Monsoon showers bring cheer; Markets end week with 4% gain

This week the Indian markets ended with highest ever weekly gain of 2012, with the Sensex rising 4.72% and the Nifty surging by 4.68%. Major Headlines RBI hints at cut in interest rates India HSBC May services PMI jumps to 3-month high CCI orders on tyre, cement cartels in final stage PM makes an effort to motivate Infra projects RIL aims to outperform global peers Govt drives 5-star Hotels crazy on austerity measures Indian indices: The Indian markets were volatile in the first week of June 2012 and closed in the positive terrain. This week the markets saw highest ever weekly gain of 2012, with the Sensex rising 4.72% and the Nifty 4.68%. The Key benchmark indices rose for all the five trading session in this week. The market spurted this week on hopes that the Reserve Bank of India (RBI) will cut interest rates at mid-quarter monetary policy review on June 18, 2012 to prop up slowing economy. The market sentiment also got a boost after Prime Minister Manmohan Singh on June 06, 2012, announced a big push to the infrastructure sector to revive sagging economic growth. Tracking some stock specific actions, Reliance Industries (RIL) 38th Annual General Meeting was held on June 07, 2012, Mukesh Ambani said RIL will invest about Rs1 lakh crore to expand its business in India. Ambani said RIL is targeting to double its operating profit in about five years. Also in the news was copper and aluminium maker Sterlite Industries which rose by 10.31% after the Chinese central bank on Thursday, (June 07, 2012), announced a surprise cut in interest rates. China is the world's largest consumer of copper and aluminum. In highlight was auto maker Hero MotoCorp which reported its best-ever monthly sales in May 2012. The company total sales rose 11.3% to 5,56,644 two-wheelers in May 2012 over May 2011. The company's sales in May this year surpassed its previous high of 5,51,557, which was recorded in last month (April 2012). State Bank of India (SBI) has decided to revise its retail term deposit interest rates with a reduction by 0.25% in tenors up to 240 days with effect from June 08, 2012. The stock gained by 7.59% for this week On the sectoral Front, FMCG stocks extended recent gains on arrival of monsoon in Kerala early this week. Good monsoon may boost farm incomes and rural consumer spending. FMCG firms derive substantial sales from rural India. Also the interest rate sensitive banking stocks rose on hopes that the Reserve Bank of India (RBI) will cut interest rates at mid-quarter monetary policy review on 18 June 2012 to prop up slowing economy. On the other side shares of infrastructure companies hogged the limelight after the Prime Minister Manmohan Singh emphasised on boosting investment in this sector. He chose to boost infrastructure spending in the country to deal with concerns over domestic economic growth. Coming to home ground, the central bank's high interest rate regime is not responsible for the slowdown in economic growth as stated by the deputy governor of RBI Mr. Subir Gokarn on June 08, 2012. Also the finance ministry last week announced a 10% cut in non-plan expenditure for FY13 as a part of austerity measures aimed at containing fiscal deficit. It also put a ban on holding department meetings and conferences in five-star hotels, among other measures. Global Indices: All the global markets closed in green zone except Shanghai Composite, which was down by 3.88% and Hang Seng dropped by 0.30%. DAX100 was up by 1.55%, CAC40 rose by 3.43%, Nasdaq surged by 3.04% and Dow Jones gained 2.83%. Sectoral and stock screening: Among the 13 sectoral indices, 12 sectors closed in green zone and only BSE CD closed in red zone (down by 2.01%). Top Gainers: BSE Bankex (up by 7.76%), BSE Realty (rose by 6.32%) and BSE Power (rose by 6.12%). Looking at the 'A' group stocks, the top three gainers of the week were Pantaloon Retail India (up 20.31%), Reliance Infra (rose by 16.6%) and L&T (up by 15.39%). The top three losers of the week were Gujarat Gas Company (down by 10.51%), Indraprastha Gas (down by 9.42%) and Gujarat State Petronet (down by 6.81%). FII/MF activity: The foreign institutional investors (FIIs) have been the net sellers Indian stocks to the tune of Rs1034.50 crore till June 06, 2012. The domestic investors bought Indian shares worth a net of Rs851.90 crore on June 06, 2012. Outlook: The market is likely to be volatile next week as investors brace for major global events over the next few days. On the macro front, the government will announce data on industrial production (IIP) for the month of April 2012 on Tuesday, 12 June 2012. The government will announce inflation data for the month of May 2012 on Thursday, 14 June 2012.Data on first installment of the advance tax payment is due on Friday, 15 June 2012, could provide cues on Q1 June 2012 corporate earnings. Investors will closely watch how monsoon progresses in the country. A good monsoon can help increase farm output, which can ease food inflation and boost agricultural income. Investors will also watch movement in the crude oil prices. India imports two-thirds of its oil consumption, so a rebound in oil prices will hurt its fiscal and trade balance negatively. Crude for July delivery was down by 2.97% at $82.30 a barrel in Asian trading on Friday, 8 June 2012.