ShareKhan Newsletter Blog

 Market Commentary 

Negative news flow pulls Indian mkts lower for Week 

The Indian markets wrapped up the week ended June 07, 2013 in the red zone reversing the gaining trend of previous week. The Sensex ended 1.67% lower, while the Nifty fell 1.75% in the week. 

Major Headlines for the week:

• India's forex reserves up $110 mn to $292.07 bn
• HSBC PMI factory output for May at 50.1
• HSBC Service PMI picks up speed in May
• Murthy rejoins Infosys as executive chairman
• RIL 39th AGM: Mukesh Ambani stresses on investment plans of co

Indian indices:

After witnessing marginal rise in the previous week, the Indian markets reversed the gaining trend in the 23rd trading week of 2013. Key benchmark indices dropped sharply, with investor sentiment hit by a weak rupee and negative news flow across the globe. The results of a private survey indicating slowdown in India's manufacturing activity in May 2013 further aggravated selling. Global cues too played spoil sport amid uncertainty about the US Federal Reserve's move on continuing its bond-buying initiative. 

The Indian indices remained volatile throughout the week, with the Sensex slipping 1.67% and Nifty down by 1.75%. 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 four out of the five trading sessions of the week. The BSE Small-Cap index rose 0.32% and the BSE Mid-Cap index slumped 0.02%. Both these indices outperformed the Sensex.

Adding further, the RBI will look at other variables, and not just the wholesale price-based inflation, when deciding monetary policy at its review on June 17, Deputy Governor K C Chakrabarty said on Wednesday. India can achieve its fiscal deficit target of 4.8% in the current fiscal year ending in March 2014, Finance Minister P. Chidambaram said on Thursday (June 06, 2013) said the weakening of rupee in the recent past is not a cause for alarm as inflows continues to be strong and the currency is expected to stabilise going ahead. 

The rupee hit near one-year low below 57 a dollar on Friday, June 07, 2013. A weak rupee makes imports costlier, stoking inflation concerns, thereby capping the Reserve Bank of India's scope to extend monetary easing and counter the slowest economic growth in a decade. 

The BSE Sensex declined 331.07 points to settle at 19429.23 while NSE Nifty dropped 104.95 points to settle at 5881 for the week ended June 07, 2013. 

Major Events: 

• The overall HSBC manufacturing purchasing managers' index (PMI), which gauges business activity in Indian factories but not its utilities, sank to 50.1 in May from 51 in April, and was the third straight monthly fall. 

• India's services output saw the fastest growth in three months, according to the widely-tracked HSBC's Purchasing Manager's Index (PMI) for services. 
  

Weekly market trend from June 03 - June 07, 2013:

• The Indian markets ended nearly 1% down on Monday (June 03, 2013), the first day of the June series due to weak global cues. The BSE Sensex falls 0.76% and the broader Nifty was down 0.78%. The Indian markets closed on a negative note oscillating on both sides of the equator. Though the markets entered the green zone but failed to maintain it till the closing bell. Persistent selling pressure in majority of the sectors and profit booking in major S&P BSE Sensex weigh on the market sentiment. The Sensex closed at 19610.48, down by 149.82 points while the Nifty slipped 46.65 points to close at 5939.30. 
  

• On Tuesday (June 04, 2013), the key Indian indices reversed early gains to end near day's low on the back of profit booking in S&P BSE Sensex movers. The BSE Sensex and Nifty closed 0.33% lower each. The fall in the markets was also after lenders such as SBI declined on continued uncertainty over rate cuts and on caution as foreign investors sold index futures. Foreign institutional investors (FIIs) sold 29 billion rupees worth of index futures in the last two trading sessions, indicating they are bracing for lower levels in cash shares in the near term, according to news report. The Sensex closed at 19545.78, down by 64.70 points and the Nifty fell 19.85 points to settle at 5919. 
  

• On June 05, 2013, the BSE Sensex gained 0.11% while NSE Nifty rose 0.07% as markets witnessed a dull session in trade and shut shop on a flat note. The Indian equities took a U-turn and recovered most of their intra-day losses to trade flat led by buying in oil & gas and realty stocks. Indian shares snapped a three-day losing streak to gain on Wednesday. The Sensex closed at 19568.22, up by 22.44 points and the Nifty rose 4.40 points to settle at 5923.85. 
  

• The key Indian indices ended in the red zone on Thursday (June 06, 2013), led by continuous selling pressure majorly in RIL, Infosys backed by weak rupee. The BSE Sensex fell 0.25% and the broader Nifty was down by 0.04%. The S&P BSE Sensex slipped below 19,400 mark and NSE Nifty below 5,900 market. Later in the noon session, benchmark indices recouped most of its losses but ended the day in the red zone, weighed down by selling in majority of the sectors. The Sensex closed at 19519.49, down by 48.73 points and the Nifty fell 2.45 points to settle at 5921.40. 
  

• On Friday (June 07, 2013), the Indian markets continued its downtrend for the second consecutive day and closed the session in the red zone. The BSE Sensex fell 0.46% and the broader Nifty was down by 0.68%. The weak global markets also weighed on the market sentiments. Though the benchmarks bounced back in mid session as IT stock gained on value-buying led by weak rupee but markets ended lower due to volatile trading session, as investors turned cautious ahead of the US jobs data which will be out later in the day. 

Global indices: 
All the global markets closed the week on a negative note. Top Losers: Nikkei slipped 6.51%, Shanghai Composite fell 3.9%, FTSE100 plunged 3.75%, Hang Seng declined 3.65%, DAX100 fell 2.99% and Nasdaq fell 0.92%. 

Sectoral and stock screening: 
Majority of the sectors closed in red, barring BSE IT up by 1.20%, BSE TECk up by 0.63%, BSE HC up 0.51%. Top Losers - BSE CD and CG slipped by 21.51%, BSE Auto dipped by 2.46% and BSE Power fell by 2.37%.

Looking at the 'A' group stocks, the top three gainers of the week were - CRISIL surged by 25.15%, GSK Pharma jumped by 16.02% and Videocon Industries gained by 6.71%. The top three losers of the week were - Jaypee Infratech slipped by 21.40%, Suzlon Energy dipped by 18.11% and Jet Airways fell by 11.14%. 

FII/MF activity 
The foreign institutional investors (FIIs) were the net buyers of the Indian stocks worth a net of Rs840.3 crore during the week till June 05, 2013.