Survival is triumph enough. Harry Crews
World markets survived yet another tumultuous week, though Spain’s rating downgrade and the subsequent decline in the US as well as European markets served as a grim reminder of the challenges that lie ahead. So, we will kick off the new week with a slightly negative bias due to shaky global markets. With the US markets shut on Monday, the trend may remain rangebound and choppy.
However, things for the Indian market could turn positive as the GDP report is expected to be quite good. FY11 promises to be even better than FY10, though monsoon remains a big ‘X’ factor along with the global economy. Even in the worst case scenario, India should be able to register a decent performance. Still, it won’t be a cakewalk amid high inflation and rising interest rates.
In the near term, the market may remain volatile as uncertainty prevails over the European debt crisis and its wider fallout on the world. Headline risks will continue to play spoilsport with every effort to move higher. As a result, one should not take undue risks at this stage and wait for some more stability.
Wall Street and European markets surrendered gains after Fitch cut Spain’s rating. The VIX jumped back above 31, while the euro slipped and the dollar index rose. Japan's Nikkei is struggling for direction while South Korea and Australia both have managed slim gains.
Beginning of the new month also means that we will get fresh manufacturing PMI data from across the globe. This particular data has been holding up well and may help restore confidence. Among the other data points to watch out for will be the monthly auto sales and the US employment report.
FIIs were net buyers of Rs4.09bn in the cash segment on Friday on a provisional basis, according to the NSE data. The local institutions were also net buyers at Rs3.43bn on the same day. In the F&O segment, the foreign funds were net buyers of more than Rs12bn.
US stocks ended lower on Friday at the end of the Dow's worst month in 70 years, after a downgrade of Spain's debt revived concerns about the ongoing debt problems in the eurozone.
Fitch Ratings lowered its rating on Spain's debt to AA+ from AAA, but said that the country's outlook is stable. The downgrade came despite the passage of austerity measures by the Spanish government.
The Dow Jones industrial average lost 122 points, or 1.2%. The S&P 500 index fell points, or 1.3%, and the Nasdaq composite dropped 21 points, or 0.9%.
US stocks had rallied on Thursday after China said that it will stay invested in European debt. The Dow jumped 285 points, or almost 3%, and the S&P 500 and Nasdaq both gained more than 3%.
Friday marked the end of a rough month on Wall Street in which stocks plunged on worries about the European debt crisis and the weak euro.
The Dow lost 7.9%, its worst month since February 2009, when it fell 11.7%, and worst May since 1940, when it plunged 21.7%.
The Nasdaq lost 8.3%, its worst month since November 2008, when it dropped 10.8%, and its worst May since 2000, when it skidded 11.9%.
The S&P 500 declined 8.2%, its worst month since February 2009, when there was an 11% loss, and its worst May since 1962, when the drop was 8.6%.
Stock declines were broad, with 27 of 30 Dow components falling.
Volume was light ahead of a three-day weekend. Composite turnover in New York Stock Exchange-listed companies hit 5.1 billion shares, well below the month's average daily volume of nearly 7 billion shares.
The CBOE Volatility (VIX) index, Wall Street's fear factor, rallied nearly 8% to 31.97.
The euro fell 0.7% versus the dollar but remained above that four-year low of $1.2146. The dollar was barely changed against the yen.
The Dollar Index, tracking the US currency against a basket of six others, jumped 0.6%.
US light crude oil for July delivery fell 58 cents to settle at $73.97 a barrel on the New York Mercantile Exchange.
COMEX gold for August delivery rose 30 cents to settle at $1,212.20 an ounce.
Treasury prices gained modestly, lowering the yield on the 10-year note to 3.31% from 3.34% late on Thursday.
A morning report from the Commerce Department showed that consumer income picked up last month, but spending didn't follow suit.
Personal income rose 0.4% in April, matching the gain in March. Economists expected the 0.4% gain. Personal spending was flat after rising 0.6% in the previous month. Spending was expected to grow by 0.3%.
The Core PCE, the report's inflation component, rose 0.1%, in line with estimates, after increasing 0.1% in March.
The May consumer sentiment index from the University of Michigan rose to 73.6 from 73.3 last month. Economists had expected it to ease to 73.2.
The Chicago PMI, a regional reading on manufacturing, fell to 59.7 in May from 63.8 in April, versus forecasts for a drop to 60.
European shares closed in the red on Friday after Spain's ratings downgrade and disappointing data on US consumer sentiment.
The Stoxx Europe 600 index gave up earlier gains to end down 0.3% to 244.09. The decline came after two days of strong gains for the index, which rose 3% on Thursday and 2.4% on Wednesday. It pared weekly gains to 2.9%.
German DAX index rose 0.2% to 5,946.18, the UK FTSE 100 index slipped 0.1% to 5,188.43 and the French CAC-40 index declined 0.3% to 3,515.06.
A week of wild swings finally ended on a positive note as sentiment across the world got a fillip after the Chinese government dismissed reports that it was considering paring down its holdings of eurozone bonds. The Indian market got off to a happy start coinciding with the ‘less expected’ truce between the earlier warring Ambani brothers. Tuesday and Wednesday saw some panic sales with the indices falling below the 200 DMA. By Thursday some semblance was restored especially during the last hour of F&O expiry. The usual short-covering on account of expiry of derivatives contract brought the Indian markets higher for the week. Finally, the NSE Nifty added 2.7% and BSE Sensex added 2.5% for the week.
