Sunday, December 8, 2013

INDIAN MARKET PERFORMANCE DURING THE WEEK 02/12/2013 to 08/12/2013

Indian markets got a sudden surge during the mid of the week that took indices higher for the yet another week. More than
economy, political developments remained in lime light for the week and traders once looked overlooking the global concern, to
emerge victorious. Though there was jubilation from the very beginning and cheering some better-than-expected macroeconomic
data, the markets started the new week and month with good gains.
Indian economy grew at a higher-than expected 4.8% in the September quarter, on the back of improvement in farm and
construction sector output, while the HSBC-PMI data, snapping its three consecutive months’ declining streak climbed from 49.6
in the previous month to 51.3 in November, mainly led by the rise in new domestic orders.
However, there was some weakness and sense of consolidation in the markets for the next two days on concern of Fed’s
tapering and ahead of exit poll results to be announced after the Delhi voting was over.
Robust US manufacturing data coupled with good readings of output, new orders, new export orders, backlogs, output prices,
and quantity of purchases, yet again fuelled fears that the US Federal Reserve may scale back its stimulus sooner than
anticipated.
Major breakthrough came to the markets on Thursday when exit poll results showed that BJP may sweep the assembly polls in
four of the five states where elections were held and encouraged investors to go for buying.
Further, final day of trade was only extension to the weekly gains for the markets as investors, in anticipation of good news,
went long on their position ahead of state assembly results on December 8 and monthly US jobs data later on Friday, which
could set expectation about the timing of any tapering in US stimulus ahead of the Federal Reserve's policy meeting in
December.
NSE Nifty rose by 83.80 points to 6,259.90 while Bank Nifty up by 566.25 points to 11,720.20, BSE Sensex gained 204.60
points to 20,996.53, BSE Mid-cap index was up by 63.40 points, while the Small-cap index up by 126.25 points, Bankex up by
633.44 points, Capital Goods up by 462.39 points, Power up by 74.47 points, Metal up by 307.66 points and PSU up by 152.58
points were the top gainers on the BSE sectoral space, while FMCG down 179.80 points and Auto down 24.35 points were the
top losers. Tata Power up by 11.19% was the top gainer on Nifty while Axis Bank up by 10.71% was another top gainer on the
Nifty during the week. Hindustan Unilever down by 5.90% was the top loser on Nifty and ITC down by 2.92% was another major
loser on the Nifty during the week.
INDUSRY & ECONOMY NEWS
The country’s GSM mobile operators have added 16.6 lakh new subscribers in rural areas in October, taking their overall user
base in such areas to 27.43 crore, which represents 0.61% growth as compared to previous month. As per COAI among all the
telecom operators, Vodafone added the maximum of 7.7 lakh new users, taking its rural subscriber base to 8.39 crore at the end
of October, following it was Bharti Airtel, which added 6 lakh new users during the month and its base stood at 8.74 crore.
Meanwhile, Idea Cellular and Aircel added 3.7 lakh and 60,000 new users to take their respective base to 6.95 crore and 2.33
crore. However, Uninor lost 1.4 lakh rural subscribers during the month, which led to a contraction in its base to 1.01 crore at the
end of October.

