Market Watch Sep 21 - Sep 25

Market Analysis

After stellar gains for the last two consecutive weeks (of 3.7% and 2.9%), the Indian markets lost some steam this week, logging in a loss of 0.3% for the week. But this comes in the backdrop of much higher declines in almost all other major indices around the world. The benchmark BSE Sensex hit a 16 month high on Tuesday, but subsequently lost the momentum to finally close the week on a marginally negative note. The Indian markets were under pressure from the weak cues emanating from the global markets. The markets closed at 16693 on Friday down by 48 compared to the last week. The broad based Nifty also closed lower compared to the last week at 4959 points.

Macro Economy

The rate of inflation more than trebled in the second week of September from its previous level as prices of daily essentials and raw food items appreciated sharply from levels prevailing a year ago. Inflation stood at 0.37% for the week ended September 12, up from 0.12% a week before when it had moved into positive territory after a space of 13 weeks. Overall, prices of raw food items increased 15.64% yearon-year during the week

under review, driven mainly by a 44.85% rise in vegetable prices. Potatoes led the list of raw food items that turned costlier at 75%, followed by pulses at 21% and rice at 17%. Processed food items continued their rising trend, with prices rising 12.68% from the year-ago level. Sugar turned dearer by 43.35%. From a weekly perspective, however, the rise in prices of

essential food items does not appear sharp except for freshwater fish which became costlier by 11%. Other food items rose in the range of 1-2% or saw a decline. The rise in inflation for the week comes despite a high base of 12.42% a year ago. Though at 0.37%, inflation does not seem too high as the rate of price rise is measured only on a yearly basis in India, the inflation rate has already crossed the psychologically important 5% mark for this fiscal so far. Rupee become marginally stronger compared to dollar from last week and was trading at Rs. 48.47 per dollar. The yellow metal on the other hand shed some shine to end at Rs 15800 per 10 grams.

Sectoral Performance

Coming to the performance of sectoral indices in India, the various indices had their fair share of both losers and gainers. The pack of gainers was led by pharmacy stocks, with the BSE-Healthcare Index ending higher by about 7.6%. The pharmacy stocks were followed in their gains by stocks forming part of the realty and FMCG sectors. Amongst the losers during the week were the BSE-Metal and BSE-IT which ended lower within a range of 3% to 3.5%. This is almost the opposite of last week, when the metal and IT spaces had performed well, and the pharma and FMCG sectors had seen comparatively much lower gains.