Posts Tagged ‘Indian markets’

Weekly Update 25th – 29th October

Losses due to profit taking in the Indian markets during initial part of the week were recouped seeing the huge response for Coal India offering especially from the overseas investors. The issue attracted bids that exceeded the combined gross domestic product of Latvia and Iceland. However most of the Asian markets corrected in the week gone by after China unexpectedly raised interest rates to curb inflation and to prevent an asset price bubble in the economy on concerns over regions economic growth.

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The move indicates that the consensus has been reached for lower growth. Albeit past experience has shown that initial interest rate hikes does not give much harm to economic growth. China’s economy expanded by 9.6 percent in the third quarterless than the growth experienced in the prior quarter but higher than the median estimates of 9.5 percent.

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Results of companies from Europe to U.S. supported markets. According to Bloomberg data of the 132 companies in the S&P 500 that reported results since Oct. 7, more than 85 percent have topped analysts’ per- share earnings estimates.Whereas in Europe, of the 46 companies in the Stoxx 600 that have posted results since Oct. 7, 32 have beaten estimates for per-share income.

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The result season has so far been good in India. Banks have posted decent to strong earnings growth. In the Information technology sector TCS and Infosys surprised positively while Wipro surprised negatively. Auto companies are expected to deliver strong set of numbers on the back of higher volumes with price increase. Higher metal prices are likely to provide good earnings to manufacturer of base metals. Cement companies are likely to post bad set of numbers on the back of lower realization and good monsoon season.

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Market is eyeing over G-20 finance chiefs meet to try to resolve differences over countries that are devaluing their respective currencies in order to spur economic growth and to endorse market-based exchange rates in a fresh effort to defuse mounting trade tensions before they hurt the world economy. We may see some volatility in domestic markets on account of expiry week.

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Stock specific activity is likely to play out as the results season is still going on. Nifty has support between 5950-5870 and Sensex between 19640-19200.Good corporate earnings amid falling dollar index are offering opportunities to bulls to keep the momentum in their favour, especially in base metals. 19-commodity Reuters-Jefferies CRB index, which serves as a broad benchmark for commodities investors, was up for a ninth straight week since Aug. 22.

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Monetary tightening by China could not give much impact on base metals prices. In case of bullions, trend is little different. Bullions prices retreated across the board as dollar index grew stronger and investors opted to sell some of their holdings for aprofit. For the time being bullions should move in a range. Market players appears cautious to some extent ahead of next month’s decision from the Federal Reserve about whether to take steps to stimulate the economy. Even energy pack is moving in a range on mixed fundamentals. Bulls are more active in agricultural commodities owing to the ongoing festive fever.

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Weekly Update 4th – 8th October 2010

Global markets closed on a mixed note in the week gone by, with Indian markets closing in positive on weekly basis. To send a message to China to raise value of its currency, the U.S. House of Representatives this week approved a bill that would let domestic companies petition for duties on imports from China to compensate for the effect of weak yuan. U.S. Treasury Secretary Timothy F. Geithner said he is confident that tensions over China’s currency, the yuan, won’t lead to escalating trade sanctions or feed into a broader global currency conflict.

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European confidence in the economic outlook unexpectedly improved this month. An index of executive and consumer sentiment in the 16 euro nations rose to 103.2, the highest since January 2008, from a revised 102.3 in August. The European Commission forecasted a more “moderate” expansion in the second half of the year as governments from Ireland to Portugal step up spending cuts to push down deficits. ECB President Jean-Claude Trichet said that there is “continuing uncertainty” about the outlook.

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China’s manufacturing expanded at the fastest pace in four months in September. According to China’s logistics federation and statistics bureau, the purchasing managers’ index rose to 53.8 from 51.7 in August. The data is viewed very positively by the market as it shows that China’s economic momentum may counter weakness in the global recovery. It is believed that growth may be further aided in coming months as government plans to speed the completion of stimulus projects and boost public housing construction.

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In Japan, the jobless rate fell to 5.1 percent from 5.2 percent. After intervening few days back in the foreign exchange market in order to stem the yen appreciation, Japan’s Finance Minister reiterated that Japan is ready to keep intervening after selling yen for the first time in six years last month.

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Core infrastructure industry that account for 26.7 percent of industrial output in India slowed to 3.7 per cent in August, as compared to 6.4 per cent in the same month last year. Going forward we expect the markets would remain firm as it is supported by strong portfolio investments. The best strategy to ride the tide would be stay invested. Nifty has support between 5940-5870 and Sensex between 19640-
19200 levels.

