Markets rise after 2-weeks steep slide

The Indian markets surged this week after falling heavily for the two straight weeks. The Sensex rose by 1.6% and the Nifty up by 1.34%.

Headlines for the week

Food inflation eases to 1.81% vs 4.35%

Kingfisher Airlines drops to No.5 position in market share

Inflation seen easing to 6-7% by March: Pranab

RBI may lower GDP projection this fiscal: Subbarao

Govt introduces the Food Security Bill on cheaper food grains

Cabinet approves anti-corruption bill




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Indian indices

After two weeks of steep slide, the Indian markets rose this week as investors bought stocks available at lower levels. Strong US Housing Starts and Jobless Claims data, unexpected improvement in the German business sentiment index and better-than-expected Spanish bond auctions boosted global sentiments.

Signs that the US economy is improving further provided some respite. However, persistent gloom hanging over the euro zone capped some gains this week.

On the domestic front, food inflation falling sharply to a near four-year low of 1.81% buoyed investor mood. This is the lowest rate of food inflation since the week ended February 9, 2008, when it stood at 2.26%. The Indian markets fell in three out of five sessions of the week.

The Sensex swung 775 points between a weekly high of 15911 and a low of 15136 to close the week 1.6% or 247 points higher at 15739. The Nifty swung 232 points between a weekly high of 4763 and a low of 4531 to 1.34% or 62 points higher at 4714.

Sectoral and stock screening

Among the 13 sectoral indices, seven closed the week on a negative note. Top Gainers — BSE Oil & Gas rose by 3.26%, BSE FMCG surged by 3.20% and BSE Auto up by 2.15%. Major Losers — BSE CG fell by 3.18%, BSE Metal down by 1.56% and BSE Realty declined by 1.36%.

Coming to 'A' group stocks, top three gainers of the week – Lanco Infratech gained by 11.44%, Gujarat Flourochemicals jumped by 10.33% and Sun TV Network surged by 9.50%. Top three losers of the week – Syndicate Bank tumbled by 16.79%, Allahabad Bank fell by 15.67% and REC declined by 14.78%.

Global indices

All the global indices closed the week higher except Nikkei down by 0.08% and Shanghai Composite down by 0.90%. CAC40 was the best performer of the week surging by 3.35%, followed by DAX up by 2.64%, Dow Jones up by 2.56%, and Hang Seng up by 1.84%.

FII/MF activity

The foreign institutional investors ( FIIs) were the net sellers of the Indian stocks this week to the tune of Rs1105 crore. The domestic investors bought Indian shares worth a net of Rs162 crore during the week till December 21, 2011.

Outlook

The markets are expected to remain highly volatile next week as traders roll over positions in futures & options (F&O) segment from the near-month December 2011 series to January 2012 series. The near-month December 2011 F&O contracts expire on Thursday (December 29, 2011).

Automobile and cement companies’ stocks will be in focus ahead of the release of sales data for December 2011, which will start flowing in from January 01, 2012. Concerns over slowing domestic economic growth, high fiscal deficit, current account deficit and government's policy inaction may continue to weigh on sentiments. Further, FII recent selling activity is also a cause of worry.