Weak upmove possible: Weekly Market Report

Support at 5,435, look out for 5,620 on the Nifty

A slew of positive economic indicators helped the market end the week with a gain of 1%. A rise in exports, the growth in six core sector industries in April and easing of food inflation for the week ended 21st May, supported the gains.

On the first trading day of the week, the market closed flat with a negative bias, weighed down by weak corporate results. Ignoring the marginally slower GDP growth for the last fiscal, the market continued its uptrend and closed higher on Tuesday. It expanded its gains on Wednesday on positive economic indicators. The rally lost steam and closed lower on the last two days. Overall, the Sensex settled 110 points higher at 18,376 and the Nifty added 41 points to close the week at 5,517.

The top Sensex gainers in the week were Reliance Communications (up 10%), Hindustan Unilever (up 5%), Larsen & Toubro, Bajaj Auto and DLF (up 4% each). Tata Motors (down 6%) was the biggest loser in the list that included Mahindra & Mahindra (down 5%), Hindalco Industries (down 4%), Tata Steel and ICICI Bank (down 2% each).

On Friday, Reliance Industries, the country's biggest company by market value, registered its biggest decline in almost three weeks, after the chairman failed to give a date by when the company would be able to increase natural gas production.

Among the sectors, the BSE Consumer Durables index gained 4% and BSE Fast Moving Consumer Goods index rose 3%, but BSE Auto lost 2% and BSE Oil & Gas shed 1%.

Overall, the uptrend in the market is still continuing with the resistance on the Nifty at 5,620. However, if the market falls in the near future, the first support lies at 5,435.

The country's gross domestic product (GDP) grew at 8.5% in the fiscal year ended March 2011, better than the 8% in the previous year. However, the growth figure for the January-March 2011 period of 7.8% caused some worry due to a slowdown in manufacturing.

The government has lowered its economic growth expectations for FY11-12 to around 8.75% from the earlier 9%. Nevertheless, it has said it is hopeful of meeting the fiscal target of 4.6% for the current year.

Food inflation rose 8.06% in the week ended 21st May, lower from 8.55% a week ago. The primary articles price index was up 10.87%, compared with an annual rise of 11.60% a week earlier. However the fuel price index climbed 12.54%, compared with a rise of 12.11% in the week before.

The growth of six core infrastructure industries-crude oil, petroleum refinery products, coal, electricity, cement and finished steel-fell to 5.2% in April 2011 from 7.5% in the year-ago period. The slowdown comes after the six core infrastructure industries grew by 7.4% in March 2011. During the 2010-11 fiscal, these core sectors had expanded by 5.9%, as against 5.5% in the previous year.

The country's exports grew by 34.4% on an annual basis to $23.8 billion in the first month of the 2011-12 fiscal, maintaining the growth momentum of the previous year. Imports were up by 14.1% at $32.8 billion in April, year-on-year, leaving a trade deficit of $8.9 billion.

For the entire fiscal 2010-11, merchandise exports aggregated $246 billion, a growth of 37.55% while imports stood at $350 billion, down by 21.6%, resulting in a trade deficit of $104 billion.

On the global front, non-farm payrolls in the US increased by 54,000 in May, the weakest reading since September, while the unemployment rate rose to 9.1% in the month under review.

The India Meteorological Department on Friday said that the monsoon has further advanced over some more parts of the central Arabian Sea, Karnataka, Andhra Pradesh and the Bay of Bengal and entire Goa. This will be a relief for the agriculture sector and policymakers.


Uptrend in share prices to continue: Friday Closing Report

RIL hinders upmove; Nifty resistance at 5,620

The domestic market which opened strong in the morning pared all its gains in noon trade after the Reliance Industries' (RIL) annual general meeting. Oil & gas, banking and realty stocks witnessed good demand in early trade. But the lacklustre RIL meeting pulled the market lower in noon trade. HDFC and Tata Motors were among the other blue-chip losers.

The Sensex opened at 18,554, up 60 points from it previous close, and the Nifty opened 15 points higher at 5,566. The market soon touched its intra-day high with the Sensex hitting 18,673 and the Nifty touching 5,605. The market continued to trade range-bound in the absence of any major triggers. The key benchmarks turned negative in noon trade, as investors who were hoping that RIL would answer some of the many questions about its business prospects, were disappointed that chairman Mukesh Ambani said nothing about specific plans for the current fiscal.

Reliance Industries, the country's biggest company by market value, declined the most in almost three weeks after the chairman failed to indicate when the company would increase natural gas production.

