Sunday, July 20, 2008
weekly Market Update as on 18th July 2008
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| Markets remained very volatile in the week with losses in initial days being recouped in the latter part, in the end, Sensex and Nifty closed with a gain of around 1%. Markets reacted positively to inflation figure coming within expectations and positive cues from international markets. Banking & PSU stocks had a bounce back this week and both the indices closed with +2% gains, whereas the BSE IT index continued its losing streak and lost 8.37%, on the back of weak demand commentary from IT companies and non revision of FY09 dollar revenue guidance. |
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Key Equity Indices |
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Week at
Glance |
7/14/2008
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7/15/2008
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7/16/2008
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7/17/2008
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7/18/2008
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Last Week |
Week on Week Change % |
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Sensex
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13330.51
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12676.19
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12575.80
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13111.85
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13635.40
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13469.85
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1.23%
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S&P CNX Nifty
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4039.70
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3861.10
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3816.70
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3947.20
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4092.25
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4049.00
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1.07%
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BSE IT
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3675.59
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3589.57
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3566.98
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3675.20
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3580.65
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3907.63
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-8.37%
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BSE PSU
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6087.99
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5821.96
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5752.70
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5866.67
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6121.15
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5967.71
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2.57%
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BANKEX
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5970.52
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5508.00
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5400.24
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5727.60
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6188.89
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6044.76
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2.38%
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Source : Bloomberg |
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Facts & Figures (Rs in Millions) |
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Date
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FII Flows in cash mkt
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MF Flows in cash mkt
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11-Jul-08
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-3103
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1199
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14-Jul-08
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-2123
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177
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15-Jul-08
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-6804
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-1082
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16-Jul-08
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-2104
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-315
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17-Jul-08
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5358
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111
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Source : SEBI, provisional data |
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| Globally, higher inflation and high interest rates are likely to persist, until the prices of commodities, primarily crude oil, decline significantly. While crude oil prices have declined 11% from their recent peak, the absolute level of prices is still very high, thereby dampening the global economic growth outlook. High inflation, worsening financial services sector scenario in the US & soaring crude prices are likely to keep the sentiments weak in the equity market.Quarterly results season has started and markets would take clue on the future growth of the companies depending on their current performance and future outlook. Given the current macro economic conditions, we maintain our view that volatility and uncertainty would persist in the Indian equity markets in short to medium term. |
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| __________________________________________________________________________________________ |
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| International Central Bank actions
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Bank
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Action
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Benchmark interest rate
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Previous
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Current
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Turkish Central Bank
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Rate increased
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16.25%
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16.75%
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Philippine Central Bank
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Rate increased
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5.25%
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5.75%
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Bank of Thailand
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Rate increased
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3.25%
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3.50%
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Sri Lankan Central Bank
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Rate unchanged
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10.50%
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10.50%
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Bank of Canada
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Rate unchanged
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3.00%
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3.00%
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Bank of Japan
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Rate unchanged
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0.50%
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0.50%
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| Source: Bloomberg |
| Economic Indicators |
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Previous Week
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Current Week
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| US 10 year benchmark treasury |
3.82%
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4.02%
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| Crude oil WTI ($/barrel) |
144.95
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130.65
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Source: Bloomberg
Currency
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Previous Week
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Current Week
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| INR |
42.91
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42.76
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| EUR |
1.58
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1.58
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| JPY |
107.02
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106.76
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Source: Bloomberg
Domestic
Liquidity
| Call rates range |
Previous Week
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Current Week
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| MIBOR range |
9.00-9.07
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8.00-9.00
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| LAF amount average (Rs crore) |
-37521
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-33583
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Source: Bloomberg
Domestic interest rates
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Previous Week
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Current Week
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| 3 month CP |
10.25%
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10.40%
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| 91 day T-bill |
9.03%
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8.90%
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| 5 year OIS |
9.97%
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9.50%
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| 10 year benchmark gilt |
9.48%
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9.09%
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Source: Bloomberg
Outlook of the Week
Liquidity conditions continued to remain strained. We expect systemic liquidity tightness to continue into the next fortnight as well on account of outflows towards the second leg of CRR hike as well as the scheduled gilt auction.
Inflation for the week ended 4th July 2008 increased marginally to 11.91% from 11.89% a week ago. We maintain our view of inflation staying firm in the coming weeks.
Sharp correction in the oil prices on the back of global economic slowdown concerns as well as U.S. inventory gains led to buying interest in gilts. Favorable comments from the Finance ministry also aided sentiment. Yield on the benchmark 10 year gilt fell to 9.09% from 9.48%, a week ago.
Going forward, movement in commodity prices would be the key indicator for the markets. We feel that oil prices would continue to be volatile since fundamental demand-supply situation remains unchanged and dollar continues to have a weak bias. It would be premature to assume that the worst is behind us. We retain our cautious view on interest rates. |
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