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Bullions may continue to lead the charge in the commodities counter as both silver and gold recently tested life time highs in MCX. The latest boon to the metal has been increasing expectations that the Federal Reserve will further ease monetary policy with measures including the purchase of Treasuries. Jitters about European sovereign debt problems have also supported gold higher as a safe-haven investment. Better jobless claims data and a revised upward GDP in US supported the crude counter which can make further gains in next coming week. Base metals will take cues from LME as China markets will remain closed for a week. In agro counter pulses along with oilseeds may trade in range while spices can get some support from upcoming festive season. Mentha oil firm export demand and low crop will assist the prices to make fresh high in MCX.

Weekly Update 27th September – 1st October 2010

Indian Markets posted fourth weekly consecutive gains led by rising optimism of growth and portfolio investments. The run up in the market was phenomenal and beyond expectations of market participants. Global investors seems to be going more anxious about India consumption and growth, complemented by continued monetary accommodation by developed nations in  order to propel growth. Indian Government recently raised the cap of foreign investments by $ 5 billion in federal and corporate bonds with a residual maturity of over five years. The step is viewed very positively in the sense that the ease of limit in federal bonds will take out interest rate pressure from the banks. The ease in corporate bonds issued by companies in the infrastructure sector will fill the estimated financing requirement of $1 trillion in the five years to 2017.


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U.S. central bank kept its benchmark interest rate in the range of zero to 0.25 percent .The bank said that they are prepared to provide additional accommodation in the light of slower economic recovery. The statement raised the speculation that the bank may buy more treasuries down the year. Weaker growth has still kept the unemployment at above 9 percent levels and reflects that companies are still cautious. The U.S. markets surged to highest level since May as the orders for durable goods rose the double of market expectations.

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Another happening that market is keeping an eye on is the political pressure building on Obama administration to take a stance on the China’s currency policy. The yuan has appreciated about 2 percent against the dollar since the central bank said it would pursue a more flexible exchange. However U.S. wants to see more rapid and “significant” rise in the yuan’s value.

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With the visible positivity across the globe, Indian markets are maintaining up move and managed to close above the psychological mark of 6000 levels on the weekly basis. The weakness in the dollar index clearly strengthens the equity markets and lead to the fresh breakout especially in US and European counterparts.

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One should maintain the stance of buying on dips. The Midcap stock may provide handsome return in the near future. Nifty has support between 5900- 5810 and Sensex between 19640-19200 levels.

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It appears that bullion counter is taking advantage of every opportunity and making new highs now and then on rock solid fundamentals. Weaker than expected growth in manufacturing and services industries of euro zone, sovereign debt crisis in Ireland, plummeting dollar index amid some poor economic releases fuelled rally in bullions. Negative tone of global economy capped the upside of base metals and energy  counter, even fall in dollar index could not give much impact and they appeared shy to break the resistance. Local currency appreciation locked the movement of commodities. This week is full of event risk. GDP data of US and UK, consumer confidence data and employment data of US may give further direction to  commodities. Crude oil is witnessing lackluster trading and thus moving in range on ambiguity in the world economy. Energy counter needs big news for further direction. Spices should revive in this week.

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Weekly Update 13th – 17th September 2010

The Indian markets saw good gains in the week gone by, as foreign investors continued to put money in search of growth which is lukewarm in major part of the world. According to the latest FED beige book finding, the U.S. economy has shown “widespread signs of a deceleration” in mid-July through the end of August. The Beige Book showed that within manufacturing, weakness was largely related to construction while strength was in auto-related production, including production of steel indicating that the FOMC may consider stimulus package in the September meeting.

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Deficit concerns pertaining to European countries also waned when Portugal managed to clock bids for 2.6 times the amount offered for sale of bonds due in 2021 compared to 1.6 times in the March sale. The better response to the bond sale gave relief to the investors over the health of European nations. Chinese government would continue to take measures in order to curb down speculation in property market and U.S. may call for protection against China imports are some of the concerns that are playing out in the market. Agovernment report showed that the manufacturers in Japan were optimistic for the fifth consecutive quarter. Japanese government is expected to revise up its estimate for the second quarter economic expansion as the companied have cut spending at the slowest pace since 2007.

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Going ahead, market will keep an eye on the RBI move in its monetary review due next week. There is a chance that RBI may leave policy rate unchanged for a while or tinker with Repurchase (Repo) rate by hiking it by 25 basis points. The expectations of good growth especially in the industrials have been built as the companies are now more confident about their expansion plans. The expected uplift in the manufacturing in the third quarter is likely to provide the gains in materials like cement and steel companies in terms of better realization of the products.

