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.

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.