The market continued to trade in negative territory in post-noon trade and touched its intra-day low in the late session. The Sensex touched its low at 18,346 and the Nifty dropped to 5,507. By the end of trade the Sensex pulled back a little to 18,376, still 118 points down, and the Nifty was still down 34 points at 5,517.

The Nifty was able to keep itself above 5,550 during trade, indicating its resistance to a fall. However the company-specific event saw the market slip during its upward journey. The uptrend is continuing with the resistance at 5,620. However if the market falls in the near future, the first support is at 5,435.

The advance-decline ratio on the National Stock Exchange was 590:806.

Among the broader indices, the BSE Mid-cap index was down 0.34% and the BSE Small-cap index shed 0.05%.

The lacklustre RIL AGM had its effect on the BSE Oil & Gas sector, which ended as the top sectoral loser (down 1.34%). Other sectoral losers were BSE Metal (down 1.05%), BSE PSU (down 1.03%), BSE Healthcare (down 0.94%) and BSE FMCG (down 0.77%). The only gainers were BSE Capital Goods (up 0.75%) and BSE Consumer Durables (up 0.46%).

Reliance Communications (up 3.95%), Larsen &Toubro (up 2.18%) and Mahindra & Mahindra (up 0.96%) were the top gainers among the Sensex stocks. HDFC (down 2.99%), Hindalco Industries (down 2.55%), Jaiprakash Associates (down 2.36%), Tata Motors (down 2.29%) and RIL (down 1.65%) were the major losers.

Markets in Asia settled mixed on signs of a slowdown in the US economy. The Japanese market was down on worries that a contraction in the global economy would impact export-oriented companies. The Seoul Composite index ended flat as gains in the shipbuilding sector helped curb the fall.

The Shanghai Composite surged 0.85%, the Jakarta Composite rose 0.16%, the KLSE Composite added 0.12% and the Taiwan Weighted climbed 0.61%. On the other hand, the Hang Seng tanked 1.31%, the Nikkei 225 slipped 0.66%, the Straits Times was down 0.47% and the Seoul Composite lost 0.03%.


GDP to grow by up to 9.5% annually over next few years: Moody’s

Terming inflation as the biggest challenge before the Indian economy, Moody's said the RBI should focus on controlling the price rise and added that maintaining the balance between growth and inflation would a test for policymakers

New Delhi: Global financial service firm Moody's today said India's growth prospects over the next few years remain robust and the economy is expected to expand by 8.5%-9.5% annually despite the slowdown during the January-March quarter of the last fiscal, reports PTI.

Terming inflation as the biggest challenge before the Indian economy, Moody's said the Reserve Bank of India (RBI) should focus on controlling the price rise and added that maintaining the balance between growth and inflation would a test for policymakers.

"The slowdown in India's real gross domestic product (GDP) in the three months to March was not entirely unexpected... The economy is still carrying strong growth momentum into 2011 and should grow in a range of 8.5%-9.5% over the next few years, in line with its recent trend," Moody's said in a report.

The country's economy grew by 7.8% during the quarter ended March, the slowest pace of growth in the last five quarters mainly on account of poor performance of the manufacturing sector.

It had registered a growth of 9.4% in the corresponding quarter of the previous fiscal and by 8.3% in the third quarter of 2010-11.

Overall, the economic growth during 2010-11 was 8.5%, a tad below the government's forecast of 8.6%, but well above 8% registered in 2009-10.

In the pre-budget survey, the government had projected economic growth during 2011-12 at 9%. However, in its monetary policy released last month, RBI said the economy is likely to register a growth of only around 8% this financial year.

Calling upon the RBI to be proactive in controlling inflation, which it termed as the biggest threat to India's growth, Moody's cautioned that policymakers would face a tough task in balancing between growth and price rise.

"As for controlling inflation, the central bank's job is far from done... Interest rates will have to rise further to tame inflation and that will come at expense of investment.

Policymakers' greatest challenge will be managing the balancing act between inflation and growth," Moody's said.

RBI has already hiked its key policy rates nine times since March 2010 to curb demand and tame inflation.

Experts had blamed high inflation and the resultant rate hikes as the reason for slowdown in the manufacturing sector.

Rising interest rates and input costs of commodities have led to a slowdown of investments in the sector.

Headline inflation has been above 8% since January 2010 and stood at 8.66% in April this year.

Moody's said that global commodity prices, particularly or crude (which are currently above $100 per barrel) remain the primary obstacle in the path of economic growth.


We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)