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Indian indices are still possibly gathering energy for a short upmove but the market is highly overbought
The BSE 30-share Sensex closed the week that ended on 21st March, at 21,753.75 (down 56 points or 0.26%), while the NSE’s 50-share Nifty closed at 6,493.20 (down 11 points or 0.17%) for the week.
On Monday, Indian financial markets were closed on account of Holi. On Tuesday both the Sensex and the Nifty hit their all time highs but could not sustain at that level and gave up all the intra day gains. Nifty closed at 6,517 (up 12 points or 0.19%).
Goldman Sachs upgraded Indian shares to "overweight" from "marketweight" and raised its target on Nifty to 7,600. It also recommended investors to focus on potential election beneficiaries. On the other hand, factory production in the US rose in February by the most in six months. The 0.8% gain at manufacturers followed a revised 0.9% slump in the prior month that was the biggest since May 2009, figures from the Federal Reserve showed.
On Wednesday lower forward guidance by Tata Consultancy Services affected the market which ignored the positive data coming from the US. On Wednesday, Nifty closed at 6,524 (up 7 points or 0.11%).
Credit rating agency Standard & Poor's (S&P) Ratings Services on Wednesday said that Indian companies are improving their credit profile by selling equity and assets, or using free operating cash flows to reduce debt. U.S. housing starts fell for a third straight month in February, but a rebound in building permits offered some hope for the housing market. The Commerce Department said on Tuesday groundbreaking slipped 0.2% to a seasonally adjusted annual rate of 907,000 units.
The gains of previous three consecutive sessions (ending Wednesday) were wiped off by the negative move on Thursday. The weakness was after the recent US Federal Reserve's policy statement hinted towards the prospect of interest rates rising sooner than anticipated. Nifty closed at 6,483 (down 41 points or 0.63%).
With the positive data from the US and Fitch Ratings affirming its credit ratings at "AAA" helped the global indices get some relief. Nifty closed at 6,493 (up 10 points or 0.16%).
For the week, among the other indices on the NSE, the top two performers were Media (4%) and Metal (3%) while the worst two performers were C P S E (3%) and PSE (2%).
Among the Nifty stocks, the top five stocks for the week were Maruti Suzuki (7%); Hindalco Industries (7%); Tata Steel (6%); Wipro (4%) and Jindal Steel & Power (3%) while the top five losers were Mahindra & Mahindra (6%); G A I L (5%); O N G C (5%); I D F C (4%) and B P C L (4%).
Of the 1,420 companies on the NSE, 795 companies closed in the green, 575 companies closed in the red while 50 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|
|Shipping||7%||Oil & Gas||-4%|
|Lifestyle & Leisure||4%||Financial Services||-1%|
The indices are still possibly gathering energy for a short upmove, but will it last?
The benchmark indices in India moved Friday almost in the same narrow range as Thursday and managed to close marginally higher. The market opened with high optimism, following a rally in the US markets but soon lost steam. The BSE 30-share Sensex opened at 21,824 while the NSE 50-share Nifty opened at 6,515. Both the indices immediately hit their respective high at 21,870 and 6,523, respectively. Sensex hit a low of 21,730 and closed at 21,754 (up 14 points or 0.06%) while Nifty closed at hit a low of 6,486 and closed at 6,493 (up 10 points or 0.16%). The NSE recorded a higher volume of 73.19 crore shares.
A panel headed by Reserve Bank of India (RBI) deputy governor Urjit Patel recommended in January moving to an inflation target, with an aim to eventually bring down consumer-price based inflation to 4% with a 2% band on either side. However, the Reserve Bank of India Governor Raghuram Rajan said that the central bank has not yet moved to an inflation target, and was still exploring the suggestions on the subject drafted by a panel with the government.
US indices closed in the green on Thursday. The number of Americans filing new claims for unemployment benefits rose less than expected last week. Initial claims for state unemployment aid increased 5,000 to a seasonally adjusted 320,000 last week, the Labor Department said.
Fitch Ratings on Friday affirmed the United States' credit ratings at "AAA" with a stable outlook, removing the distant danger that it might downgrade the world's largest economy. The action resolves the negative watch that Fitch had placed on the United States back in October, when political wrangling over the debt ceiling had raised the risk of default. Fitch said the latest crisis over the debt limit had not adversely affected US Treasury yields or the appetite of foreign investors for the debt. "Therefore Fitch does not believe the role of the US dollar, sovereign financing flexibility or debt tolerance has been materially damaged," it said.
Except for NZSE 50 (down 0.69%) and Taiwan Weighted (down 0.23%) all the other trading Asian indices closed in the positive. Shanghai Composite (2.72%) was the top gainer.
European indices were trading in the green while US Futures were trading marginally higher.
Standard & Poor’s and Fitch Ratings cut Russia’s credit outlook to negative after the US penalised officials and business leaders named as having ties to Russian President Vladimir Putin.
Greece's credit rating was maintained at six steps below investment grade by Standard & Poor's, which said the country's debt remains large even as its government's fiscal performance improves. The country's long-term local currency debt was kept at B-, with a stable outlook, S&P said in a statement.