Posts Tagged ‘SEC’

Weekly Update 19th – 23rd April 2010

After nine consecutive weeks of gains, domestic markets ended in the negative terrain in the week gone by on the concerns over interest rate tightening by the RBI in its monetary policy scheduled on 20th April coupled with weak cues from the Asian markets.

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Moreover increase in unemployment numbers in US and China’s measures to cool its real estate market raised the uncertainty over the global economic growth. Now, Investors are much wary over the signs of overheating in China as its economy grew almost 12%, the biggest expansion since 2007, Industrial production grew 18.1% in March & retail sales increased 18%. Closer home IIP numbers for the month of February grew by 15.1% as against an annual gain of 16.7% in January, and 17.6% in December. While India’s inflation, as measured by the wholesale price index (WPI), surprisingly stayed almost unchanged in March at 9.90% as compared to 9.89% in February. However, it is expected that after the strong Industrial numbers, improving trade, healthy credit off take in the last fortnight of last financial year & high Inflation, RBI may take steps to suck liquidity by increasing Cash Reserve Ratio & give signals of higher interest rates to the banking system & industry as well by increasing both policy rates. The other concern emerging for the manufacturing growth is appreciating rupee.

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As a major proportion of manufactured goods are meant for exports, the rise in domestic currency will arrest exporters’ margin & may result in lower export.

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FII’s also were a bit cautious to actively participate in the market ahead of RBI’s policy review. In the current CY, FIIs have so far pumped in more than $5.42 billion, while in the month of April; they have been net buyers at $ 1.05 billion in the Indian markets. Expectation of the good corporate results is likely to play a catalyst role for the next direction of the market. World stocks & commodity markets fell across the board after the revelation of SEC announcing civil fraud charges against Goldman Sach’s. This incident is likely to have its effect on the markets in the coming week.

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After 9 weeks of continuous rally in Indian stock markets, the rally ended last week after Nifty closed down 1.85% for the week. With world stock markets including the commodities taking a sharp correction on Friday, it seems that temporarily a top has been made in the market and one should be careful.

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Nifty has support between 5200-5100 levels and Sensex between 17400-17200 levels.

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On the commodity front, a range trading is expected in metals and energy.

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Since last few weeks, bullions and base metals have been trading in upper zone but are unable to break the resistance. Once they break their resistance then only, traders’ can see a new trading range. Back at home, sharp appreciation in rupee is also locking the movements. Data from European Union is important for the week apart from PPI and housing data of US. If improvement continues then only commodities will trade in upper trading range or vice a versa. Agro commodities could be more volatile ahead of expiry of April contract on NCDEX. In agro commodities, guar could see further rise on improved fundamentals as well as technical.