Indecisive market: Weekly Market Report
Moneylife Digital Team 11 August 2012

If the Nifty breaks Friday’s low, it may head for 5,200

The market closed in the positive for the second week in a row on hopes that the Indian government would renew efforts to push growth-oriented reforms and easing of global uncertainties. Going ahead, headline inflation numbers for July, which will be announced on Tuesday, will lead the market in the holiday-shortened week.
The Sensex closed the week at 17,758, up 360 points (2.09%) and the Nifty climbed 105 points (2.01%) to settle at 5,320. The market is now in an indecisive phase. If the Nifty breaks Friday’s low, it may head for 5,200.
The indices closed higher on Monday on firm global cues and sustained buying in blue chips. The market closed in the positive for the second day on Tuesday on assurances from the new finance minister to look at easing interest rates and review the retrospective tax provisions. On Wednesday the benchmarks pared all their gains to settle flat on selling pressure in Bharti Airtel on account of its dismal quarterly performance and lower growth forecast by global research entities.
Dismal industrial production numbers for June, forecast of lower GDP growth and not so impressive corporate results resulted in the indices settling lower on Thursday. The market settled flat with a negative bias on Friday following a clutch of disappointing quarterly results and subdued global cues.
Among the sectoral indices, BSE Auto and BSE IT gained 4% each while BSE Consumer Durables settled 2% down in the week.
The top gainers on the Sensex were Sterlite Industries (up 9%), Mahindra & Mahindra (up 8%), Hindustan Unilever (up 7%), Reliance Industries and Hindalco Industries (up 5% each). The key losers were Bharti Airtel (down 14%), State Bank of India (down 6%), Hero MotoCorp, Dr Reddy’s Laboratories (down 2% each) and HDFC (down 1%).
The Nifty leaders were Sterlite Ind (up 9%), M&M (up 8%), HUL (up 7%), Ambuja Cements and Kotak Mahindra Bank (up 6% each). Bharti Airtel (down 14%), SBI (down 6%), Ranbaxy (down 5%), Bank of Baroda (down 4%) and Cairn India (down 3%) were the key losers on the index in the week.
Industrial production declined by 1.8% in June, mainly due to poor show by the manufacturing and capital goods sectors, indicating a persistent slowdown in the economy. Similarly, industrial output in the April-June quarter too contracted by 0.1% this fiscal. “The June 2012 IIP numbers are disappointing and are a cause for serious concern,” an analyst opined.
Moody’s Analytic, a unit of Moody’s Investment Services, lowered the GDP growth forecast of India to 5.5% for 2012 and 6% in 2013, from 6.2% estimated earlier. The agency cited lack of government or RBI action despite a broad-based slowdown, as well as a poor monsoon. CLSA and Citigroup also cut their outlooks for India to 5.4% and 5.5%, respectively, although for the fiscal year ending in March 2013.
While the Eurozone debt issues are still lingering, global markets were comforted by a plan of action laid out by European Central Bank president Mario Draghi, even though it lacks clarity. This apart, The US Federal Reserve has promised to take action if needed, and traders are eying its September meeting for an announcement of a new bond purchase program.
1 decade ago
Markets are running ahead of fundamentals. Lot is being expected from Chidambaram but his past involvement in scams will come home to roost and he will fare no better than Pranab in taking drastic steps for reviving economy. As we inch towards 2014, politics will take front seat. Liquidity game will peter out and there could be a big fall in markets.
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