Weekly Market Wrap..Nifty rallying further to end with gains for the fifth consecutive week.

The week gone by saw the Nifty rallying further to end with gains for the fifth consecutive week. The Nifty gained 2.33% W-o-W. Market breadth was positive in four out of the five trading sessions of the week. The biggest gainers from the CNX 500 were STC India, KSK, Aban, Tata Global and Prestige. The biggest losers were Varun Shipping, Sterling Bio, FDC and Tata Coffee.

Indian Markets

Equity benchmarks maintained their upward momentum during the week, rising 2% over last Friday. A glance at the events and developments that ruled sentiment during the week.

• December exports up 6.7% to $25 billion, trade deficit (exports-minus imports) for April-December soars to $133 billion, and seen touching $160 billion by March.

• Core sector growth in December at a tepid 3.1%, indicating that the recovery in the November index of industrial production may have been an aberration.

• Finance ministry advisor Kaushik Basu sees inflation for FY12 between 6.5-6.8%, says economy is turning around.

• Rupee continues to rise against the dollar, hits three month high of 48.68, driven by strong FII inflows, weakness in dollar relative to other economies.

• Growth in household savings declines to 13.7% in 2010-11, compared to 21% the previous fiscal, mainly due to high inflation.

• Purchasing Managers Index for manufacturing hits 7-month high of 57.5 in January.

• Liquidity pressure persists despite cut in cash reserve ratio, RBI resorts to open market operations to infuse liquity.

Policy Changes:

The Supreme Court on Friday cancelled 122 2G telecom licences issued after January 2008, saying that norms were flouted while awarding them to companies. Uninor, Loop DB Etisalat, Sistema Shyam among worst affected. No clarity yet on refund on licence fee.  The spectrum available as a result of the cancellation of the licences, will be auctioned, earning much needed revenues to the cash-strapped government.

The government revised the economic growth rate for 2010-11 financial year slightly down to 8.4% from the earlier estimate of 8.5%.

Exports grew by merely 6.7% to $25 billion in December 2011 compared to the same month last year due to demand slowdown in the western markets of the US and Europe.

Key Sectoral Movement

All the sectoral indices except Consumer Durables and Capital Goods ended in the green, which lost 2.8% and 1% respectively. The top gainers were Realty, Auto, IT and Bankex, which ended higher by 4.8%, 3.7%, 3.3% and 3.2% respectively.

Outlook of the week

With the markets moving up further for the fourth consecutive session, the underlying trend continues to remain up. Immediate upside targets for the Nifty in the coming week are at 5360-5380. The current short term uptrend would reverse with a Nifty close under 5076.

Sources-moneycontrol, hdfcsec

Morning Be!!........The Sensex opened flat on the last day of the week after rallying for consecutive three sessions

Indian Markets

The key Indian stock indices have opened on a sedate note and are trading with slim gains in early minutes of trading, as investors assess the wider impact of the Supreme Court's verdict on the 2G scam. While the FII inflows remain robust, there are concerns about the Government's ballooning budget deficit. Sentiment is also edgy ahead of tomorrow's lower court ruling on P. Chidambaram's alleged role in the 2G scam.

The Government’s already scarred image has taken another knock in the form of an adverse Supreme Court verdict which could make matters difficult for the Congress in the crucial UP elections.

Markets could be edgy today as investors await a lower court’s order on the alleged role of P. Chidambaram in the 2G mess. The court is set to deliver its verdict on Saturday.

The SC ruling has also thrown up a few tricky questions that could continue to haunt the telecom sector for a while. Let’s hope that the damage to investor confidence is limited.

On the global front, things have turned quiet ahead of Friday’s US monthly jobs data. While French and Spanish debt auctions went off well a deal on Greece’s debt recast remains elusive.

Just like the RBI governor, his US counterpart, Ben S. Bernanke, has raised a red flag over its government's ballooning budget deficit.

Global Markets
On the global front, Asian markets are cautious as investors await the release of monthly US jobs data on Friday and talks on the proposed debt swap in Greece remain inconclusive. The US markets finished mostly flat overnight while their European counterparts managed moderate gains.

