Nifty headed for 5,000-5,045
The market settled lower this week on concerns about the government’s proposed tax reforms, a depreciating rupee and the weakening macro picture. While the market closed in the green on the first day of holiday-shortened week, the losses kept increasing on the latter three days.
The market closed 2% lower in the week with the Sensex losing 303 points at 16,831 and the Nifty settling at 5,087, down 104 points. The market is likely to see a further slide with the Nifty headed for the 5,000-5,045 area.
The market closed higher on Monday on hopes of a stimulus from the US Fed on the back of weak growth in the world’s largest economy. The market sputtered in the second half of trade and settled flat on Wednesday. The losses increased on the last two sessions on domestic as well as global concerns.
BSE IT (up 3%) and BSE TECk (up 2%) were the main sectoral gainers in the week while BSE Capital Goods and BSE Auto (declined 5% each).
The top Sensex gainers were TCS (up 6%), Cipla, Hindustan Unilever (up 5% each), Wipro and Infosys (up 2%). The main losers were Hero MotoCorp (down 9%), Maruti Suzuki (down 7%); State Bank of India, Coal India and Tata Steel (down6% each).
The Nifty was led by TCS (up 6%); Cipla, HUL (up 5% each), Asian Paints (up 3%) and Wipro (up 2%). The losers on the index were Bank of Baroda (down 10%); Hero MotoCorp, Axis Bank (down 9% each), Maruti Suzuki (down 7%) and Tata Steel (down 6%).
The government has proposed to review the Direct Tax Avoidance Convention (DTAC) to incorporate amendments to the DTAC for prevention of treaty abuse and to strengthen the mechanism for exchange of information on tax matters between India and Mauritius. The review will help India to raise revenue from these foreign investments in the country. India is said to be losing more than $600 million every year in revenue because of the tax treaty, ministry of state for finance SS Palanimanickam informed the Parliament on Friday.
After three months of decline, India’s factory output inched up to 54.9 in April, from 54.7 in March. A reading above 50 shows that the sector is growing, while a reading below 50 means the segment is contracting.
Similarly, driven by a rise in new businesses, services sector growth picked up momentum in April to 52.8, up from 52.3 in the previous month, and business optimism hit its highest level since last June, according the HSBC services PMI survey released on Thursday.
Reflecting a slowdown in the economy, the growth rate of eight core infrastructure sectors dipped to 2% in March and 4.3% during 2011-12 on account of poor performance in crude oil and natural gas.
India’s exports surpassed the target of $300 billion for 2011-12 at $303.7 billion while imports touched $488.6 billion on account of rise in imports of crude oil and gold. The high import bill resulted in a trade deficit of $13.9 billion.
On the global front, US markets witnessed their biggest weekly fall this year on weak economic indicators. Eurozone services and manufacturing output contracted more than expected in April, dampening the prospects of a firm pickup in the world economy.