After rising smartly last week, the week gone by saw the Sensex/Nifty attempting to move higher. They however found resistance at the 17004/5099 levels and slid lower. The selling pressure intensified in the last two sessions of the week as the bears got the upper hand. W-o-W, while the Sensex lost 3.83%, the Nifty lost 3.63% over the same period. Market breadth was negative in two out of the four trading sessions of the week.
Key events
Global Markets
U.S. government reported that the number of people filing for initial unemployment benefits fell to a 9-month low of 381,000 in the latest week. Wholesale inventories for the month of October came in higher-than-expected at 1.6%. U.S. consumer credit rose by $7.7 billion in October, or 3.7% an annual rate, the Federal Reserve said. The trade deficit probably widened in October as a strengthening U.S. economy helped drive up the nation's import bill while exports cooled from a record high. The gap grew to $44 billion from the prior month's $43.1 billion shortfall that was the smallest this year.
European Central Bank took steps to revive the ailing European economy and ease credit conditions for troubled EURO zone banks. But ECB president Mario Draghi offered no indication that he is willing to intervene aggressively in the bond market, stressing that the onus is on European governments to resolve the debt crisis. China's inflation reached a 14-month low and industrial production rose less than forecast, bolstering the case for more stimulus measures to shore up growth in the world's second-largest economy. Japan's economy grew less than the government's initial estimate last quarter as companies reduced investment on concern overseas demand was stalling. Gross domestic product increased at an annualized 5.6 percent in the three months ended Sept. 30.
The European statistics agency, Eurostat, estimated that eurozone economy grew 0.2% in the third quarter.
S&P said it might also cut the AAA rating of Europe's bailout fund. The fund needs that top rating to cheaply raise money, and losing it would mean it would cost billions more to fund bailouts.
Indian Markets
India's exports grew by 33.2% to $192.7 billion in the April-November period of the 2011-12 financial year. The country's imports also rose by 30.2% to $309.5 billion during the period, leaving a trade gap of $116.8 billion. India's manufacturing sector expansion slowed in November as factory output grew at its slowest pace in nearly three years although export demand should provide some cheer for factories. HSBC Markit India Manufacturing PMI fell to 51.0 from 52.0 in October, but has stayed above the 50 mark that divides growth from contraction for 32 months. Food inflation declined to 8% in the week ended November 19 from 9.01% in the preceding week. Inflation in the Primary Articles group fell to 7.74% in the week under review, from 9.08%. Inflation in the Fuel & Power group stood at 15.53% in the week ended November 19 versus 15.49% in the previous week.
India's services sector expanded in November for the first time in two months as new business accelerated despite persistent inflationary pressures. HSBC Markit Business Activity Index -- based on a survey of around 400 firms -- stood at 53.2 in November.
Outlook of the week starting 19/12
Looks like we are toast. And also looks like this new year party would be all about how we have lost money for good. Well as with all disaster movies that show crises after crises hitting the protagonist and finally victory and well earned at that; I am sure that just on the other side of 2011 there will be a strong recovery we would all be proud of. Asides, for the next couple of weeks, particularly week starting 19/12 I would imagine that we are hitting the slowness in the scheme of things. General lethargy to trade and look at the markets. People would look at an alibi to postpone purchases of stocks and consequent low volumes.
This is actually a good time to cherry pick in the large cap names. Nice time to have them all, at a price that you have been waiting for. Remember, just like all good things come to an end; bad things DO come to an end to. So stock up as always said, till stocks last.
Sources:
HDFC Securities Weekly wrap of the Market
Right Horizons Equity Desk for Outlook for the coming week
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