Currencies
Indian Rupee climbed to a 3-month high vis-?-vis the US Dollar after a private report showed the nation?s manufacturing expanded at the fastest pace in eight months. The currency rose for a third day, strengthening past 49 per dollar for the first time since November 4, 2011.

Commodities
The metals ended mixed on the LME with Nickel and Zinc gaining marginally by 0.1% while Aluminium and Copper fell by 0.6% and 0.5% respectively. Oil for March delivery slipped $1.25 cents to end at $96.36 a barrel.Gold futures for April delivery added $9.80 to $1,759.30 an ounce.

Outlook
Today, we expect the Indian Markets to open flat to marginally in the green and trade in a narrow range. With the markets moving up further for the third consecutive session, the underlying trend continues to remain up. Immediate resistance for Nifty is at 5300, while support is at 5200. Among the sectoral indices, IT, Metal & Capital Goods continue to look good, while Healthcare & FMCG could underperform.
Sources-: hdfcsec, india infoline

Time for the second line?

Today the trade was simple and straight. The ones which did not run for many days are now participating in the rally. This might be good and bad at the same time. Good because that makes the rally a very broad based one, bad because now each and everything seem to be running, whether it merits increase or not. The likes of Ambuja, DLF, ACC, GAIL & Sesa Goa were amongst the top gainer for the Nifty stocks. Now the cement pack has been very quite on the back of subdued cement prices and consequent flat or lower earnings; so where is the need to run away to glory?

The global markets running with confidence lends more credibility to the continued terrific performance that the indices are displaying, but now I am getting a feeling that it is moving too fast and too furious for comfort.

If that were the case, then we are in for trouble ahead since YTD we are now coasting at around 15% or thereabouts on the Nifty Index and if we keep moving this way then in a few weeks we would be hitting 19k levels very soon. And then we will need to pull out money fast. What might be interesting is that fact that in all this, only the outsiders would have made money. Since the FII’s are pumping the money and the domestic guys are still sitting on the sidelines. So we could be missing the stellar returns yet again and sound like being in catch 22. Again!

February 2012 would be very interesting indeed. If this gallops, then we make superb returns, if we return then the question would be, are we returning to sub 4800 levels? This market still would not le us sleep easy. Keep eyes wide open, steep curve ahead.

Morning Be!!!.........Indian stock indices have continued their good run of the past two sessions

Indian Markets

The frontline Indian stock indices have continued their good run of the past two sessions in early morning trade, as investors cheer encouraging manufacturing PMI data from across the globe. Also, FII inflows into Indian financial assets continues to be robust following a spectacular January rally. Globally too, risk appetite seems to be back amid optimism about US and Chinese growth and hope of a resolution to the euro area credit crisis.

The bullish undercurrent in the Indian market is in line with the ongoing global 'risk on' rally as market players gradually resume their shopping spree in equities after last year's debacle. Growth in the US is holding steady despite the eurozone debt crisis while China too looks likely to avoid a hard landing. As far as the euro area is concerned, there are still fears of the fiscal mess stretching longer as Greece struggles to seal a deal over its debt restructuring.

The rising market brings back memories of 2007. Risk appetite is back on the table as global liquidity, unlocked by easy monetary policies, chases high returns after a tumultuous 2011. The trigger for Wednesday’s worldwide ‘risk on’ rally came from upbeat manufacturing data.

Back home, auto sales for January and the manufacturing PMI have further stoked optimism about a gradual revival. Results have been mixed but most players are probably looking ahead to FY13.

Such powerful is the sentiment that lingering problems are being overlooked. The question is whether the current upswing is sustainable? Won’t take long for fear to return and some cooling is a given after a strong rally. So, ride the bullish wave as long as it lasts.

Global Markets

A couple of other reports also underscored the resilience of the US economy in the face of the eurozone fiscal malaise. While China’s manufacturing PMI reports were mixed few economists see a hard landing there.