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Despite mixed cues from the global indices, Indian markets traded with the positive bias throughout the week. It almost tested the upper trend of the weekly channel so one should be careful for the week ahead and wait for the sustainability above that zone for confirmation of breakout before initiating fresh investment. Nifty has support between 5540-5475 and Sensex between 18300- 18000 levels.

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It was a truncated week for Indian market. Upside in bullions dazzled the eye of investors. Gold is trading near the mark of all time high as investors increased their long position in gold futures on safe haven buying. Mighty commodity crude, lost its shine on end of driving season in US amid comfortable stocks. Increasing short position in gasoline is adding further pressure on prices. Crude may trade in a range of $71-$76 dollar per barrel. Investors should keep a tight vigil on the data of US Michigan Confidence, advance retail sales etc, which is likely to provide further direction in commodities. As regards agro commodities it should be a good week for oil seeds and edible oil complex where investors may see some lower level buying. However, ample of stocks may cap the upside.

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Weekly Update 30th August – 3rd September 2010

The global equity markets fell in the week gone by after a record plunge in U.S. home sales and slowing export growth in Japan raised concerns that developed economies are losing momentum. However losses in the equity markets were recouped during the end of the week when Federal Reserve Chairman Ben S. Bernanke said the U.S. central bank “will do all that it can” to safeguard the recovery and growth and stronger-than-forecast U.S. economic growth eased concern the world’s biggest economy will return to recession. According to the EPFR Global, risk aversion led global investors to put some $5.2 billion into bonds and withdrew a net $7.1 billion from equity funds worldwide.

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European Central Bank President Jean-Claude Trichet called for immediate fiscal austerity measures. He said that the lesson from past history is that dealing with the legacy of accumulated imbalances is not simply a duty to be fulfilled after the economic recovery, but rather an important precondition for sustaining a durable recovery.

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However he was skeptical of the argument that cutting back deficits now would risk derailing the recovery. Bank of Japan is expected to hold an emergency meeting next week to consider more monetary easing and Japan’s Prime Minister is expected to give economic stimulus package as strong appreciation in Yen to 15 year high against the dollar is threatening the export-led recovery.

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On the domestic front, RBI in its Annual Report said that the growth outlook for the current fiscal year is robust but inflation has emerged as a major concern. It said that it would remain committed to contain generalized inflationary pressures through its calibrated monetary policy based on careful assessment of risks to both inflation and growth.

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Going next week, investors will keep an eye over the GDP growth number for the first quarter of 2010-2011 to be released on 31st August. The expansion in the economy is expected to match up the growth of 8.6 percent seen in the last quarter of the fiscal 2009-2010. Stock specific activity, specifically in Auto and Cement stocks may not be ruled out as companies would be reporting monthly production numbers.

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In comparison to world indices, Indian markets are still in the better position as it fell marginally lower as comparised to global counterparts. On the weekly closing basis, dollar index is struggling around 83.50 levels which may trigger technical recovery across the board especially in the US and European markets. Accordingly, one should opt for staying long for the next week till our levels withhold. Nifty has support between 5350- 5300 and Sensex between 17800-17600 levels.

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Risk aversion in the financial markets may continue to keep the safe haven appeal of bullions intact. US GDP came slightly lower than previous figure but was better than expected. Fed comments to safe guard the US economy may extend some support to the base metals counter however the continued weakness in the housing and job sector may keep the upside capped. Fed commented that the central bank will act if “unexpected developments” cause the recovery to falter. Euro zone GDP and US housing data next week will guide the movement in crude oil and base metals pack in near term. Crude oil may trade choppy as marginal short covering can be witnessed in near term.

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In Agri pack bears may keep the selling pressure intact especially in spices complex. Oilseeds complex may witness an increased activity as the fundamental storyline in the global markets as well as in the domestic, have improved. India’s new business opportunity of soy meal export to Thailand & China’s strong export demand for U.S soybean crop coupled with strength in crude oil futures may provide psychological support to attract buying. Outflow of Potato stocks from UP cold storages and farmers eying the exports to Pakistan may provide some support to the prices.

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Weekly Update 23rd – 27th August 2010

The buying continued in the Indian markets and helped broader indices to surge to two and a half year highs. While negative sentiments in the global markets led to profit booking with major markets closing in the negative on weekly basis. The Federal Reserve Bank of Philadelphia’s general economic index dropped to the lowest reading since July 2009 to minus 7.7 this month, signaling contraction in the area covering eastern Pennsylvania, southern New Jersey and Delaware.

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The unemployment claims unexpectedly shot up by 12,000 to 500,000 last week more than the economist estimates. U.S. recovery is fading and European governments would struggle to reduce their deficits are the worrisome factors that are lingering on in the investors mind. The producer price index in U.S. increased 0.2 percent following a 0.5 percent drop in June.

