Markets end with good gains for 4th week

The Indian markets stood positive for the fourth consecutive week. The Sensex rose 2.69% and the Nifty ended up 2.58% for the week ended June 29, 2012. Major Headlines: India's fiscal deficit for April-May at $25.3 bn Indian equities upgraded to 'equalweight': Morgan Stanley Non-urea fertiliser demand can slide by 28% Primary dealers to stop short-term debt issues from July 1: RBI RBI takes steps to boost economy by raising ECB limits e-Payment compulsory for PSUs from July 1: Fin Ministry Indian Indices Three cheers to the Indian markets for topping the global charts and closing higher for the fourth consecutive week. The biggest positive surprise of the week was relief that came in from the European Summit backed by domestic scenario, which turned extremely buoyant post the GAAR clarifications. The other contributors to the big rise were renewed reform hopes when Prime Minister Manmohan Singh took the charge of the Finance Ministry. Measures announced by the government to boost dollar inflows was another good news for the markets. Owing to this, markets ended the week in positive note with Sensex & Nifty gaining over 2.5% each. The Key Indices surged for four out of five trading sessions this week. The Sensex rose 2.69% to 17,429.98, its highest closing level since April 19, 2012 while the Nifty gained 2.58% to settle at 5,278.90, its highest closing level since April 20, 2012. The BSE Mid-Cap index rose 2.39% and the BSE Small Cap index gained 2.13%. Both these indices under performed the Sensex. Major highlights of the week! The major highlights of the week ended June 29, 2012 were:- 1. On June 25, 2012, the Reserve Bank of India (RBI) hiked the foreign investment cap on government bonds by $5 billion and the limit on overseas commercial borrowings was raised by $10 billion. The RBI also allowed sovereign wealth funds, multilateral agencies, endowment funds, insurance and pension funds as well as foreign central banks to invest in government bonds. These measures are aimed to attract foreign funds and arrest the recent sharp slide of the rupee against the US dollar. The government also said that the withholding tax would be liberalized as announced in the 2012-13 Budget where Finance Minister Pranab Mukherjee had proposed to reduce the rate of withholding tax on interest payments on external commercial borrowing (ECBs) from 20% to 5% for three years, for certain stressed infrastructure sectors. 2. Prime Minister (PM) Manmohan Singh took additional charge of the finance ministry as Pranab Mukherjee on June 26, 2012 resigned as finance minister to contest the presidential polls next month. The shift comes at a time when the economy is going through a slowdown amid deteriorating domestic conditions and euro-zone troubles. Further adding, Mr. Mukherjee is the leading contender in the July 19 presidential election, having been nominated by the Congress party-led United Progressive Alliance government for the largely ceremonial post. 3. Another major event this week was from the Prime Minister's office (PMO) on June 29, 2012, which clarified that the GAAR guidelines that have been put up on the government website from the official level of the Finance Ministry and shared with some stakeholders are only draft guidelines and have been put out for receiving wide-ranging feedback and for discussion purposes only. These guidelines have not been seen by the Prime Minister and will be finalised with the approval of the Prime Minister only after considering the feedback received. 4. Volatility was high during the week as traders rolled over positions from June 2012 series to July 2012 series. The June 2012 derivatives contracts expired on Thursday, June 28 2012. 5. State-run oil marketing companies (PSU OMCs) announced reduction in petrol prices by Rs2.46 per litre effective Friday, June 29 2012. 6. On a weekly basis, the rupee jumped 2.64% or Rs1.51 from last week’s close of 57.12 to the dollar, the highest in over two and half years. Global wrap for the week! On the global front, the two-day European Union summit that ended on June 29, 2012 aimed at resolving the euro-zone debt crisis after European Union leaders on June 28, 2012, agreed for stabilizing Spanish and Italian bond markets and took steps to establish euro-zone-wide banking union. European leaders agreed to allow the region's permanent rescue fund, the European Stability Mechanism, or ESM will provide cash directly to Spanish banks once a regionwide financial supervisor is established. That would allow Spain's government not to take the cost of the bailout onto its books. Leaders also agreed to allow the rescue funds to buy distressed government bonds without requiring countries to sign on to strictly monitored bailout programs, opening the door for purchases of Italian bonds. Sectoral and stock screening: All the 13 sectoral indices closed the week on a positive note. Top Gainers - BSE Power which was up by 4.96%, BSE Metal rose by 4.26%, BSE Bankex up 3.01%. The remaining ten sectors gained in the range of 0.54% to 2.95% gains. Looking at the 'A' group stocks, the top three gainers of the week were Manappuram Finance which was up by 27.44%, Tata Power Company up by 10.91% and GMR Infra up by 10.79%. The top three losers of the week were Cairn India down by 5.67%, Gujarat Fluorochemicals down by 4.26% and Jaiprakash Power Ventures down by 3.06%. FII/MF activity: The foreign institutional investors (FIIs) continued their selling activity and sold Indian stocks worth a net of Rs150.7 crore, while the domestic investors were net buyers of Indian stocks to the tune of Rs86.7 crore during the week till June 28, 2012. Global indices: All the global markets closed on a positive note baring Shanghai Composite which fell by 1.57%. Top gainers: CAC 40 up by 3.42%, DAX100 surged by 2.44% and Nikkei rose by 2.37%, Hang Seng up by 2.35%, Dow Jones rose by 1.89%, Nasdaq surged by 1.47% and FTSE 100 gained 1.04%. Market Outlook for the coming week! In the forthcoming week, automobile and cement shares will remain on the investors' radar, as the companies from these two sectors will start unveiling monthly sales volume data for June 2012 from July 01, 2012. On the macro front, the manufacturing Managers' Index (PMI) for June 2012 will be out by July 02, 2012. The HSBC manufacturing Purchasing Managers' Index (PMI) slipped marginally to 54.8 in May from 54.9 in April. It has stayed above the 50 mark that separates growth from contraction for a little over three years now. Chinese economic data is due to be out in the next few weeks and will cast a new light on the scale of the ongoing economic slowdown in the world's second biggest economy. Kicking off the parade of data is an official manufacturing survey for June 2012 due on Sunday, July 01, 2012. Other figures due out later, over a five-day period from July 9 include second quarter gross domestic product, as well as such indicators as June fixed-asset investment, inflation, industrial production and bank lending.