Given the encouraging global backdrop, the start today is likely to be positive. Asian markets are on a firm wicket. US stocks shook off their recent lethargy to end smartly up. European indices too joined the party.

Currencies

The Indian Rupee hit a near three-month high on Wednesday vis-a-vis the US Dollar, clawing back all early losses, supported by robust dollar inflows, local share gains and a recovery in the euro.

Commodities

Among the metals, Aluminium lost 1.9% while Nickel fell by 1.3%. Copper and Zinc ended lower by 1.2% each. Oil for March delivery fell 87 cents to end at $97.61 a barrel. Gold futures for April delivery rose $9.10 to close at $1,749.50 an ounce.

Key events to watch for today

India - WPI

Outlook

Today, we expect the Indian Markets to open up and then later during the day, it could take cues from Dow Futures & European markets for any further direction. With the markets erasing almost all its losses, the underlying trend continues to remain up. Immediate resistance levels for Nifty are at 5275 & 5230, while support levels are at 5159 & 5125. Among the indices, Metals, Capital Goods & Auto could outperform.

Sources- hdfc security, india infoline

Morning Be!!......Indian stock indices are trading with minor losses in early morning trade

Indian Markets

The main Indian stock indices are trading with minor losses in early morning trade, stepping back slightly after the previous session's stellar gains and a fantastic start to the year. The undertone is cautious after the fiscal deficit reached more than 90% of the FY12 goal. Also, data from the US showed some softening amid ongoing worries about the eurozone. China's manufacturing PMI reports have been mixed as well. South Korea has swung to its first trade deficit in two years. Australia's home prices fell the most on record in 2011.

Shares of HDFC Ltd. are down in a sluggish market in early morning trade after Carlyle reportedly sold a big chunk of its stake in the housing finance major through a block deal.

More manufacturing PMI reports will be out later in the day from across the globe. The Indian market will also react to the latest trade data apart from the monthly auto and cement volumes.

Talking of fiscal conditions, India’s budget deficit has almost reached the year-end projection. The external balance sheet too is showing some signs of stress. movement in currency and commodities will be crucial going ahead. One has to see how the Government tackles these issues once the political compulsions of state elections subside.

US and European Markets

January offered up an apology to discouraged investors. Unlike 2011, when markets spiked and sunk several hundred points each day but ultimately closed out the year relatively flat, all three indexes mostly climbed higher throughout the month with occasional dips

Eurozone troubles are a big overhang at the moment. The deal on the proposed restructuring of Greek debt remains elusive. Negotiations between Greek government and private bondholders are likely to end today. Portugal is feared to be next in line for seeking writedowns on its debt load. Italy and Spain too have crippling debt burdens. In short, the world economy will do a whole lot better if Europe manages to come out of the current mess largely unscathed.

Asian Markets

Today, barring Strait Times, which is trading marginally lower by 0.1%, all the other Asian indices are trading in the green with Hang Seng & Shanghai trading up by 0.4% & 0.2% respectively. Nikkei & Kospi are trading higher by 0.3% & 0.6% respectively, while Taiwan is trading in the green by 0.3%. SGX Nifty is trading lower by 16 points over Tuesday?s close.

Currencies

The Indian rupee surged against the US Dollar on Tuesday, as local stocks jumped. Foreign funds are investing aggressively into the local stocks, which are attractively valued.

Commodities

Among the metals, Nickel was the only loser falling by 0.8% while Aluminium gained the most (2.4%). Copper and Zinc ended higher by 1% each. Oil for March delivery dropped 37 cents to $98.39 a barrel. Gold futures for April delivery rose $7.40 to $1,740.40 an ounce.

Outlook

Today, we expect the Indian Markets to open flat to marginally in the negative. Later during the day, it could take cues from Dow Futures & European markets for any further direction. With the markets erasing almost all its losses seen on Monday, the underlying trend continues to remain up.

Immediate resistance for Nifty is at 5250, while support is at 5125. Among the indices, Banks, Realty & Auto are looking good and could outperform.

