ShareKhan Newsletter Blog

 Market Commentary 

Sensex tops global charts in an action-packed week; Nifty up 2%  

The Indian markets closed an eventful week with the Sensex rising 1.56% and the Nifty up by 2.03% for the week ended September 21, 2012.

Major news for the week:

• RBI cuts CRR by 25 bps, leaves key rates unchanged 
• August consumer price inflation at 10.03% 
• India's fuel sales up 7.8% in August 
• India to cut tax on overseas borrowing by local firms 
• Govt OKs 51% FDI in Multi Brand Retail 

Indian indices

The Indian markets wrapped up the week ended September 21, 2012 in green for the third straight week. The Indian markets ended the 38th trading session of 2012 with the BSE Sensex rising 1.56% and the NSE Nifty up by 2.03%. Volatility ruled the markets this week on account of global woes both in local and overseas indices. In the week gone by, markets witnessed buying across the board. During the week, the markets registered gains in two out of the four trading sessions. Events like the RBI monetary policy, Consumer Price Index, and rating Upgrade /downgrade caught the limelight this week.

The Sensex, reached its highest closing level in nearly 14 months while NSE Nifty touched its highest closing level in almost 14-1/2 months. The BSE Mid-Cap and the BSE Small-Cap indices outperformed the BSE Sensex by rising 3% 2.81% each for the week ended.

The Sensex gained 288.56 points or 1.56% to settle at 18,752.83, its highest closing level since July 25, 2011. The Nifty surged 113.50 points or 2.03% to close at 5,691.15, its highest closing level since July 07 2012.

Major events of this week: 

The RBI on (September 17, 2012) announced a reduction in CRR by 25bps and kept the repo rate and reverse repo rate unchanged at 8% and 7% each under the liquidity adjustment facility (LAF).

Consumer Price Index (CPI) data released in this week saw the highest rise in prices of vegetables that recorded an increase of 20.79% during the month. The soaring vegetable prices pushed up the retail inflation to double digits at 10.03% in August, up from 9.86% in the previous month.

Six ministers of Trinamool Congress are set to formally submit their resignation letters to President Pranab Mukherjee on 21st September 2012. Trinamool Congress early this week decided to withdraw support from the government due to a recent hike in diesel prices, the government's decision to cap subsidised LPG for households and to allow 51% FDI in multi-brand retail. 

Weekly market trend from September 17 - September 21, 2012

• The week gone by started trading session on positive note. Benchmark indices traded higher on Monday, (September 17, 2012) and closed higher for the ninth session in a row, with rising for more than 1200 points. The rally was aided by consistent inflow of foreign money that lifted the rupee to 54 against the US dollar, a third quantitative easing by the Federal Reserve, favorable German's Constitutional court ruling, diesel price hike and FDIs approval in retail, aviation & broadcast carriage services sectors. The Sensex ended at 18542.31, up by 78.04 points, while the Nifty shut shop at 5610, up by 32.35 points.

• On Tuesday, (September 18, 2012), the Indian markets broke 9-day's gaining trend and closed trading session in the red zone. The Profit Booking was seen ahead of a Trinamool Congress meeting in Kolkata to review its support to the UPA government over the reform push by Prime Minister Manmohan Singh. The markets ended lower for the first time in last ten trading sessions, led by a fall in major index heavyweight shares such as Reliance Industries on its buy back and Tata Consultancy on Q2 earnings woes. The Sensex shut shop at 18,496.01, down by 46.30 points and the Nifty fell 9.95 points to close at 5,600.05 in trade today.

• The Indian markets were closed on September 19, 2012, on account of "Ganesh Chaturthi".

• The Key benchmark indices fell on Thursday, (September 20, 2012) after Trinamool Congress, a key coalition partner of the ruling government, withdrew its support, raising worries of political instability that would threaten reforms. Indian equity benchmarks as well as broader markets were caught in bear grip. The Sensex shut shop at 18349.25, down by 146.76 points while the Nifty fell 45.80 points to close at 5554.24.

• On Friday, (September 21, 2012), the BSE Sensex and Nifty rose more than 2% to their highest level since July 2011 as hopes that the government will announce additional reform measures were bolstered after the Samajwadi Party stated that it will continued to provide outside support to the ruling coalition. Further adding, Finance minister P. Chidambaram said India would slash a tax on overseas borrowing by local companies and implement a scheme to attract retail investors into stocks, following the government's recent big ticket reforms. The Sensex ended at 18,753 up by 404 points while Nifty settled at 5691 up by 137 points. 

Global indices:
All the global markets closed in the red zone except Hang Seng which rose by 0.51% and Dow Jones that gained 0.03%. Top losers: Shanghai Composite down by 4.57%, FTSE100 fell by 1.03% and Nikkei slipped 0.54%.

Sectoral and stock screening:
Among the 13 sectoral indices, eight sectors closed the week on a positive note while remaining four sectors closed in red. The topmost gainers were - Realty rose by 8.84%, Bankex up by 6.96% and CG advanced by 6.88%. Top Losers: IT fell by 3.56%, HC slipped by 2.18%, FMCG down by 2.05%
    

Looking at the 'A' group stocks, the top three gainers of the week were - Canara Bank up by 26.26%, Oriental Bank of Commerce up by 25.45% and Union Bank of India up by 21.89%. The top three losers of the week were - Hexaware Technologies fell by 8.61%, TCS fell by 7.70% and Dr. Reddy's Laboratories fell by 5.87%.

FII/MF activity
The foreign institutional investors (FIIs) have been the net buyers of the Indian stocks to the tune of Rs3405.50 crore while the domestic investors sold Indian shares worth a net of Rs958.00 crore on Sept 18, 2012.