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| Markets remained volatile during the week. Sensex closed marginally negative over the last week at 14484, losing 0.55%. Similarly, Nifty lost 0.18% to close at 4352. However, many banking stocks ended positively. The Bankex gained 2.33% on account of waning concerns over high inflation, which was reported lower for the second consecutive week at 12.34%. Global equity markets also remained volatile during the week. Crude oil prices corrected around 3.1% in last week and by around 26.8% from the peak of $ 147/barrel (in first week of July) to reach around $ 107/barrel. London Metal Exchange Index (LMEX) tracking the base metal prices also declined by 3.1% in the last week and around 22% from the peak (in first week of Mar’08). Steel prices have also shown signs of softening. |
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Key Equity Indices |
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Week at
Glance |
9/1/2008
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9/2/2008
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9/4/2008
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9/5/2008
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Last Week
|
Week on Week Change %
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| Sensex |
14,498.5
|
15,049.9
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14,899.1
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14,483.8
|
14,564.5
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-0.55%
|
| S&P CNX Nifty |
4,348.7
|
4,504.0
|
4,447.8
|
4,352.3
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4,360.0
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-0.18%
|
| BSE IT |
3,954.2
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4,066.9
|
4,085.7
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3,941.7
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3,966.8
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-0.63%
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| BSE PSU |
6,768.2
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7,022.8
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6,971.4
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6,890.2
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6,747.1
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2.12%
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| BANKEX |
7,021.4
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7,446.5
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7,434.7
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7,172.9
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7,009.7
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2.33%
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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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1-Sep-08
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-1,717
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-807
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2-Sep -08
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13,374
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1,059
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4-Sep -08
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-3,991
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1,341
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5-Sep -08
|
Not Available.
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Not Available
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Source : SEBI, provisional data |
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| The weakness in US economy is evident with various indicators, including increasing jobless claims. Europe is also showing signs of economic slow-down. As a result, commodities prices, including oil are on downtrend.The declining commodity prices are positive for India, which has still a long way to go in economic, infrastructural development and consumption driven growth. We continue to believe the India growth story is here to stay; though volatility and uncertainty would persist in the short to medium term. |
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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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European Central Bank
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Rate unchanged
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4.25%
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4.25%
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Bank of England
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Rate unchanged
|
5.00%
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5.00%
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Chile Central Bank
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Rate increased
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7.75%
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8.25%
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Bank of Indonesia
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Rate increased
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9.00%
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9.25%
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Bank of Canada
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Rate unchanged
|
3.00%
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3.00%
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Australian Central Bank
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Rate decreased
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7.25%
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7.00%
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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 |
3.77%
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3.56%
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| Crude oil WTI ($/barrel) |
116.55
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106.90
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Source: Bloomberg
Currency
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Previous Week
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Current Week
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| INR |
43.42
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44.66
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| EUR |
1.47
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1.42
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| JPY |
108.63
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105.90
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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 |
9.77-6.11
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9.04-9.39
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| LAF amount average (Rs crore) |
-5731
|
-11685
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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 |
11.10%
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11.15%
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| 91 day T-bill |
9.05%
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8.95%
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| 5 year OIS |
9.05%
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8.70%
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| 10 year benchmark gilt |
8.71%
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8.49%
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Source: Bloomberg
Outlook of the Week
Correction in commodity prices especially oil prices boosted sentiment in the bond market. SLR demand also led to buying support for gilts resulting in the 10 year gilt yield easing to 8.49% from 8.71% levels, a week ago. Good demand was witnessed for the PFC bond issue as corporate bond spreads look attractive at current levels. We believe the rally to be overdone and market is likely to consolidate at current levels before yields move up once again. Corporate bond spreads may compress a little from current levels. Money market rates are likely to stay firm as liquidity would become tighter after the advance tax outflows mid-month.
Going forward, inflation is likely to remain in double digits till this calendar year end and that would result in a continued hawkish stance from RBI. However odds for a status quo in rates have increased. |
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