ShareKhan Newsletter Blog

 Market Commentary 

Markets post weekly loss of 4% on domestic, global jitters

Domestic and global woes weighed on the market sentiments this week. The Sensex fell 3.56% and the Nifty dropped 3.76% for the week ended March 22, 2013.

Major Headlines for the week:

• RBI cuts Repo Rate by 25 bps; CRR unchanged 
• Moody's worry over India's high Food Inflation 
• India's forex reserves slip by $223.9 mn
• Maharashtra govt increases tax rates on liquor, cosmetics 

Indian indices:

The Indian indices remained volatile throughout the week, with the Sensex slipping 3.56% and Nifty down by 3.76%. Profit booking was witnessed throughout the week, which kept the sentiments bearish. Investors booked profits across the board on the back of domestic and global woes. Markets fell in all the five trading sessions of the week. This was the 12th trading week of 2013. The BSE Small-Cap index tumbled 6.58% and the BSE Mid-Cap index slumped 4.8%. Both these indices underperformed the Sensex.

Major highlight this week were the political worries which hovered on the market sentiments, as the DMK pulled out of the Congress-led UPA coalition on Tuesday (March 19, 2013) in protest against the government's position on a US backed United Nations resolution on war crimes carried out during Sri Lanka's civil war. 

President Pranab Mukherjee accepted the resignation of five Ministers belonging to DMK, which withdrew support to the UPA government on the Sri Lankan Tamils issue.

On economic front, Moody's expressed deep concern over the country's high food inflation saying that it would be negative for the country's sovereign ratings as it filters through the broader economy, with adverse consequences for growth and the large fiscal and current account deficits.

The Reserve Bank of India in its mid-quarter policy review (Jan-March) reduced Repo rate by 25 bps to 7.5%, in line with estimates. The RBI lowered the repo rate for the second time in this year in a bid to help revive growth in Asia's third-largest economy, but warned that the scope for further easing is limited. However, the other key rates - CRR and reverse repo rate remained unchanged.

The BSE Sensex declined 3.56% to settle at 18,735.60 while NSE Nifty dropped 3.76% to settle at 5,872.60 in the week ended March 22, 2013.

Weekly market trend from March 18-22, 2013: 

• On March 18, 2013, the BSE Sensex fell 0.69% while Nifty ended 0.64% lower. Domestic shares fell in line with Asian stocks as the investors were rattled by a radical bailout plan for Cyprus. Investors remained sideline ahead of key RBI monetary policy. The Sensex closed at 19293.20, down by 134.36 points and the Nifty fell 37.35 points to settle at 5835.25.

• On March 19, 2013, Indian markets witnessed steep fall in late morning trades with the Sensex plunging below 19,000 amid political uncertainty after the DMK began withdrawing support to the ruling United Progressive Alliance. RBI's rate cut was also ignored as investors sentiments were dampened by domestic chaos. The Sensex closed at 19008.10, down by 285.10 points and the Nifty fell by 89.30 points to settle at 5745.95.

• On March 20, 2013, the Domestic markets ended lower on continued worries after a regional party withdrew from the ruling coalition, while the concerns about growth piled up after the central bank issued a cautious statement in its monetary policy. The Sensex closed at 18, 884.19, down by 123.91 points and the Nifty fell by 51.55 points to settle at 5,694.40.

• On March 21, 2013, the Indian stock indices again ended with losses in late afternoon trade after a positive start. Weak opening of the European equities also pulled down the domestic markets. Indian shares fell to their lowest close in nearly five months. Relentless selling in majority of the sector also led to a major decline. The Sensex shed 91.32 points to close at 18,792.87 while Nifty slipped 35.65 points to end 5,658.75.

• On March 22, 2013, Indian shares fell for a sixth consecutive session on Friday to their lowest close in four months as blue chips such as State Bank of India continued to reel from concerns about political instability and doubts about the prospect of future rate cuts. The Sensex closed at 18735.60, down by 57.27 points and the Nifty fell 7.40 points to settle at 5651.35 in trade.

Global indices
All the global markets closed the week on a negative note except Shanghai Composite which rose by 2.19%. Top Losers: Hang Seng was down by 1.85%, CAC40 fell 1.80%, Nikkei slipped 1.77%, FTSE100 declined 1.56%, Dax100 slipped 1.37%, Nasdaq fell 0.81% and Dow Jones down 0.64%.

Sectoral and stock screening
Majority of the sectors closed in red, barring BSE FMCG up by 0.07%. Losers - BSE Realty slipped by 13.04%, BSE PSU dipped by 7.58% and BSE Power fell by 7.32%. 

Looking at the 'A' group stocks, the top three gainers of the week were - Lupin surged by 4.52%, Pidilite Industries jumped by 4.44% and Piramal Enterprises gained by 4.01%. The top three losers of the week were - HDIL slipped by 29.47%, MMTC dipped by 27.46% and National Aluminium Company fell by 21.71%.

FII/MF activity
The foreign institutional investors (FIIs) were the net buyers of the Indian stocks worth a net of Rs522.10 crore during the week till March 20, 2013; the domestic investors were the net sellers of Indian stocks to the tune of Rs336.20 crore during the week till March 20, 2013.