Uptrend losing steam: Weekly Market Report

First new support for the Nifty is at 5,415 and then at 5,350

Dismal economic news from the domestic arena and disturbing signals globally resulted in the market closing with a 1% cut this week. The eyes of investors will be focused on the Reserve Bank of India's mid-quarter policy review on Thursday, as it weighs another possible rate hike to combat stubborn inflation and the pace of economic growth slows.

The market closed with modest gains on the first two trading days. However, adverse comments by US Federal Reserve chief Ben Bernanke dragged the market sharply lower on Wednesday. The indices settled flat on Thursday, but a steep decline in industrial output for April forced a deep cut on Friday.

Overall, the Sensex lost 108 points to close the week at 18,269 and the Nifty settled 31 points down at 5,486. The market has closed negative for three of the past four weeks. It is witnessing a downtrend with the first support on the Nifty at 5,415. If it breaches this level, the market may fall to around 5,350.

BSE Consumer Durables (up 3%) and BSE IT (up 1%) were the top gainers in the sectoral space. BSE Auto (down 2%), BSE Bankex and BSE Metal (down 1%) were the major losers.

TCS (up 3%), Cipla, Infosys Technologies (up 2% each), NTPC and Reliance Industries (up 1% each) were the top performers on the Sensex. Hero Honda (down 7%), ONGC (down 5%), Jaiprakash Associates (down 4%), Bajaj Auto and State Bank of India (down 3% each) were the leading losers on the index.

Food inflation jumped to a two-month high of 9.01% for the week ended 28th May from 8.06% in the previous week. The latest numbers are the highest level of food inflation since the week ended 26th March when it was 9.18%.

The Index of Industrial Production (IIP) registered a growth of 6.3% in April as per the new series with a base year of 2004-05, it was announced on Friday. According to the old series, which will continue for three months, factory output nosedived to just 4.4%. The finance minister described the decline as 'disturbing' and preferred to wait for other data to ascertain the trend.

On the positive side, the monsoon is expected to cover the remaining parts of the north-east over the next two days and advance over remaining parts of the peninsula and east India, besides some parts of central India in the later half of the next week, the India Meteorological Department said.

The country's exports registered a record 57% growth to $26 billion in May, on the back of a splendid performance by engineering, oil and electronics sectors. Imports also jumped by 54% to a four-year high of $41 billion, mainly due to higher oil prices and a surge in gold imports. The trade deficit-the gap between imports and exports- in May, widened to $15 billion (a 67% increase), the largest since August 2008, prompting the authorities to caution that the trade deficit for the current fiscal could touch a record $145billion-$150 billion.

In international news, US Federal Reserve chief Ben Bernanke acknowledged a slowdown in the US economy, but he did not outline any plan to spur growth. The $600 billion bond-buying programme that the Fed launched last year to aid financial markets is set to end this month, and there are no signs of any new stimulus package.

South Korea's central bank on Friday raised its policy rate by a quarter percentage point after holding it steady for the past two months. The Bank of Korea's monetary policy committee raised the 7-day repurchase agreement rate to 3.25% despite signs of a slowing economy.

Chinese exports rose 19.4% in May from a year earlier, slowing from the 29.9% pace in April, while import growth increased to 28.4% from 21.8%. The trade surplus of $13.1 billion in May, up from $11.4 billion in April, was still less than expected.

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RIL acquires Bharti’s stake in AXA JVs

Through this deal, Bharti has exited the business in both Bharti AXA Life Insurance and Bharti AXA General Insurance

Reliance Industries has made its entry into the insurance business by agreeing to buy Bharti's 74% stake in its life insurance business Bharti-Axa. Through this deal, Bharti has exited the business in both Bharti AXA Life Insurance and Bharti AXA General Insurance.

This transaction is subject to negotiation and entering into legally binding agreements between RIL, Reliance Industrial Infrastructure (RIIL) and AXA and obtaining necessary approvals from IRDA1 and other relevant/applicable approvals.

On completion of the proposed transaction, RIL and RIIL would effectively own respectively 57% and 17% in both insurance companies and would become AXA's joint ventures partners in India. AXA would retain its current 26% shareholding and would continue to manage the day to day operations of the JVs.

The proposed agreement contemplates an option by which AXA would acquire from RIL and RIIL upto 24% shareholding in both the insurance companies in accordance with the applicable regulations as and when the FDI2 regulations permit such holding by AXA. Upon exercise of such option, RIL will effectively own 45%, RIIL will effectively own 5% and AXA the balance 50% in both the insurance companies.

RIL and AXA will join forces to create market leading life and general insurance businesses in India by leveraging their respective strengths and expertise.

In fiscal year 2011, Bharti AXA Life collected premiums of Rs7.9 billion and Bharti AXA GI collected gross direct premiums of Rs5.5 billion.

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Monsoon may remain active for next two weeks: IMD

The monsoon system could cover the remaining parts of north-east over the next two days and then advance over remaining parts of south peninsula and many parts of east India, besides some parts of central India during the later half of the next one week, the India Meteorological Department said

New Delhi: The south-west monsoon is making smooth progress and is likely to remain active at least for the next two weeks, reports PTI quoting the weather office.

Since its onset on 29th May, the southern peninsula, where the monsoon is active, has received excess rainfall barring Marathwada region which has received normal rains.

"The cumulative seasonal rainfall for the country as a whole during this year's monsoon has so far been 17% above the Long Period Average (LPA)," the India Meteorological Department (IMD) said.

According to the IMD, besides covering the entire peninsular region, the monsoon could advance over most parts of central India and large parts of the east and north-eastern region by 24th June.

"An upper air cyclonic circulation is likely to develop in the North Bay of Bengal around 12th June and move inland.

Under its influence, rainfall activity is likely to increase over east India," it said.

The monsoon system could cover the remaining parts of north-east over the next two days and then advance over remaining parts of south peninsula and many parts of east India, besides some parts of central India during the later half of the next one week, the weather office said.

Subsequently, between 18th and 24th June, it could cover most parts of central India.

As of now, the performance of the monsoon is in keeping with IMD's April forecast of a normal monsoon season.

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