13th September, 2013 : Comments by Amar Ambani, Head of Research, India Infoline
Friday the 13th…Indices flatten after choppy trade
It was a choppy day of trade with global cues mostly lower. The action seemed to be more outside the market with attention on the announcement of Narendra Modi as BJP’s prime ministerial candidate expected later in the day.
Given the cautious situation in the market after a recent rally, investors chose to ignore better than expected July industrial production data and CPI date. The country’s industrial production, which declined for the last two months, saw a growth of 2.6% for the month of July following an improvement in the manufacturing and power sectors. The Consumer Price Index based inflation also moderated to 9.52% in August from 9.64% in July, following a fall in inflation for most items, excluding vegetables. However, for urban areas, CPI-based inflation rose to 10.32% in August from 10.26% in July. For rural areas, it fell from 9.14% to 8.93%.
India’s economy is expected to grow 5.3% this fiscal year, the prime minister’s economic advisory panel said on Friday, sharply lower than an earlier estimate of 6.4% but higher than the previous year.
Coming back to today’s trading session, the BSE realty, power, capital goods and auto index were among the major gainers. Even the BSE mid-cap and the small-cap index rose by 0.6% each.
On the other hand, BSE consumer durables, IT and the telecom index were among the top laggards.
Finally, BSE Sensex closed at 19,732 down 49 points, while NSE Nifty closed flat at 5,850.
How would the market fare in the coming week? Amar Ambani, Head of Research at IIFL says, “In the near term, Nifty is expected to consolidate between 5,750-5,990 following the recent run up.” With not so encouraging job creation data, the QE3 tapering by US Fed is expected to be modest. Back home, the new RBI governor Mr. Raghuram Rajan has started his tenure with a bang exhibiting a strong intent to liberalize the banking sector. However, monetary policy outlook remains uncertain amidst high retail inflation, anemic growth and volatile currency.
In most likelihood, RBI would keep the repo rate unchanged and announce incremental measures to stabilize the currency. We also expect the RBI to rollback the liquidity tightening measures announced in July in the next couple of months.
HCL Tech, Ultratech Cement, ITC, Tata Steel, ICICI Bank, Infosys, HDFC Bank, HDFC and Bharti Airtel were among the major laggards.
On the other hand, BHEL, DLF, Axis Bank, PNB, Reliance Infra, JP Associates, Coal India and LT were among the top gainers.
The advance-decline ratio favoured the bulls. On the BSE, 1357 stocks advanced against 1033 declining stocks, while 166 remained unchanged.
The INDIA VIX was down at 5% at 28.29. It hit a day’s high of 29.71 and low of 28.17.
In important political development, Narendra Modi is set to be named as Bharatiya Janata Party’s Prime Ministerial candidate. According to reports, LK Advani informed Sushma Swaraj and Rajnath Singh that he will not be interested in working for the party if Modi is projected as the party’s prime ministerial candidate for the 2014 Lok Sabha elections.