Saturday, August 2, 2008
weekly Market Update as on 2nd August 2008
Equity Market Update

 
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.
Key Equity Indices

 

Week at
Glance

7/28/2008

7/29/2008

7/30/2008

7/31/2008

8/1/2008

Last Week

Week on Week Change %

Sensex

14349.11

13791.54

14287.21

14355.75

14656.69

14274.94

2.67%

S&P CNX Nifty

4332.1

4189.85

4313.55

4332.95

4413.55

4311.85

2.36%

BSE IT

3606.81

3588.57

3722.09

3689.57

3800.06

3611.24

5.23%

BSE PSU

6724.42

6514.79

6676.91

6706.14

6925.52

6674.57

3.76%

BANKEX

6761.82

6199.6

6522.62

6516.41

6728.65

6751.86

-0.34%
  Source :  Bloomberg
Facts & Figures (Rs in Millions)

 

Date

FII Flows in cash mkt

MF Flows in cash mkt

25-Jul-08

-5463

8271

28- Jul 08

-6093

6479

29-Jul-08

-3323

7918

30-Jul-08

-3919

4574

31-Jul-08

5970

Not Available

 

 Source : SEBI, provisional data
Outlook
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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Debt Market Update

 
        International        Central Bank actions

         

Bank

Action

Benchmark interest rate

 

 

Previous

Current

Polish Central Bank

Rate unchanged

6.00%

6.00%

Pakistan Central Bank

Rate increased

12.00%

13.00%

Slovak Central Bank

Rate unchanged

4.25%

4.25%

Reserve Bank of India

Repo Rate increased

8.50%

9.00%

 

Cash Reserve Ratio increased

8.75%

9.00%
              Source: Bloomberg
         Economic Indicators

 

Previous Week

Current Week
US 10 year benchmark treasury

4.00%

3.93%
Crude oil WTI ($/barrel)

126.29

123.60

 

 

Source: Bloomberg

Currency

 

Previous Week

Current Week
INR

42.26

42.35
EUR

1.57

1.56
JPY

107.31

107.41

Source: Bloomberg

Domestic

Liquidity

Call rates range

Previous Week

Current Week
MIBOR range

9.18-9.71

6.31-9.20
LAF amount  average (Rs crore)

-36954

-13666

Source: Bloomberg

Domestic interest rates

Previous Week

Current Week
3 month CP

10.40%

10.25%
91 day T-bill

8.90%

9.10%
5 year OIS

9.50%

9.33%
10 year benchmark gilt

9.09%

9.29%

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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Sunday, July 20, 2008
weekly Market Update as on 18th July 2008
Equity Market Update

 
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.
Key Equity Indices

 

Week at
Glance

7/14/2008

7/15/2008

7/16/2008

7/17/2008

7/18/2008

   Last Week Week on Week Change %

Sensex

13330.51

12676.19

12575.80

13111.85

13635.40

13469.85

1.23%

S&P CNX Nifty

4039.70

3861.10

3816.70

3947.20

4092.25

4049.00

1.07%

BSE IT

3675.59

3589.57

3566.98

3675.20

3580.65

3907.63

-8.37%

BSE PSU

6087.99

5821.96

5752.70

5866.67

6121.15

5967.71

2.57%

BANKEX

5970.52

5508.00

5400.24

5727.60

6188.89

6044.76

2.38%
  Source :  Bloomberg
Facts & Figures (Rs in Millions)

 

Date

FII Flows in cash mkt

MF Flows in cash mkt

11-Jul-08

-3103

1199

14-Jul-08

-2123

177

15-Jul-08

-6804

-1082

16-Jul-08

-2104

-315

17-Jul-08

5358

111

 

 Source : SEBI, provisional data
Outlook
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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Debt Market Update

 
        International        Central Bank actions

         

Bank

Action

Benchmark interest rate

 

 

Previous

Current

Turkish Central Bank

Rate increased

16.25%

16.75%

Philippine Central Bank

Rate increased

5.25%

5.75%

Bank of Thailand

Rate increased

3.25%

3.50%

Sri Lankan Central Bank

Rate unchanged

10.50%

10.50%

Bank of Canada

Rate unchanged

3.00%

3.00%

Bank of Japan

Rate unchanged

0.50%

0.50%
              Source: Bloomberg
         Economic Indicators

 

Previous Week

Current Week
US 10 year benchmark treasury

3.82%

4.02%
Crude oil WTI ($/barrel)

144.95

130.65

 

 

Source: Bloomberg

Currency

 

Previous Week

Current Week
INR

42.91

42.76
EUR

1.58

1.58
JPY

107.02

106.76

Source: Bloomberg

Domestic

Liquidity

Call rates range

Previous Week

Current Week
MIBOR range

9.00-9.07

8.00-9.00
LAF amount  average (Rs crore)

-37521

-33583

Source: Bloomberg

Domestic interest rates

Previous Week

Current Week
3 month CP

10.25%

10.40%
91 day T-bill

9.03%

8.90%
5 year OIS

9.97%

9.50%
10 year benchmark gilt

9.48%

9.09%

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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Saturday, March 8, 2008
Weekly market Update as on 8th March 2008


