Saturday, August 2, 2008
weekly Market Update as on 2nd August 2008
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| Markets gave a knee jerk reaction to the credit policy & recovered swiftly to close the derivatives expiry week with over 2% gains in benchmark indices. IT index gained more than 5% this week. Positive global cues helped the pull back rally and hope of fast track reforms process brought the PSU and banking stocks back in limelight. Overseas investors were net sellers, whereas the domestic investors were net buyers for the week. |
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Key Equity Indices |
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Week at
Glance |
7/28/2008
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7/29/2008
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7/30/2008
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7/31/2008
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8/1/2008
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Last Week
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Week on Week Change %
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Sensex
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14349.11
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13791.54
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14287.21
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14355.75
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14656.69
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14274.94
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2.67%
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S&P CNX Nifty
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4332.1
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4189.85
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4313.55
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4332.95
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4413.55
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4311.85
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2.36%
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BSE IT
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3606.81
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3588.57
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3722.09
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3689.57
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3800.06
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3611.24
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5.23%
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BSE PSU
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6724.42
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6514.79
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6676.91
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6706.14
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6925.52
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6674.57
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3.76%
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BANKEX
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6761.82
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6199.6
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6522.62
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6516.41
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6728.65
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6751.86
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-0.34%
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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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25-Jul-08
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-5463
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8271
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28- Jul 08
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-6093
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6479
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29-Jul-08
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-3323
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7918
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30-Jul-08
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-3919
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4574
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31-Jul-08
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5970
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Not Available
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Source : SEBI, provisional data |
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| Global commodity prices have shown signs of correction in the recent past, thus acknowledging a weak global growth outlook. Fresh credit write downs have necessitated further capital raising indicating that the worst is not over. We expect the equity markets across the globe to remain range bound in short to medium term, in the light of high commodity prices and sub-prime related issues.Quarterly numbers from Indian companies have not given any major negative surprises. Overall top line growth has been robust, although operating margins have declined. Post result corporate interaction indicates continued optimism amidst a challenging environment. We believe the India growth story is here to stay; though there can be some volatility & uncertainty in the 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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Polish Central Bank
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Rate unchanged
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6.00%
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6.00%
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Pakistan Central Bank
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Rate increased
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12.00%
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13.00%
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Slovak Central Bank
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Rate unchanged
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4.25%
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4.25%
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Reserve Bank of India
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Repo Rate increased
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8.50%
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9.00%
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Cash Reserve Ratio increased
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8.75%
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9.00%
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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 |
4.00%
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3.93%
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| Crude oil WTI ($/barrel) |
126.29
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123.60
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Source: Bloomberg
Currency
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Previous Week
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Current Week
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| INR |
42.26
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42.35
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| EUR |
1.57
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1.56
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| JPY |
107.31
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107.41
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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 |
9.18-9.71
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6.31-9.20
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| LAF amount average (Rs crore) |
-36954
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-13666
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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 |
10.40%
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10.25%
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| 91 day T-bill |
8.90%
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9.10%
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| 5 year OIS |
9.50%
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9.33%
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| 10 year benchmark gilt |
9.09%
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9.29%
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Source: Bloomberg
RBI action
- Repo rate increased by 50bps to 9.00%
- Cash reserve ratio increased by 25bps to 9.00%
Outlook of the Week
Quarterly monetary policy review was more hawkish than market expectation. RBI stressed on demand pressures and containment of inflationary expectations. Gilt yields increased sharply in response to the policy review but inched down later in the week on correction in oil prices and significant improvement in systemic liquidity.
We believe that inflationary pressures would continue to dominate policy stance in the months to come. Second round impact of fuel and other commodity price increases have not been felt yet. Monsoons have not been normally distributed and this is having impact on food prices. Government borrowings for the second half are expected to be sharply higher on account of the high subsidy bill and continued higher oil prices may force the government to raise the fuel prices once again.
We thus expect yields to continue to have an upward bias in the near to medium term. |
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