WORLD MARKET BEHAVIOUR DURING THE WEEK
US MARKET:
The US markets traded under pressure during the week as investors were nervous over the timing of Federal Reserve’s
decision to scale back its bond-buying program. However, Federal Reserve President stated that a tapering of the Federal
Reserve’s bond-buying program that has supported equities should be on the table in December.
The US economy expanded by a 3.6% annual pace in the third quarter to mark the fastest increase in a year and a half, but the
revised gain was fueled by the largest buildup in inventories since 1998. Additionally, manufacturing conditions improved in
November to their best level in more than two years. The Institute for Supply Management’s manufacturing index climbed to
57.3% from 56.4% in October, reaching the highest level since April 2011. US manufacturing also accelerated to a ten-month
high in November. The manufacturing PMI rose to 54.7, which was above the flash estimate of 54.3 and compared to the 51.8
reading in October. Besides, US car sales clocked their fastest pace in nearly seven years as holiday deals boosted already
strong demand. Total industry sales jumped 9% percent from November 2012 and hit an annualized pace of 16.4 million
vehicle. That’s up substantially from the 15.2 million pace set in October and the fastest pace since February 2007.
Further, the nation’s trade deficit fell 5.4% to $40.6 billion in October, as the US exported more petroleum, soybeans and
collectibles while buying foreign-made goods at a slower rate. Besides, the number of new applications for unemployment
benefits fell by 23,000 last week to 298,000, but the decline may have been skewed by difficulties in making seasonal
adjustments during the holidays. Separately, US service-sector companies expanded at a slower pace in November. The ISM
stated that its survey of purchasing managers -- executives who buy supplies for their companies - fell to 53.9% in November
from 55.4% in October. On the flip side, factory orders declined 0.9% in October to $486.9 billion, with drops for both durable
and nondurable goods. Orders for durable goods fell 1.6% in October, while orders for nondurables fell 0.2%. The shipments of
manufactured goods ticked up 0.1%.
EUROPEAN MARKET:
The European markets too remained under pressure during the week on uncertainty over when the Federal Reserve will begin
to scale back stimulus. ECB President Mario Draghi stated they are ready to take fresh policy action to support the euro zone
economy but has not yet worked out a detailed plan of which policy tool to use and when.
He also added that the ECB’s staff has raised slightly its projection for euro zone economic activity but sees inflation remaining
subdued over the next two years. The staff’s projections for inflation were revised down 0.2 points to 1.1% in 2014, while its first
forecast for 2015 predicted consumer prices rising 1.3%. A downward revision in the 2014 inflation forecasts and the subdued
outlook for 2015 had been widely expected. While October’s inflation drop prompted the ECB to cut its main refinancing rate to
0.25%, the Governing Council decided to keep interest rates unchanged despite the downward revisions. The staff’s projections
for GDP growth in 2014 were raised 0.1 point from September’s forecast to 1.1%, up from an unchanged expectation of -0.4%
this year. GDP growth for 2015 was seen recovering further to 1.5%.
Meanwhile, Moody’s Investors Service raised its outlook on Spain’s government bond rating to stable from negative, citing
progress in the country’s economic and fiscal situation. Moody’s maintained its Baa3 rating on Spain’s government bond, which
is the lowest investment-grade rating. The ratings firm cited evidence of a sustained rebalancing in Spain’s economy that
supports its view that the country’s public finances are slowly improving.
On the economic front, the euro zone’s GDP grew by a seasonally adjusted 0.1% in the third quarter, in line with expectations
and unchanged from an initial estimate. The euro zone’s economy grew by 0.3% in the preceding quarter. Year-on-year, euro
zone GDP fell 0.4% compared to a year earlier. The region’s economy shrank at an annualized rate of 0.6% in the preceding
quarter. Manufacturing activity in the euro zone expanded at a faster pace than initially expected in November. Its final
manufacturing purchasing managers’ index inched up to a seasonally adjusted 51.6 in November, up from a preliminary reading
of 51.5 and compared to 51.3 in October. Besides, the final services purchasing managers’ index inched up to a seasonally
adjusted 51.2 in November, up from a preliminary reading of 50.9 and compared to 51.6 in October.
The retail sales in the euro zone fell unexpectedly in October, fuelling concerns over the region’s economy. The retail sales
decline by a seasonally adjusted 0.2% in October disappointing expectations for a 0.3% gain. Retail sales for September fell
0.6%. Year-over-year, retail sales in the euro zone eased down at an annualized rate of 0.1% in October from a year earlier,
confounding expectations for a 0.9% gain, after rising 0.3% in September. The producer price index in euro zone eased down
by a seasonally adjusted 0.5% in October, compared to expectations for a 0.2% decline. Producer prices inched up 0.2% in
September.

ASIAN MARKET:
Asian equity benchmarks ended the week’s trade mostly in the red terrain; with investors continuing to offload their positions
after better-than-expected ADP jobs data lifted speculation the US central bank might start reducing its monthly bond purchases
sooner than forecasted. Back on regional front, South Korea’s Seoul Composite remained the top loser among Asian
counterparts, shedding over three percent as reports showed that the annual inflation rate quickened to 0.9% in November from
0.7% in October.
Japanese markets tumbled over two percentage points as investors withdrew cash off the table after the market climbed to
highest level in six years previous day. Moreover, rise in Japanese yen against the greenback further intensified the selloff.
Meanwhile, the nation’s capital expenditures were up 1.5% in the third quarter of 2013 compared to the previous three months,
standing at 8.942 trillion yen. That was shy of forecasts for an increase of 3.6% following the flat reading in the second quarter
and the 3.9% contraction in Q1.
Bucking the trend, Chinese markets ended higher, garnering gains of over half a percent during the passing week on the back
of decent manufacturing data. The nation’s factory activity maintained steady growth momentum in November, boosted by
resilient new orders, though the pace of expansion eased slightly from October. The final PMI reading came in at 50.8 in
November, down from 50.9 in October but improving from a preliminary reading of 50.4.

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