The May pattern

It’s human nature to find patterns where there are none and to find skill where luck is a more likely explanation. - Bernstein William.

Things have turned a little sour for world equity markets in May. Investors seem to have taken the old axiom of 'sell in May and go away' seriously; and they have been lucky so far. India has been no exception with the key indices on a mostly downward spiral. The slide is likely to persist at least at the start of the last week of the month.



US and European stocks slid amid lingering worries over the precarious fiscal conditions of Greece and other peripheral eurozone nations. The dollar has advanced while the euro has hit a record low versus the Swiss franc. Asian stock markets are down 1-2% this morning. Crude oil is hovering around $100 a barrel mark.

Indian markets did recover some ground late last week, but the overall outlook remains murky. Things could get volatile in view of the F&O expiry on Thursday. Any move above 5520 could push the Nifty towards 5600. On the way down watch out for the levels of 5450 and 5350.

The near-term sentiment will hinge on global cues and results of a few top companies. The onset of monsoon will be another key event to keep an eye on.

Shares of Sanghvi Forging and Engineering Ltd. will get listed today. It has fixed its issue price at the higher end of the Rs 80-85 a share range. The company has raised Rs 369mn through its IPO, which was subscribed 1.3 times.

Shares of CIL Nova Petrochemicals Ltd. pursuant to Scheme of Arrangement.

FIIs were net sellers of Rs 1.8bn in the cash segment on Friday, according to the provisional NSE data. The domestic institutional institutions (DIIs) were net buyers at Rs 3.98bn on the same day. In the F&O segment, the foreign funds were net buyers of Rs 8.68bn.

The foreign funds were net sellers of Rs 71mn in the cash segment on Thursday, as per SEBI web site. Mutual Funds were net buyers of Rs 282mn on the same day.

Results Today: Bajaj Electricals, Balaji Telefilms, BHEL, Dish TV, ENIL, Everonn, Gail India, Hotel Leela, JB Chemicals, Karnataka Bank, Kingfisher Airlines, Mahindra Satyam, Tata Chemicals, Texmaco and Texmaco Rail.

Investors pulled out US$1.64bn from emerging markets equity funds last week for the first time in two months. That accounted for a major portion of a total outflow of US$7.07bn in global stock funds, according to the data complied by fund tracking firm EPFR.

This was the first time since third week of March that emerging market equity funds posted outflows on renewed concerns over Greek's debt and the scheduled end of QE2 by the Federal Reserve on June 30.

In contrast, global bond funds attracted a net of US$4.59bn. The effect of series of monetary tightening by the People's Bank of China saw China equity funds post their biggest outflow since the second week of February. Year-to-date redemptions for the region (ex-Japan) reached over US$9bn.