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Monday, January 17, 2011
Markets head towards a flat opening
The Indian markets are likely to begin the trade on a flat note on the back of not-so-supportive Asian cues. TCS, PFC, L&T will declare their results.
Headlines for the day:
Govt to announce multi-brand retail policy soon
Excise duty alignment with GST likely to impact SMEs
Etisalat misses Zain deal deadline, to keep trying
Earning reports boost US stocks
Stocks register strong weekly gains for the second consecutive week
US stocks ended with strong gains for the week that ended on Friday, 14 January 2011. Better than expected earning and economic reports boosted stocks since the very start of the week. In addition easing of Europe's sovereign debt problems further improved sentiment.
For the week, that ended on Friday, 14 January 2011, Dow ended higher by 112.62 points (1%) at 11,787.38. Nasdaq ended higher by 52.19 points (1.9%) at 2,755.3. S&P 500 ended higher by 21.74 points (1.73%) at 1,293.24.
Crude pares early losses
Positive earnings and mixed data boost prices
Crude prices pared earlier losses and ended marginally higher on Friday, 14 January 2011 at Nymex. Prices rose due to better than expected earning reports and mixed economic data.
On Friday, crude oil futures for light sweet crude for February delivery closed higher by $0.14 (0.15%) at $91.64/barrel. Earlier in the day, prices fell to a low of $90. For the week, crude gained 4%. On a year to date basis, crude is almost unchanged.
Bullion metals turn extremely pale
Prices drop to lowest level in two months
Precious metals ended considerably lower on Friday, 14 January 2011 at Comex. Prices fell to lowest levels in two months as most of the pressure in the European region regarding concerns over sovereign debt problems eased and also as China hiked its reserve requirements.
Copper stays steady
Good data and earnings push prices higher
Copper prices ended higher for the day and week on Friday, 14 January 2011. Prices rose due to better than expected earnings data and mixed economic data that boosted overall sentiments. Though prices rose at Comex, they slipped at LME.
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Indian markets are still not out of the woods and are trying hard to negotiate the highs of last year. Infosys' December quarter results, low November industrial output data and inflation are dampening market sentiments.
Pfizer
If the last few quarters saw Pfizer's earnings under pressure as it grappled with the integration of Wyeth and the addition of field force, the coming quarters promise to turn that around significantly. Focus on branded generics, market expansion initiatives, strong product portfolio and expected increase in field force productivity promise a smoother sojourn for Pfizer.
ABG Shipyard
Valuations of the ABG Shipyard stock have moved up sooner than expected, owing to the rally it witnessed in the last six months on pick-up in orders and expectations of restoration in capital subsidy. The stock has gained 47 per cent from our ‘buy' recommendation in June 2010, thus capturing much of the potential we saw in the medium term.
Rural Electrification Corporation
Financial stocks have been pummelled in recent sessions on fear of rising interest rates cutting into margins. This provides a good entry point for long-term investors in the stock of REC (Rural Electrification Corporation) as its prospects are quite promising. REC may manage to retain industry spreads in excess of 3 per cent even in a rising interest rate scenario, owing to its access to low-cost funding and its recent ‘infrastructure financing company' status.
Sunday, January 16, 2011
Bears play havoc; Indices register 4% weekly loss
Markets suffered a long-term damage this week with key indices breaking crucial support levels. High inflation, Infosys' disappointing Q3 nos and fears of rate hike weighed
Major headlines for the week
November IIP at 2.7%
Inflation rises to 8.43% in December
Infosys Q3 results lag estimates; stock falls
HDFC Q3 net profit jumps 33%
Duty-free sugar imports extended till March 31
Indian Indices
Indian markets have come under a bear grip in the new year. Bears have descended at the ring and remained aggressive since the start of 2011. Domestic indices were in a huge pressure for the second straight week amid high volatility. The domestic market fell sharply during the week owing to weak Q3 results by Infosys technologies and also concerns over rising inflation. Inflation surged to 8.43% in December as compared to 7.48% seen in previous month. The rising inflation increased fears of interest rate hike by Reserve Bank of India (RBI ) in its upcoming Policy meet schedule on January 25, 2010. Rate hike fears, as a result, led to heavy sell-off in interest rate sensitive sectors such as banking, auto and realty stocks. Another reason that led to steep fall in the market was Index for Industrial Production (IIP) data, which came in at a 18 month low level of 2.7% in November.
During the week, Sensex and Nifty breached another significant levels of 19000 and 5700 respectively. Markets witnessed highly volatile session throughout the week, with the Sensex and Nifty swinging 908 and 268 points respectively. Finally, the Sensex ended the week lower by 831 points or 4.22% at 18860 and the Nifty by 250 points or 4.23% at 5655.
Global indices
Among the global markets, US and European indices outperformed the Asian peers. During the week France’s CAC 40 index surged the most with gains of 2.83% while, DAX 100 and Nasdaq advanced over 1% each. On other hand, Sensex slid the most with a loss of 4.22%, followed by China’s Shanghai Index that fell 1.70%.
Sectoral and stock screening
In the second straight week of 2011, all the Sectoral indices ended the week in negative territory. BSE Capital Goods (CG), BSE Realty, BSE Bankex and BSE Oil & Gas tumbled over 5% each while rest of the sectors ended the week lower in the range of 1.55-4.09%.
Among ‘A’ group stocks, top three gainers of the week were Petronet LNG, which shot up by 3.4%, Grasim surged 3.29% and Ultratech Cement gained 3.04%. Top three losers of the week were pantaloon Retail which slid 13.05%, Zee Entertainment fell 12.85% and Jet Airways lost 12.3%.
FII/MF activity
The foreign institutional investors (FIIs) also participated in the sell-off and sold Indian equities worth a net of Rs3,387 crore in the week as compared to the net buy of Rs1,517.3 crore seen in the previous week. Selling by FIIs also dampened investor sentiment. The domestic institutional investors (DIIs) turned out to be the net buyers and bought Rs842.6 crore worth of Indian equities as compared to the net sell of Rs943.4 crore seen in the previous week.
Outlook
The earning of top Indian firm in next week may dictate the future path of Indian markets. Earnings of Larsen & Toubro, Axis Bank, Tata Consultancy services, Gail India, Bajaj Auto, HCL Technologies, Reliance Industries, ITC, Bharat Heavy Electricals and Punjab National Bank are scheduled next week. FIIs’ activity and developments in the external environment may also have some impact on the Indian markets
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