Equity Market Update

 
During the week, the Sensex lost 9.12% to close below 16000 at 15975. The entire week was mired in huge volatility due to (1) proposals in Union Budget FY 2008 - 09 to increase the short-term capital gains tax to 15% from 10% and changes in provisions of Securities Transaction Tax and (2) continued weakness in global markets. The fall was led by Banking stocks. Bankex was down by 16%, led by (1) uncertainty over the Rs.600 bn farm loan waiver scheme and (2) ICICI Bank’s MTM losses in its credit derivatives and international fixed income portfolio..
Key Equity Indices
Week at
Glance

3/3/2008

3/4/2008

3/5/2008

3/7/2008

 Last Week

Week on Week
% change
Sensex

16677.88

16339.89

16542.08

15975.52

17578.72

-9.12%
S&P CNX Nifty

4953.00

4864.25

4921.40

4771.60

5223.50

-8.65%
BSE IT

3692.49

3614.41

3752.47

3638.44

3862.45

-5.80%
BSE PSU

7999.93

7824.73

7830.96

7578.50

8484.16

-10.67%
BANKEX

9434.44

9056.76

8916.03

8477.46

10113.73

-16.18%
Source : BSE & NSE


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Saturday, March 1, 2008
Weekly market Update as on 1st March 2008

 

Equity Market Update

 
Equity markets witnessed dull activity during the week, which is contrary to what is generally witnessed in a derivatives expiry week. It was characterized by both lower volume and volatility as compared to the previous expiries. Markets did not get the much needed direction to trade, either from the policy statements or global cues. Key economic announcements by way of Railway budget, the economic survey and the Finance budget for 2008-09 were presented to the parliament during this week which did not enthuse the market participants as the benchmark indices lost over a 1.5% on budget day.
Key Equity Indices

 
Week at
Glance

2/25/2008

2/26/2008

2/27/2008

2/28/2008

2/29/2008

Last week

Week on Week
% change
Sensex

17650.57

17806.19

17825.99

17824.48

17578.72

17349.07

1.32%
S&P CNX Nifty

5200.70

5270.05

5268.40

5285.10

5223.50

5110.75

2.21%
BSE IT

3992.54

4062.67

3973.12

3967.40

3862.45

3918.28

-1.42%
BSE PSU

8308.37

8438.08

8471.05

8499.34

8484.16

8209.24

3.35%
BANKEX

10113.14

10189.48

10156.52

10073.91

10113.73

10150.22

-0.36%
            Source :  BSE  & NSE
Facts & Figures (Rs in Millions)

 

Date

FII Flows in cash mkt

MF Flows in cash mkt

Date

FII

MF

22-Feb-08

-4538

-1636

25-Feb-08

7385

-1405

26-Feb-08

854

5259

27-Feb-08

3964

1925

28-Feb-08

-5293

6007

 

 Source : SEBI, provisional data
Outlook
Global factors, led by the U.S, will continue to cause more volatility in the global markets as well as Indian markets. There is bound to be collateral damage.  India, though, has the potential to ‘decouple’ from the rest of the world eventually. Remember, decoupling based on relatively strong fundamentals, takes time. It is not something which happens, necessarily, in the short term.  We continue to argue, as we have in the past, that two factors will drive Indian markets (a) continued economic and corporate profit growth and (b) a P/E re-rating due to qualitative changes in the Indian economy, companies and markets.
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Debt Market Update

 
       International

         Central Bank actions

Bank

Action

Benchmark interest rate

 

 

Previous

Current

   Central Bank of Malaysia

 Rate unchanged

3.50%

3.50%

  Central Bank of Hungary

 Rate unchanged

7.50%

7.50%
           Central Bank of Israel

Rate decreased

4.25%

3.75%

  Central Bank of Thailand

 Rate unchanged

3.25%

3.25%
           Central Bank of Poland      Rate increased

5.25%

5.50%
        Source: Bloomberg

          

  
         Economic Indicators

 

Previous Week

Current Week
US 10 year benchmark treasury

3.74%

3.59%
Crude oil WTI ($/barrel)

99.15

102.43

 

 

Source: Bloomberg

Currency

 

Previous Week

Current Week
INR

40.05

40.02
EUR

1.48

1.52
JPY

107.07

104.20

Source: Bloomberg

Domestic

Liquidity

Call rates range

Previous Week

Current Week
MIBOR range

7.65-7.98

8.25-7.26
LAF amount  average (Rs crore)

-16728

- 8975

Source: Bloomberg

Domestic interest rates

Previous Week

Current Week
3 month CP

9.95%

10.00%
91 day T-bill

7.35%

7.43%
5 year OIS

6.98%

6.87%
10 year benchmark gilt

7.70%

7.57%

Source: Bloomberg

Outlook of the Week

Lower than expected government borrowing program in the Union budget resulted in gilt as well as corporate bond yields declining by 5-7 bps. Going forward, the market is likely to trade in a range as it awaits further information on provisioning for Rs 60,000 crore for debt relief to distressed farmers. Also, the fact that impact of the 6th pay commission’s recommendations have not been provided for in the budget would impact market sentiment.

We expect systemic liquidity to improve before the advance tax outflow in mid-march on government expenditure and Forex intervention by RBI. Market participants have created higher cash provisioning anticipating tighter overnight rates in March and are awaiting cues from RBI as to the measures being adopted to contain excessive money market volatility that is traditionally the bane of money markets in the month of March.

 
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