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Excluding food and energy costs it climbed 0.3 percent signaling that world’s largest economy may not face deflation moving with slower growth. China, the Emerging Market frontier that saw an unparallel growth in the past is facing threats of faltering demand for exports as U.S. and European consumers are cutting spending, rising wages and the risk of bad loans from record lending by banks in the past. Japan Economy saw an expansion of an annualized 0.4 percent in the quarter ending June pushing it into third place behind the U.S. and China.

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In India, with good monsoon season the prospects of harvest have improved and now it is widely believed that inflation would come down by the end of this quarter. The primary articles index rose 14.85% in the year to 7 August 2010, lower than previous week’s annual rise of 15.66%. The food price index rose 10.35%, lower than previous week’s annual rise of 11.4%, as prices of vegetables, potatoes and onions fell.

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Going forward the domestic market is expected to remain firm with the support of foreign investment.

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However, investors will continuously monitor the global developments after some of the recent disappointing data coming from U.S.markets. Trend of Indian Stock Markets is up though other world markets are coming under pressure especially the European and US markets. Dollar index is showing some strength which is giving jitters to commodities. But till the trend of our stock markets is up, one should be playing on the long side with a cautious approach. Nifty has support between 5400-5350 and Sensex between 18000-17800 levels.

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Gold has benefited from last few weeks as investors are escalating the insurance like metals in their portfolio. However, gold silver ratio is rising once again as silver is moving in a range due to falling base metals. With the looming weakness in various economies, gold may invite bulls further. After touching many week highs, base metals washed off their previous gain on unexpected drop in Philadelphia Fed survey and bad employment data. Now the pulse of base metals is likely to be guided by the outcome of housing and durable goods data of US this week. Weakness in equity market, swelling inventories, slow recovery may weigh on the crude prices further, which already hit six week low last week. Dollar gain against euro is dampening the commodities demand, compelling CRB index to trade range bound with bearish bias.

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Nevertheless, lower level buying cannot be denied in between.

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Weekly Update 10th – 14th May

The stock markets around the world are more or less trying to top out at higher levels. World markets are falling like ninepins on the back of fear that Europe’s debt crisis could spread in other European Union countries and may upset the global economic recovery. The hope of some rescue package tabled down when Trichet made the statement that the ECB’s 22-member Governing Council didn’t discuss buying government debt to stem the contagion.

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Markets from Europe to US tumbled as high as 11 percent during the week. Indian markets too ended their journey in deep red in the week gone by after concerns of sovereign debts in Europe sparked sharp sell-off in global equities.

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The worst hit were sectors like metal, realty, cap good and banks while oil & gas bucked the trend. In another event, Fitch downgraded the ratings for Chinese banks and has improved outlook for Indian banks. Quality of growth & large speculative investments funding by Chinese banks is the concern area. Whereas the tighter provisioning norms by Indian banks regulator has led to the improvement in Indian bank’s outlook. As a matter of fact European Union comprising of 27 countries accounts close to 19 percent share in India’s total exports & thus may affect the manufacturing sector.

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The European crisis may also affect the overall sentiments of the industry and could affect the fund raising plans of companies in India & abroad. The risk aversion in global equity markets resulted in large withdrawal by foreign institutions & the money sought its place in safe haven like bonds & gold.

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Now all are eying how European leaders will come forward to halt the fiscal worries & prevent a sovereign debt crisis after European Commission President Jose Barroso said that they will defend Euro, whatever it takes.With the crisis looming, Inflation, a major concern may not be a worry factor with the metals & crude prices coming down. And the central banks in world over may keep up the liquidity & may not tinker with the interest rates for an extended term.

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The week went by saw a sharp rise in volatility along with a major fall in stock markets around the world. Even the Base metal commodities tanked down though precious metals that is Gold and Silver saw a sharp rally in times of uncertainty. Overall trend of all world markets including ours is down now. Nifty faces resistance between 5200-5100 levels and Sensex between 17500-17000 levels.

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On the commodity front, continued debt contagion fears in Europe triggered blood bath in some commodities, especially in metals and energy. It also resulted in terrific rally in gold, which is not a general phenomenon. Expected hung parliament in UK may also give boost up to dollar index. Back at home, depreciation in local currency also added volatility. As regards trend of metals and energy in short run, after witnessing a razor sharp fall, these commodities may trade in range, however, overall trend is still down, except gold and silver.

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Agro commodities performed better on improved fundamentals. Buy at dip could be a good strategy for agro commodities.