ShareKhan Newsletter Blog

 Market Commentary 

Bears hit Bulls eye; Indices down nearly 3% on profit booking 

Indian benchmarks corrected last week as a recent rally in stock prices urged investors to book profits. The Sensex shut shop 2.50% down while the Nifty slipped 2.79% for the week ended November 08, 2013.

Major Headlines for the week:

• HSBC Services PMI contracts moderately in October 
• Goldman upgrades India to 'marketweight' 
• S&P's outlook for India remains negative

Indian indices:

Welcome to the 'Weekly Market Wrap' for November 08, 2013. The market corrected last week as a recent rally in stock prices urged investors to book profits. The S&P BSE Sensex fell below its psychological level of 21,000 mark after cautious stance from ratings agency Standard & Poor's (S&P) spoiled investors' sentiment. Shares also came under pressure after a survey showed that India's vast service sector activity remained weak in the month just gone by. Key benchmark indices fell in four out of six trading sessions during the week.

The Indian services firms recovered slightly last month from the worst slump in over four years in September but activity still shrank and a shortage of new orders means a rebound looks some way off, a survey showed on Tuesday. The HSBC Services PMI rose to 47.1 last month from 44.6 in September. 

The BSE Mid-Cap index fell 0.51% and the BSE Small-Cap index fell 0.13%. Both these indices outperformed the Sensex.

The S&P BSE Sensex tumbled 530.66 points to 20,666.15, its lowest closing level since October 28, 2013. The 50-unit CNX Nifty fell 176.60 points to 6,140.75, its lowest closing level since October 28, 2013.

Weekly market trend from November 03, 2013 - November 08, 2013:

• On Sunday (November 03, 2013), during the special 75-minute Muhurat Trading to mark the beginning of Samvat 2070, a new year for traders according to the Hindu calendar, the 30-share Sensex ended up 0.2% at 21,239 after hitting a new high of 21,321. The NSE Nifty, on the other hand, posted a record closing high of 6,317.35, topping its previous high of 6,312.45 on November 5, 2010. However, the highest level in intra-day trade remains 6,357.10, hit on January 8, 2008.

• The stock markets remained closed on Monday, November 04, 2013, on account of Diwali-Balipratipada.

• On November 05, 2013, the S&P BSE Sensex retreated from a record high of 21,321.53 hit on a special trading session on Sunday as investors book profits. The BSE Sensex fell 1.25% and the Nifty was down by 1.02%. Goldman Sachs on Tuesday changed its stance on India in a report titled "Modi-fying Our View: Raise India to Market Weight". One only hopes that the market's enchantment with Modi is shared by the country's electorate as well, or else the sentiment could turn for the worse as it had in May 2004 when the UPA coalition came to power with the socialist parties. The S&P BSE Sensex shed 264.57 points to close at 20974.79 while Nifty slipped 64.20 points to end at 6253.15

• The Indian markets fell for a second consecutive session on Wednesday (November 06, 2013), on continued profit-taking after the benchmark hit a record high on Sunday, with lenders such as ICICI Bank leading decliners. The BSE Sensex fell 0.38% and the Nifty was down by 0.61%. Markets ended near their day's lows weighed down by financials and index heavyweight Reliance Industries after recent gains. The Sensex closed at 20,894.94, down by 79.85 points, while the Nifty fell by 38.00 points to close at 6,215.15.

• On November 07, 2013, the Indian equities remained highly volatile throughout the day and closed on a negative note for third consecutive session. The BSE Sensex fell 0.35% and the Nifty was down by 0.45%. Markets erased its earlier gains after rating agency Standard & Poor's on Thursday said it may cut India's sovereign rating to below investment grade should the next government fail to provide a credible plan to reverse the country's low economic growth. The S&P BSE Sensex shed 72.17 points to close at 20822.77 while Nifty slipped 27.90 points to end at 6187.25.

• Indian markets slipped 0.75% on Friday (November 08, 2013), after hitting a new high of 21,321 on Muharat trading session day. Losses in major Blue-chip companies dragged markets lower. Benchmark indices remained weak amid dismal Asian cues, along with index heavyweights and financials and oil shares weighed on the indices. The Sensex fell by 156.62 points to close at 20666.15 while the Nifty ended at 6140.75, down 46.50 points.

Global indices:
Majority of the global markets closed the week on a negative note, except Dow Jones which rose 0.94% and DAX100 up 0.78%. Top Losers: Hang Seng plunged 2.17%, Shanghai Composite declined 2.02% and Nikkei down 0.81%.

Sectoral and stock screening:
Among the 13 sectoral indices, top gainers- BSE IT up 1.48%, BSE HC rose 0.36%, BSE Power gained 0.31%. Top losers: BSE CD fell by 6.94%, BSE Bankex down 6.16%, BSE FMCG dropped 3.15%.

Looking at the 'A' group stocks, the top three gainers of the week were - Aurobindo Pharma up by 20.16%, Torrent Power rose 17.03% and Indian Bank up by 15.25%. The top three losers of the week were - United Breweries fell by 15.30%, Titan Industries fell by 11.98% and Axis Bank fell by 8.55%.

FII/MF activity:
The foreign institutional investors (FIIs) have been the net buyers of the Indian stocks to the tune of Rs949.1 crore as on November 07, 2013 and the domestic investors sold Indian shares worth a net of Rs558 crore as on November 06, 2013.