Volatile week ends lower

The domestic markets shut the volatile week lower as investor sentiment turned sour on doubts over the quantum of quantitative easing by the Federal Reserve

Major news for the week

ICICI Bank Q2 net profit up 19% yoy

India to grow at 8.25-8.75% in current fiscal: FM

Food inflation eases to 13.75%

September exports at two-year high, trade deficit shrinks

Core sector growth falls to 18-month low



Weekly report

It was a volatile week, with domestic markets ending the week in the red. The investor sentiment turned sour on doubts over the quantum of quantitative easing by the Federal Reserve at a policy meeting in early November 2010. Volatility was high as traders rolled over there positions in the derivatives segment from the October 2010 series to November 2010 series. During the week, the markets witnessed highest ever turnover of 2.86 lakh crore. Encouraging set of quarterly results of Indian Inc’s and easing food inflation to 13.75% for the week ended October 16, 2010 from 15.53% seen in previous week failed to lift the market sentiment. The Sensex outperformed the Mid-cap (down 1.46%) and Small-cap (fell 1.18%) indices during the week.

During the week, the Sensex and the Nifty swung 683 and 214 points respectively. On its way, the Sensex and the Nifty slipped below their psychological levels of 20000 and 6000 respectively. However, the indices regained their crucial levels on the last day of the week. Wrapping the week, the Sensex shut lower by 134 points or 0.66%, at 20032 and the Nifty closed lower by 48 points or 0.8%, at 6018.

On the global front, Nasdaq outperformed the other world markets by surging 1.13%. While Japan’s Nikkei fell the most with losses of 2.38% followed by Hang Seng that slid by 1.79%. Shanghai Composite, DAX and Dow Jones ended the week flat.

On the sectoral front, consumer durables (CD) and auto were the only sectors that performed well, with the BSE CD up by 3.70% and BSE Auto rose by 1.85%. On the other hand, BSE Realty lost by 4.25%, followed by BSE Power and BSE PSU that fell by 3.49% and 2.84% respectively.

Looking into 'A' group stocks, the toppers were - Shriram Transport Finance up by 16.32%, Mahindra & Mahindra Financial rose by 12.39% and Titan Industries gained by 10.71%. The losers were - Financial Technologies slid by 13.92%, Petronet LNG dropped by 12.46% and Mundra Port & Special Economic Zone fell by 11%

The foreign institutional investors (FIIs)’ inflows have slowed down in this week, as FIIs bought Indian shares worth a net of Rs2,755.8 crore as compared to net buy of Rs3,598.20 crore seen in the previous week. The local investors sold Indian stocks worth a net of Rs705.50 crore as against net sell of Rs859.20 crore seen in the previous week.

In the upcoming week, the Reserve Bank of India (RBI) will hold its next quarterly monetary policy review on Tuesday (November 02, 2010). It is widely speculated that the RBI will hike the key lending and borrowing rates by 0.25% each at its policy review. The investors will focus on the RBI’s move as rate hikes by the RBI have a direct impact on the interest rates offered by banks on loans to Indian companies. Another major event is that the Federal Reserve will hold meeting on November 2-3, 2010 to take decision on monetary easing. The quarterly results will continue to flow and set the tone for the domestic markets in the near-term. The stock specific action will be seen in Reliance Industries, Gail India, Maruti Suzuki and Suzlon Energy. The developments in the external environment and foreign fund flows will also play a significant role in deciding the future path of the markets.