify what it would be willing to provide. Unnamed senior US officials said Washington is considering whether to conduct drone missions in Iraq.


The UN Security Council met to discuss the crisis, underscoring the growing international alarm over the stunning advances by the terrorist forces.


Al-Maliki had asked Parliament to declare a state of emergency that would give him and his Shiite-led government increased powers to run the country, but the lawmakers failed to assemble a quorum yesterday.


Skirmishes continued in several areas. Two communities near Tikirt — the key oil refining centre of Beiji and the city of Samarra, home to a prominent Shiite shrine — remained in government hands according to Iraqi intelligence officials.


In Saddam’s home town of Tikrit, overrun by the militants on Wednesday, witnesses said fighters raised posters of the late dictator and Izzat Ibrahim al-Douri, his former deputy who escaped the 2003 US-led invasion and has eluded security forces ever since.


Baghdad's authorities tightened security and residents stocked up on essentials. Hundreds of young men crowded in front of the main army recruiting centre in Baghdad after authorities urged Iraqis to help battle the insurgents.


Security officials said the Islamic State fighters managed to take control of two weapons depots holding 400,000 items, including AK-47 rifles, rockets and rocket-propelled grenades, artillery shells and mortars.


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