Hattrick of marginal gains for Indian markets

The Indian markets registered marginal gains in a truncated week with the Sensex rising 0.76% and the Nifty up by 0.86% for the week ended August 17, 2012. Major Headlines of the week Inflation for July at 6.87% vs 7.25% in June India’s export slips 14.8% in July this year PMEAC lowers 2012-13 GDP forecast to 6.7% Jet fuel price up 3.2%; 3rd straight hike since July RBI should pay 7% interest on CRR deposits: Fin Ministry Indian Indices The Indian markets wrapped up the week ended August 17, 2012 in green for the third straight week. This week saw the monthly inflation falling the most in nearly three years. The inflation for the month of July 2012 came in at 6.87% v/s 7.25% in the previous month, building hopes that the central bank will find more space to ease the monetary policy and revive industrial growth that has slumped largely due to high interest rates over the past couple of years. The continuous buying of Indian stocks by foreign funds supported the market sentiment this week. Interest rate sensitive auto and banking stocks also added some support. The 33rd trading week of 2012 comes to a close with investors assessing better than expected data on consumer confidence and leading indicators. The week gone by saw the Nifty moving up further carrying forward last two week gains. Though, the NSE Nifty also crossed its recent highs of 5378 in the process. It was the third consecutive week of gains for the Nifty as it gained 0.86% W-o-W. The BSE Mid-Cap index rose 0.96% and the BSE Small-Cap index gained 1%. Both these indices outperformed the Sensex. The BSE Sensex, gained 133.34 points or 0.76% to settle at 17,691.08 while the NSE Nifty gained 45.90 points or 0.86% to close at 5,366.30. Major events of this week: 1. India's monthly inflation dropped higher than expected at 6.87% in July as against 7.25% in the previous month. 2. India's exports declined 14.8% year-on-year to $22.4 billion in July this year due to slowdown in the global demand. In July 2011, the country's shipment stood at $26.3 billion. Imports too contracted during the month by 7.61% to $37.9 billion, leaving a trade deficit of $15.5 billion. Weekly market trend from August 13 - August 17, 2012: 1. Trading for the week began on a firm note. Key benchmark indices edged higher on August 13, 2012, with the market sentiments boosted by data showing continuation of buying of Indian stocks by foreign funds. The Sensex closed 76 points higher while the Nifty surged 28 points, its highest closing level since 15 March 2012. 2. On August 14 2012, key benchmark indices edged higher after the monthly inflation fell to the slowest pace in nearly three years in July 2012, building hopes that the central bank will find more space to ease monetary policy and revive industrial growth that has slumped largely due to high interest rates over the past couple of years. The Sensex ended at 17728.20, up by 94.75 points while Nifty closed at 5380.35, up by 32.45 points. 3. The stock market remained closed on Wednesday, August 15, 2012, on account of India's Independence Day. 4. On August 16, 2012, the Indian equities broke 2-day's rising trend and closed the trading session in the negative terrain as investors pared expectations of further quantitative easing by the US Federal Reserve following encouraging US economic data. The Sensex shut shop at 17657.21, down by 70.99 points while the Nifty fell 17.40 points to close at 5362.95. 5. Key benchmark indices eked out small gains in choppy trade on August 17, 2012, due to stability in global markets on hopes of easing Eurozone debt crisis after German Chancellor Angela Merkel's support to ECB President Mario Draghi's announcements in last ECB meet. The Sensex settled with marginal gains of 34 points at 17,691 and the Nifty gained 3 points to close at 5,366. Focusing on the other headlines for the week, the Prime Minister's Economic Advisory Council ( PMEAC) headed by Dr. C Rangarajan, on August 17, 2012 projected a 6.7% GDP for 2012/13. The GDP is projected to come in at 6.7% for 2012/13 due to the impact of weak monsoon on agriculture and the current reservoir storage position in 2012/13, PMEAC said in a statement. PMEAC added that deficient monsoon will likely have an adverse impact on the prices of primary food items. PMEAC has forecast inflation rate to be within the range of 6.5% to 7% at the end of 2012-13. The major news this week was the Comptroller and Auditor General of India ( CAG) report on allocation of coal blocks, aviation and mega power projects which rendered huge undue benefits to select companies that was tabled in the Parliament on August 17,2012. The Congress-led UPA government responded aggressively to the three reports of the CAG, which accused it of pursuing policies that conferred benefits upon private companies while depriving the exchequer of revenue. The government fielded two ministers-minister of state V Narayanswami and minister for coal Sri Prakash Jaiswal-to rebut the CAG findings that alleged a mind-boggling gain of over Rs2 lakh crore to private companies as a result of the government's failure to auction coal mines after 2004 and alleged deficiencies in the privatisation of Delhi Airport in 2005. Global indices: Among the global markets, seven indices closed on a positive note baring Hang Seng which fell by 0.1% and Shanghai Composite which slipped 2.49%. Top gainers: Nasdaq jumped by 1.84%, CAC40 gained by 1.54%, DAX100 advanced by 1.39%, Dow Jones surged by 0.51%, Nikkei gained by 0.35%. Sectoral and stock screening: Among the 13 sectoral indices nine sectors closed the week on a positive note while remaining four sectors closed in the red zone, Top gainers - BSE Oil&Gas jumped by 2.29%, BSE Auto gained by 1.8%, BSE CD surged by 1.75%. Top losers- BSE Metal declined 1.83%, BSE Power slipped 1.09%, BSE FMCG fell by 0.41%. Looking at the 'A' group stocks, the top three gainers of the week were United Spirits which was up by 11.86%, United Breweries up by 10.73% and Wockhardt up by 9.08%. The top three losers of the week were Jain Irrigation slipped by 9.74%, Indiabulls Fin Serve down by 8.69% and Hindalco declined by 7.21%. FII/MF activity: The foreign institutional investors (FIIs) have been the net buyers in Indian stocks to the tune of Rs776.90 crore, the domestic investors bought Indian shares worth a net of Rs113.10 crore during the week till August 16, 2012. Market Outlook: The market may consolidate in a truncated week ahead amid lack of major triggers in the near-term. The progress of monsoon rains will be closely watched next week as well. The monsoon rains--which make up around 70% of India's annual rainfall--are crucial to the nation's agriculture sector and broader economy. Finance Minister P. Chidambaram will reportedly review the performance of public sector banks (PSB) on August 18, amid slowdown in economy and concerns over rising bad loans. The Indian stock markets will remain closed on first trading day of next week that is Monday- 20 August 2012 on account of Ramzan Id. An India-Mauritius joint panel will discuss a series of proposals to review the double taxation avoidance treaty between the two nations on 22-24 August in Mauritius. On the global front: The Greek Prime Minister Antonis Samaras is set to meet German Chancellor Angela Merkel in Berlin on Friday, 24 August 2012 to stretch the implementation of new austerity measures over four years rather than the two years agreed as part of second bailout for Greece. Federal Reserve Chairman Ben Bernanke is scheduled to talk on 31 August 2012 at the Kansas City Federal Reserve Bank's annual symposium in Jackson Hole, Wyo.