Source- hdfc security, india infoline

Last ball six!

The Indian cricket team might have got a drubbing of 4-0 in the recently concluded Aussie test series, but the Indian stock market investor can take solace from the fact that January 2012 has ended in a classic Shewag style last ball six with the market gaining 2.2% in the last trading day for the month. The lead was taken by none other than Shewag like ICICI Bank which posted some stellar results in the Q3FY12 earnings release that happened today.

This couple with support from other bigges such as RIL and HDFCBank, SBI and other key banking players aided the stellar closing for the day. With this, now the Nifty Index closed January 2012 with a 12.5% returns for the month, amongst it’s top monthly performance for a long time. And what a time to deliver it. To put things into perspective. 2011 January the Nifty Index closed with huge 10.58% negative and that had just started the leak which transformed into a huge flood and by December 2011 we have a 25% hole in the returns for that year.

With this strong pull back, as mentioned in the earlier rants, the tone for the year 2012 has already been set; so if the global macro situation just holds on a bit then we could end up with decent returns on the ticker. In the worst case, we could end up with single digit returns, which should pave way for a very strong foundation for a bull run over the next few years.

So now all booking are open for tickets for the February 2012 show.

Morning Be!!....Indian stock indices have advanced in early morning trade, with the NSE Nifty reclaiming the 5100 mark and the BSE Sensex crossing 17,000.

Indian Markets

The frontline Indian stock indices have advanced in early morning trade, with the NSE Nifty reclaiming the 5100 mark and the BSE Sensex crossing 17,000. The undercurrent is upbeat as investors focus on gains for other Asian markets and reports suggest that Most EU leaders have agreed to strengthen a financial firewall against the debt crisis. The rebound today has come after Monday's big selloff where the Nifty and the Sensex lost 2% each.

Major Results Today:

ICICI Bank, PNB, NMDC, Siemens, Titan, Crompton Greaves, TVS Motor, Dabur India, IDBI Bank, Central Bank of India, Jagran Prakashan, Mahindra Holidays, Century Textiles, Shoppers Stop, Union Bank of India, Aban Offshore, City Union Bank, Delta Corp, PTC India, HCL Infosystem, Firstsource Solutions, Subex, KEC International, Blue Dart, IPCA Labs, Financial Technologies, Berger Paints, DCM Shriram Consolidated, Usha Martin, Welspun Projects

US & European Markets

U.S. stocks recovered most of their lost ground on Monday afternoon but struggled to pull out of the red as concerns over Greece continued to weigh on the market. Stocks started the day down about 1% after the weekend came and went without Greek leaders reaching an agreement on a debt-relief deal. But as the trading session wore on, the major indexes trimmed most of those losses.

Dow Jones finished 7 points lower, or 0.1%. Earlier, the blue chip index had declined 131 points. S&P 500 lost 3 points, or 0.3%, and Nasdaq slumped 5 points, or 0.2%.

European stocks extended losses due to uncertainties whether the meeting will bring viable solutions to the debt crisis in the area. Britain's FTSE 100 fell 1.1%, DAX in Germany dropped 1% and France's CAC 40 lost 1.6%.

Asian Markets

Today, amongst the Asian markets Strait times & Shanghai Composite are trading in the red, down by 0.4% and 0.2% respectively. Nikkei is trading up by 0.3%. Hang Seng & Kospi are up by 0.7% and 0.8% respectively. The Taiwan markets too are up by 1%.SGX Nifty is trading higher by 38 points.

Currencies

The Indian Rupee retreated from a near three-month high on Monday, weighed by weak equities, US Dollar demand from a local steelmaker and oil importers. Traders also awaited a debt deal between Greece and its private creditors for further clues on the local currency.

Commodities

Among the metals, Zinc and Copper fell by 3.6% and 2.5% respectively. Aluminium and Nickel ended lower by 1.5% each. Oil for March delivery slipped 78 cents to settle at $98.78 a barrel. Gold futures for April delivery fell $1.00 to settle at $1,734.40 an ounce.

