There is no sign of a market decline currently but watch out for a reaction late Tuesday or Wednesday
The markets had a great week with BSE 30-share Sensex rising 354 points (or 1.73%) to close the week at 20882.89, while the Nifty closed at 6,189, up 93 points (or up 1.53%).
On Monday, unlike most of the Asian indices, which ended in the negative the Sensex continued to close in the positive for the fifth consecutive session. American lawmakers struggled over an accord to raise the US debt limit and restore government operations. Back home, wholesale price inflation (WPI) accelerated to a seven-month high in September 2013. WPI inflation accelerated to 6.46% in September 2013, from 6.1% in August 2013.
On Tuesday, although the Sensex hit the highest level since its previous high of 11 November 2010, it closed in the negative breaking five days of positive move. This happened among the mix of good and bad news. News of US debt deal and good results from Reliance Industries helped while the corporate India was stunned with the fact that CBI filed a first information report (FIR) against Aditya Birla group chairman Kumar Mangalam Birla, his firm Hindalco Industries Ltd and former coal secretary PC Parakh in the case related to the allotment of captive coal blocks.
On Wednesday, the market was closes on account of Bakri Id. On Thursday, in spite of the positive news from the US, where the government shutdown impasse was broken and there was a strong close in the US markets, the Indian markets fell, as investors sold shares of frontline software companies.
On Friday, the markets did a massive reversal of sorts. They opened strongly on the back of positive news from China, and closed at lifetime weekly highs. China reported GDP growth of 7.8%, its quickest rate of the year. The US markets finished strongly on Thursday after opening poorly. Google reported good quarterly results which buoyed US markets. The S&P 500 hit a new lifetime high on Thursday.
We expect the market momentum to continue for a few days. However, the market has been rallying continuously, since early September and Sensex and Nifty are already up 20% each. Sometime around Tuesday and Wednesday, we expect the first reaction to come in.
|Top ML sectors||Worst ML sectors|
|Food & Beverages||5%||Pharma||-1%|
|Telecom Services||4%||Financial services||0%|
The upward momentum is strong and FIIs are pouring in money but they have a habit of being very bullish near market tops
On Friday, the indices put on a massive rally after two days of weakness. Markets open strongly and sustained the upward trend, stabilized mid-session rallying again towards the close. The S&P BSE Sensex opened at 20,487 to touch intraday high of 20,932 before closing at 20,883 (up 467 points or 2.29%). Similarly, Nifty opened at 6,071 hit a high of 6,201 before closing at 6,189 (up 144 points or 2.37%). The National Stock Exchange (NSE) recorded a higher volume of 64.90 crore shares.
We expect this fresh rally that has started today to last for a couple of days more, at least.
The number of advances outpaced the number of declines by nearly 2:1. Out of 1,229 stocks, 727 were up, 437 were down and 65 were unchanged.
All the sectoral indices finished in the green. The strongest movers were CNX Finance (3.54%), CNX Metal (3.34%), Bank Nifty (3.95%) and CNX Realty (3.04%).
Of the 50 stocks in the Nifty, only Bajaj Auto finished in the red (down 0.02%); rest finished in the green. The top five gainers were IndusInd Bank (6.39%); Tata Steel (6.09%); Sesa Sterlite (5.97%); Axis Bank (5.55%) and Jaiprakash Associates (5.14%).
In the other interesting bit of news, SpiceJet shot up over 6% on rumours that Qatar Airways has evinced interest in the company. However, the company issued a press release stating that it was just “speculation”.
The positive sentiment was driven by good economic growth in China and the record set by the US markets. The S&P 500 hit its intraday record of 1733 and closed at the same level, an all-time high. Indian markets were also buoyed by positive sentiment in the US post-shutdown, better data from China and a sense that taper is a long way off, meaning that is this a risk-on period for the emerging markets.
The Chinese government reported robust economic growth, with gross domestic product (GDP) growing at 7.8%, its quickest this year, when compared to the June-September quarter last year. However, analysts have predicted that despite the positive data, they expect the Chinese economy to slow down in the months ahead. They expect inflation to go up and exports to soften.
Meanwhile, as the meeting of Federal Open Market Committee (FOMC) nears, the pushback on the consensus of the debt ceiling to February only strengthened the case for no ‘tapering’ by the US Federal Reserve. This expectation has a positive effect on emerging markets.
Asian markets were all up as well, except for Japan and New Zealand, which were down 0.17% and 0.36% respectively. Hong Kong markets moved up strongly by 1.06%.
At the time of writing this piece, almost all European indices were trading in the green. The US Stock Futures were marginally up.
Owing to the volatility of the rupee and the global trend of high crude oil and base oil prices, Castrol India reports a sluggish growth in net profit and predicts a negative impact on short term growth and margins
Castrol India, India’s second largest manufacture of automotive and industrial lubricants, delivered a decent profit growth for the September quarter, with profit after tax growing by 22% at Rs104.5 crore as against Rs85.7 crore during the same period in the previous year. The improved result was on account of higher sales realisation, lower base oil price and prudent cost management.
The net income stood at Rs2370.1 crore for the quarter ending on 30 September 2013 compared to the Rs2360 crore last quarter ending at 30 September 2012.
Commenting on the third quarter results, Ravi Kirpalani, managing director, Castrol India Limited, said “Despite the unfavourable economic scenario, including significant rupee depreciation, the third quarter results show improved gross margin on account of higher sales realisation, lower base oil prices and effective cost management strategy.”
“Continued economic headwinds, rupee volatility and high crude and base oil prices are likely to impact the growth and margins in the short term”, said the company in a press release. The company remained positive about future growth opportunities given its strong brand, strong relationships with key stakeholders, and commitment of its employees.
During the quarter, the company re-launched Castrol Power1, a premium two wheeler engine oil in collaboration with its key partner, Tata Motors.
The company share price has gone up by 0.24% at Rs 308.30 while the BSE stock exchange stood at 20,570.18.