Market continued its choppiness during the week ended 7th June 2013 and closed sharply lower on profit booking as the Indian rupee weakened further.
There are concerns that rising yield in the US would cause flight of foreign institutional investors (FII) fund from Indian equities and bonds back to the US as concerns of partial stimulus rollback in the US increased and this has caused some bit of pressure on the Indian indices during the past several days. Markets across the globe witnessed volatility ahead of the key US nonfarm payroll data. The data came in ahead of expectations and that caused rally in the US indices yesterday.
During the week under review the benchmark nifty fell 104.95 points to close at 5881 on Friday. The nifty future of the June series closed at 5895.20 (14.20 points premium to the underlying) on Friday. In the futures and option (F&O) segment the trend was that of long unwinding both in the index and stock futures,
while the nifty 5800 and up strike call option witnessed aggressive writing indicating that there is pressure for the benchmark in the days ahead.
Worries of global liquidities getting dried out if the US Fed rolls back its bond buying programme and the inaction by the Bank of Japan last week to stabilize its bond market caused sell off in global equities during the beginning of the week. The Indian market too fell following global cues but poor Index of Industrial Production (IIP) numbers that came out on Thursday accentuated the correction on that day. Nevertheless expectation of interest rate cut by the RBI due to poor IIP started building up and that caused major pull back on Friday, although for the full week the market closed lower than the previous week. Overall for the week the benchmark nifty fell 72.60 points to close at 5808.40 points .On Friday the nifty rose 109.30 points. The nifty future of the June series closed at 2.45 point discount to the underlying at 5805.95 on Friday.
In the futures and option (F&O) segment the index and stock futures witnessed aggressive shorts, while on Friday it witnessed short covering ahead of the RBI policy meet on Monday. During the full week the nifty future of the June series added 33.14 lakh shares in open interest (OI) mostly on the short side to take its total OI to 1.56 crore shares.
Global developments during the week ended 21st June 2013 caused the Indian indices to witness sharp fall as foreign institutional investors (FII) turned net sellers on concerns of liquidity dry up and economic slowdown. The rupee continued to fall and closed at all time low levels against the dollar and this threatens to further complicate the task at hand of RBI. Expectations of rate cut by RBI took a back seat during the week under review due to rupee fall while concerns of further increase in current account deficit (CAD) caused some jitters in the market. Globally the market witnessed steep fall following Fed Chairman Mr Ben Bernanke's statement that the central bank would start reducing its bond buying programme to end it completely by the middle of CY2014.
During the week under review the benchmark nifty fell 140.75 points to close at 5667.65 on Friday while the nifty future of the June series closed at 5661.85 (11.75 points discount to the underlying). The June nifty future added 56.15 lakh shares in open interest (OI) as shorts got buildup during the week, to take its total OI to 2.13 crore shares.
Easing global concerns and reform announcement in India's oil & gas sector helped the benchmark during the week ended 28th June 2013. After opening lower during the beginning of the week on concerns of liquidity in the Chinese banking system and economic slow down there, the global market bounced back sharply following US consumer spending numbers, employment benefit claim and housing data which came in better than estimated. The Indian rupee closed at its all time low on Friday as Foreign Institutional Investors (FII) continued to pull back their money. But Thursday and Friday were different. Assurance by Chinese government that it will manage its liquidity concerns helped the short term lending rates there and that in turn helped the global markets, but the rupee continued its slide in India. However the announcement by the Indian government to increase the domestic gas price considerably helped the market on Friday.
The rupee rallied along with the stocks and the recovery perhaps was sharp. The benchmark nifty for the last week rose 174.55 points to close at 5842.20 on Friday. The surprisingly lower CAD numbers for the fourth quarter that came out also helped the market. In the futures & option (F&O) segment the overall rollover to the July series was weak, while sharp rally on Thursday & Friday might have caused severe short covering in the index and
stock futures.
The results of private surveys providing indications of the strength of factory and services activity for the month of June 2013 will catch investors' attention in the coming week. Markit Economics will unveil HSBC India Manufacturing PMI, which gauges the business activity of India's factories, for June 2013 on Monday, 1 July 2013. HSBC's India manufacturing PMI, eased to 50.1 in May 2013 from 51 in April 2013 led by a fall in output and a slowdown in new orders. Markit Economics will unveil the result of a monthly survey on the performance of India's services sector for June 2013 on Wednesday, 3 July 2013. The HSBC Markit Services Purchasing Managers' Index rose to 53.6 in May from 50.7 in April.
On global front, China's HSBC Manufacturing PMI for June 2013 due on 1 July 2013 and HSBC Markit Services Purchasing Managers' Index for June 2013 scheduled on 3 July 2013 will also be closely watched. China's flash HSBC Purchasing Managers' Index fell to a nine month low of 48.3 in June from May's final reading of 49.2. Chinese government's official PMI for June 2013 is also due on 1 July 2013. Global markets had witnessed selling pressure recently on concerns about China's economic and financial stability.