Key events to watch for today

India : CPI (Industrial Workers)

Outlook for Today

Today, we expect the Indian Markets to open in the green and later witness some profit booking at higher levels during the day. Immediate supports to watch are at 5050 & 5000 levels while the immediate resistance levels are 5162 & 5200. Among the sectors, FMCG & Health Care may relativly fall by a lesser magnitude if markets correct from a higher levels during the day.

Sources- hdfcsec, India Infoline

Too hot to handle!

When you hit the peddle to the floor the vehicle moves fast and when it gains momentum you ease on the peddle. When you don’t do that, keep the pedal to the floor for an extended period of time, the vehicle keeps picking momentum until a point where you start to lose control. Over the past 30 days the market kept taking the momentum and did not ease one bit, so today’s fall was expected and also in a way good for the market. Had the momentum taken the market’s to dizzy heights, then the fall could be been that much sharper and painful.

So the momentum has stuck on, I would imagine and the pull back could be a few more percentage points, however, looks like we would be ok in terms of corporate performance since now corporate are increasingly getting into a belt tightening mode to protect margins and profits. So earnings should stabilize this year. This period therefore is extremely crucial for us to take selective entry into the market with every passing correction.

When the positive momentum starts to build in from a structural point of view, then these corrections will become very short and small. We are yet slightly away from that point. At this moment it would look like we are heading into 4000 points on the Nifty. Actually, I would imagine we would never get there. The low point has occurred sometime last year and could be tested, if at all, and then head higher gradually from here. Ultimately, there is no place else to go and this would be evident from each passing quarter. Of course it would be extremely painful to experience the same.

Today was particularly notorious for performance from BHEL. Reporting disappointing numbers earlier, the stock did face some stick in the hands of investors. If today belonged to BHEL, will it be SBI tomorrow, since the bank reports earnings. And I would be the last person to be surprised if it reports ugly earnings. According to me, the surprise element was taken away, when earlier this month the chairman indicated that the KFA debt is essentially an NPA and that there are scores of such hidden ugly loans in the balance sheet. So we have no choice but to wait for the can of worms to open tomorrow. In all the doom lies opportunity. Only if we spot it and sit tight. Indians that we are, we are never accustomed to sit tight.

At least, sleep right, good night.

Morning Bell.....The Sensex opened 150 points lower to kickstart the week following weak global cues

Indian Markets

The top Indian equity indices have lost some ground in early minutes of trade. Investors are taking a step back after this month's strong rally while the undercurrent remains cautious ahead of today's EU leaders' summit. Also, lower-than-expected Q4 GDP growth in the US has also caused investors to be a little more guarded.

BHEL tanked 8.6% as its margin declined at 19.37% versus 22.96% YoY due to inflationary pressure and rising competition.

The Sensex was down 123 points at 17,110.63 and the Nifty fell 40 points to 5,164.65.

Major Results Today:

NMDC, Glenmark Pharma, Balrampur Chini , LIC Hsg, Indian Bank, Oriental Bank, Allahbad Bank, Corporation Bank, GMDC, Indiabulls Financial, Havells India, United Phosphorus, Kansai Nerolac, National Fertilizers, EID Parry, MCLeod Russel, Sadbhav Engineering, Punjab and Sind Bank, Bajaj Corp, ENIL, Orient Papers, HSIL, Aanjaneya, IL&FS Investment Managers, Taj GVK, Noida Toll Bridge, PVR, Ajmera Realty, Chemplast, Zee Learn, Nelcast, GHCL, Nitco, Rajshree Sugar, Amarjyothi, Electrotherm, Pansonic Home, 3M India, Ingersoll Rand, Mahindra Lifespace

US and European Markets

U.S. stocks ended mostly lower on Friday as jittery investors digested a weaker-than-expected economic growth report and as Europe's debt crisis still loomed in the background. Dow Jones dropped 74 points, or 0.6%, S&P 500 slipped 2 points, or 0.2%. Nasdaq managed to gain ground, adding 11 points, or 0.4%.

