ShareKhan Newsletter Blog

 Market Commentary 

Downward journey continues for 3rd week on subdued cues

February 2014 sees minute losses in second week as markets remained lackluster yet again led by muted domestic and global cues. The Sensex shut shop 0.05% lower while the Nifty fell 0.24% for the week ended February 14, 2014

Major Headlines for the week:

• Trade deficit narrows down to $9.92 bln 
• Domestic car sales down for fourth straight month 
• Interim Rail Budget 2014: Passenger fares, freight rates unchanged 
• SBI dips as Q3 lags estimate: Consolidated net profit down 39% (YoY) 
• January 2014 WPI based inflation at 8 month low 

Indian indices:

Welcome to the 'Weekly Market Wrap' for February 14, 2014 where the markets declined last week booking third straight weekly loss on muted global cues and weak industrial output in December 2013. Selling by foreign institutional investors (FIIs) also put pressure on stocks. The markets rose in three out of five trading sessions of the week.

The BSE Mid-Cap index fell 24.96 points, or 0.39% to 6,311.88 and the BSE Small-Cap index fell 49.07 points or 0.78% to 6,279.69. Both these indices underperformed the Sensex. 

The S&P BSE Sensex fell 9.74 points to 20,366.82. The 50-unit CNX Nifty fell 14.85 points to 6,048.35.

Major events for the week: 

• India left train fares and freight rates unchanged in its interim railway budget, as politicians try to please voters and manufacturing companies ahead of national elections due in the next three months. Railway Minister Mallikarjun Kharge presented the interim railway budget after the Lok Sabha resumed after being adjourned until afternoon on Wednesday.
  Kharge announced inclusion of the north-eastern states of Meghalaya and Arunachal Pradesh on the railway map by FY15, which currently have very low railway connectivity. The rail minister also announced the completion of the 11.2-kilometre-long banihal -qazigund rail link in Jammu & Kashmir, terming it as "landmark project".

• The trade deficit stood at $9.92 billion last month compared with $10.14 billion in December, a trade ministry official said on Tuesday. Merchandise exports rose 3.79% year-on-year to $26.75 billion, compared with a 3.5% annual growth in December. Imports fell 18.07% year-on-year to $36.57 billion led by a 77% drop in gold and silver imports on the year.

• Car sales in India fell 7.6% in January, the fourth straight month of decline, according to figures released by the Society of Indian Automobile Manufacturers (SIAM), in a market set to fall for the second straight year.

• The wholesale price inflation, decelerated faster than expected, to ease to an eight-month low of 5.05% in January. The Wholesale Price Indexed inflation softened from 6.16% in December, owing to ease in the food prices, official data released today showed. This is the lowest since May when the inflation rate stood at 4.58%.

• In December 2013 the IIP declined by 0.6% versus market estimates of 1.1%. However, the December IIP is at its highest in the past three months (-1.6% & -1.3% in October & November respectively) . This was largely due to a tepid recovery in the manufacturing segment and growth in the electricity segment.

• The January 2013, CPI based inflation has declined to 8.79% from 9.87% in the December driven by a substantial moderation in CPI food inflation (9.9% vs 12.16% in December 2013). 

Weekly market trend from February 10, 2014 - February 11, 2014:
Feb 10- The Indian shares fell on Monday after marking its highest level in February, as telecom companies such as Idea Cellular slumped after prices in a mobile spectrum auction rose, raising worries about their profit margins. The BSE Sensex fell 0.21% and NSE Nifty was down by 0.16%. Benchmark indices ended marginally lower as sales by foreign institutional investors in index heavyweights capped upside gains. The Sensex closed at 20334.27, down by 42.29 points, while the Nifty fell 9.75 points to close at 6053.45

Feb 11- Indian shares rose on Tuesday as Tata Motors rallied after its quarterly earnings surged on strong results at its Jaguar Land Rover unit, while software services providers rose after an industry body predicted exports would improve. The BSE Sensex rose 0.14% and NSE Nifty was up by 0.15%. The Sensex closed at 20363.37, up by 29.10 points, while the Nifty was up 9.25 points to close at 6062.70

Feb 12- Indian shares rose for a second consecutive session on Wednesday as blue chips rallied, in line with stronger global markets while Reliance Industries recovered from steep falls in the previous session that were seen as excessive. The BSE Sensex rose 0.42% and NSE Nifty was up by 0.35%. Investors remained cautious ahead of the macro-economic data which is set to be released later in the day. The Sensex closed at 20448.49, up by 85.12 points, while the Nifty was up 21.30 points to close at 6084.00

Feb 13- Indian shares posted their biggest drop in one-and-a-half weeks as Cipla and Coal India slumped following disappointing earnings, while other blue chips tracked weaker global markets. The BSE Sensex fell 1.25% and NSE Nifty was down by 1.46%. Benchmarks snapped three day winning streak as investors booked profits at higher levels. Weakness in Asia and Europe dragged domestic benchmark share indices with banking and financial stocks leading the decline. The Sensex closed at 20193.35, down by 255.14 points, while the Nifty was down 82.90 points to close at 6001.10.

Feb 14- Indian shares ended higher on Friday, led by telecom services providers and software companies ahead of the interim budget where Finance Minister Palaniappan Chidambaram has a tough task of wooing voters while keeping fiscal discipline. The BSE Sensex rose 0.86% and NSE Nifty was up by 0.79%. Benchmarks staged a recovery on Friday led by gains in IT majors and index heavyweight like Reliance and Tata Motors after key indices declined sharply in the previous session. The Sensex closed at 20366.82, up by 173.47 points, while the Nifty was up 47.25 points to close at 6048.35

Global indices:
Among the global markets for the week ended February 07, 2014. Top three losers were DAX100 which fell 3.88%, CAC40 declined 2.65% and FTSE100 slipped 1.40%. Top three Gainers were Shanghai Comp which gained 3.49%, Hang Seng rose 3.06% and Nasdaq up 2.86%.

Sectoral and stock screening:
Among 13 sectoral indices, 6 closed the week in red zone. Top three gainers of the week were S&P BSE CD, which was up 2.15%, S&P BSE IT up 2.12%, and S&P BSE Auto up 1.50%. The top three losers were S&P BSE Power down 2.79%, S&P BSE Metal dipped by 2.58 and S&P BSE HC fell by 1.78%.

Looking at the 'A' group stocks, the top three gainers of the week were Muthoot Finance which was up 25.61%, Cadila Healthcare up 11.35% and Motherson Sumi Systems up 9.46%. The top three losers of the week were Sun TV Network down 9.34%, Torrent Power fell 9.03% and MRPL dipped 8.96%.

FII/MF activity:
The foreign institutional investors (FIIs) have been net sellers of the Indian stocks worth a net of Rs91.20 crore till February 13, 2014, while the domestic investors were net buyers of Indian stocks to the tune of Rs362.70 crore during the week till February 11, 2014.