Sensex intra-week high of 16,891 and low of 15,960
Nifty intra-week high of 5,077 and low of 4,786
The top gainers: The top gainers in the Sensex were Reliance Power (up 12.8%), Reliance Infrastructure (up 6.9%), Tata Motors (up 5.6%), TCS (up 4.5%) and ITC (up 4.4%).
The Top Losers: The top losers in the Sensex were Grasim Inds (down 24.7%), ACC (down 4.3%), Tata Steel (down 2.4%), Bharti Airtel (down 2.1%) and SBI (down 1.4%).
The BSE IT Index (up 3.2%): The top gainers in the IT sector were Mahindra Satyam (up 6.9%), TCS (up 4.5%), Infosys (up 3.7%), Wipro (up 3.4%) and HCL Tech (up 2.6%).
The top losers were Mphasis (down 8.9%) and Sasken Communication (down 3.3%).
The BSE Consumer Index: The top gainers in the Consumer Durables sector were Blue Star (up 6.3%), Videocon Industries (up 1.6%), Su-Raj Diamonds (up 0.3%) and Samtel Color (up 0.3%).
The BSE Healthcare Index (up 2.3%):The top gainers in the Pharma space were Ipca Labs (up 7.7%), Fresenius Kabi (up 7.5%), Natco Pharma (up 7.2%), Divi Labs (up 6.1%) and Sun Pharma (up 5.5%).
The top losers were Dishman Pharma (down 5.5%), Astrazeneca Pharma (down 2.4%), Glaxosmithkline (down 2.4%), Aurobindo Pharma (down 2%) and Suven Life (down 1.5%).
The BSE Banking Index (up 1.6%):The top gainers in the banking space were Yes Bank (up 6.2%), Federal Bank (up 6%), Andhra Bank (up 5.9%), HDFC Bank (up 3.8%) and OBC (up 3.8%).
The top losers were Canara Bank (down 3.5%), Karnataka Bank (down 3%), IOB (down 2.6%), SBI (down 1.4%) and Union Bank of India (down 0.3%).
The BSE Auto Index (up 2%):The top gainers in the auto space were Tata Motors (up 5.6%), Hero Honda (up 3.5%), Bajaj Auto (up 3.1%), Hindustan Motors (up 1.6%) and M&M (up 1.4%).
The top losers were Ashok Leyland (down 1.2%) and Maruti Suzuki (down 1.1%).
The BSE Oil & Gas Index (up 3.4%): The top gainers in the oil & gas space were Gujarat NRE (up 10.4%), Hindustan Oil (up 6.5%), Cairn India (up 4.5%), Reliance Industries (up 4.1%) and ONGC (up 3.4%).
The top losers were Chennai Petroleum (down 3.9%), MRPL (down 1.1%), Essar Oil (down 0.8%), Shiv-Vani Oil & (down 0.8%) and Jindal Drilling (down 0.1%).
The BSE Capital Goods Index (up 2%):The top gainers in the Capital Goods space were Areva T&D (up 20.1%), Siemens (up 7.3%), Aban Offshore (up 5.2%), Jyoti Structures (up 5.1%) and Crompton Greaves (up 4.9%).
The top losers were Esab India (down 2.4%), LMW (down 1.6%), Bharat Electron (down 1.5%), BEML (down 1.4%) and Greaves Cotton (down 1.4%).
The Cement Sector: The top gainers in the cement sector were Dalmia Cement (up 3.6%), JK Cements (up 2.7%), Kakatiya Cement (up 2.7%), Gujarat Sidhee (up 1.8%) and India Cements (up 1.4%).
The top losers in the cement sector were Grasim Inds (down 24.7%), Acc (down 4.3%), Shree Cement (down 2.6%), Binani Indus (down 1.9%) and Ultratech Cement (down 1.5%),
The Telecom Sector: The top gainers in the telecom space were RCom (up 10.6%), Tata Communication (up 2.7%), WWIL (up 1.1%), TTML (up 1%) and Himachal Futuristic (up 1%).
The top losers were Idea Cellular (down 3.3%), Shyam Telecom (down 2.4%), Bharti Airtel (down 2.1%), Gemini Comm (down 1.2%) and MTNL (down 0.8%).
The Realty Sector (up 4.1%):The top gainers in the real estate space were Parsvnath (up 10.7%), Omaxe (up 7.8%), Mahindra Lifespace (up 7.1%), HDIL (up 6.8%) and Unitech (up 6.5%).
The Metals sector (up 1.5%):The top gainers in the metals sector were Adhunik Metaliks (up 8.1%), Tata Metaliks (up 6.5%), Jindal Steel (up 3.1%), Sunflag Iron (up 2.1%) and Jindal Stainless (up 1.8%).
The top losers in the metals sector were Tata Steel (down 2.4%), Bhushan Steel (down 2.1%) and Tata Sponge (down 0.4%).