Friday's slump came as investors reacted to the government's first reading on fourth-quarter gross domestic product. The United States economy picked up speed at the end of 2011, growing at an annual rate of 2.8%, as consumers increased their spending. But the data fell short of the 3.2% forecast.

Asian Markets

Today, the Asian markets are trading in the red with Strait times & KOSPI trading down by 0.8% and 0.7% respectively. Nikkei too is down by 0.6%. Hang Seng & China is down by 0.7% each. On the other hand the Taiwan markets are up by 2.8%.SGX Nifty is trading down by 43 points over Fridays close.

Currencies

The Indian Rupee on Friday appreciated by 77 paise to close at a near 12-week high of 49.31/32 vis-?-vis the US Dollar, driven by strong capital inflows into rising local stock markets. Forex dealers said sustained dollar selling by exporters amid weakness in the U.S. currency?s value overseas also boosted the rupee sentiment.

Outlook

Today markets could open on a weak note following negative global cues and trade in a range with negative bias. The immediate resistance stands at 5250 while the immediate downside support is at 5180 & 5160. Banks, Realty & IT could underperform.

Source- hdfc security, india infoline

Headbangers Ball!

Carrying on from last week, the week gone by saw the main indices moving up further. It was the fourth consecutive week of gains for the Sensex/Nifty as they took out the intermediate highs of 17004/5099 and also closed above the 200 day EMA. W-o-W, while the Sensex gained 2.82%, the Nifty was up by 3.09% over the same period. Reflecting the positive sentiments, market breadth was positive in all the four trading sessions of the week.

Key Events

Indian Markets

India's central bank unexpectedly cut the amount of deposits lenders need to set aside as reserves for the first time since 2009 and signaled future interest-rate cuts, joining BRIC nations in shielding growth. Stocks rose. The Reserve Bank of India reduced the cash reserve ratio to 5.5 percent from 6 percent, it said in a statement in Mumbai today. The move adds around 320 billion rupees ($6.4 billion) into lenders, it said

Cotton production in India, the second-biggest grower, will be lower than earlier forecast after diseases cut yields in the states of Maharashtra and Andhra Pradesh, said the nation's textiles commissioner. The harvest may reach 34.5 million bales of 170 kilograms (375 pounds) each in the year that began Oct. 1, against 35.6 million bales estimated on Nov. 15, Textiles Commissioner A.B. Joshi told reporters in Mumbai after a meeting of the Cotton Advisory Board. India produced 32.5 million bales in 2010-2011.

The International Monetary Fund cut its forecast for global growth and warned that the European debt crisis threatens to derail the world economy. India is expected to grow 7 percent in 2012, 0.5 percentage point less than in September forecasts.

India's economic growth is weakening more than anticipated and inflation remains 'high' as the rupee's fall threatens to stoke price pressures, the central bank said, signaling it may leave interest rates unchanged. 'The growth slowdown, high inflation and currency pressures, complicate policy choices,' the Reserve Bank of India said in a report yesterday before its rate decision in Mumbai. The 'critical factors' ahead will be 'core inflation and exchange rate pass-through,' it said, adding that keeping the 'liquidity deficit' in acceptable limits is also a priority.

Outlook of the week

We would now be closing 2012 January on a firm note, irrespective what would happen in the couple of days left to close. The reason for this firm finish and the extent of the gains is not new and has been spoken a lot buy ‘pundits’ on TV. With earnings season looking decent so far, though bulk of the big names (SBI amongst them) reporting next week, it could prove very crucial. Especially for setting the tone for February 2012. My sense is that we could see a pull back of anywhere from 3%-5% due to the fact that SBI’s numbers could disappoint, also host of financial services/banks could post negative surprises. On the flip side, such a strong momentum that was set in so far, clearly warrants that we consolidate or pull back marginally and push higher over time. FY13 could prove to be a consolidation year from corporate and then we move onto higher ground with passing years.

Sources:

HDFC Securities Weekly wrap of the Market

Right Horizons Equity Desk for Outlook for the coming week