Market watch - Sep 14 to Sep 18

Market Analysis

Recording their consecutive weekly gain, the Indian markets were one of the top gainers amongst key markets worldwide. The benchmark index BSE Sensex ended the week higher by around 2.9% to close at 16741 points. Lesser worries about the shortfall of monsoon and high FII inflows (net investment of Rs 53 bn. during the week) are believed to be the key

reasons for the same. In fact, the net FII inflow on Friday i.e. September 18 itself stood at about Rs 27 bn.

Macro Economy

India's wholesale price index (WPI) came in a tad below the zero mark in the year to September 5 at 0.08%. This was little changed from the previous week's fall of 0.12%. The general consensus is that the figure is likely to turn positive in the coming weeks. This is not very surprising considering that crude prices have rebounded from their lows and that

deficient monsoons have hampered crop production thereby inflating food prices. The food articles index rose 14.8% in the year to August 29 and the CPI over the last year has stayed stubbornly high. It may be noted that the RBI has revised its WPI forecast for the end of FY10 to 6% from 5% predicted in July. If that turns out to be true, the likelihood of RBI

putting the brakes on its expansionary monetary policy cannot be ruled out. Rupee closed at 48.93 per dollar. The yellow metal was trading at Rs. 16045 per 10 grams.

Sectoral Performance

Coming to the performance of sectoral indices in India, barring stocks from the oil & gas space, buying activity was witnessed across sectors. The pack of gainers was led by auto stocks, with the BSE-Auto Index ending higher by about 8%. It was followed by stocks forming part of the metal and IT sectors. While the BSE-Metal Index ended higher by 7%, the BSE-IT Index ended higher by 4%. Amongst the lowest gainers during the week, were

the BSE-FMCG, BSE-PSU and BSE-Healthcare indices which ended lower within a range of 1% to 2%. The BSE-Oil & Gas Index ended the week lower by 1.5%. However, during the previous week, this index ended higher by about 5%.

Global Cues

As far as global markets are concerned, most of the Asian markets ended the week lower, while the Americas and Europe recorded gains. Leading the pack of gainers was Brazil, which recorded a gain of 4%. UK, France and US followed suit recording gains of 3%, 2.5% and 2.2% respectively. Singapore, China and Japan ended the week on a negative note, down

by about 1% each.