INDIAN MARKET MOVEMENT DURING THE WEEK 07/04/2014 to 11/04/2014

Indian markets though recovered from the exhaustion they went through in last week and managed to snap the passing week with good gains, but there were rounds of volatility in the holiday truncated week tailing some frail global cues. The start of the week was on a flat note after a HSBC survey report stated that private sector activity in emerging market economies fell for the fourth consecutive month in March. As per the report, while China posted a marginal decline for the second month running, India slipped back into contraction. But the markets showed strong vigor after a day of break and surged to their fresh life time high as traders turned bullish about corporate India's improvement in new orders and sales growth on a slew of project clearances undertaken by the government in recent months and the possibility of a stable government at the centre, post the Lok Sabha elections. Market also got a boost with International Monetary Fund's (IMF) latest edition of the World Economic Outlook, stating that India's growth is expected to recover from 4.4 percent in 2013 to 5.4 percent in 2014 supported by slightly stronger global growth, improving export competitiveness and implementation of recently approved investment projects. However, there was some profit booking and consolidation in last two days of the week that led the benchmarks pare some of their gains, especially the last trading session, majorly impacted by global sell-off. There was trepidation in the markets across globe that weighed on the markets dragging them lower with banking stocks suffering the most after a RBI appointed panel backed sweeping changes in the way bank fix interest rates and end the discrimination of old customers. However, despite all these, markets managed gains of over a percent on the back of mega rally during mid of the week. Broadly, Nifty rose by 81.95 points to 6,776.30 and Bank Nifty up by 288.50 points to 12,840.20. BSE Sensex gained 269.46 points to 22,628.96 during the week ended April 11, 2014. BSE Mid-cap index was up by 140.84 points, while the Small-cap index up by 258.13 points. On the sectoral front, Power up by 57.77 points, Metal up by 242.18 points, Capital Goods up by 281.02 points, Bankex up by 327.63 points and PSU up by 141.01 points were the top gainers on the BSE sectoral space, while IT down 43.58 points, Teck down 18.63 points and FMCG down 7.04 points were the only losers on the BSE sectoral front. FIIs were net buyer in equity segment in the week with a net inflow of Rs 1728.03 cr. Scrip wise, Sun Pharmaceutical up by 9.85% was the top gainer on Nifty and NMDC up by 7.59% was another top gainer on the Nifty and Jindal Steel & Power down by 6.49% was the top loser of the week on Nifty and Tech Mahindra down by 4.06% was another major loser on the Nifty. During the week, Nifty touched the highest level of 6819.05 on April 10, 2014 and the lowest point of 6650.40 on April 7, 2014. On the last trading day, the Nifty closed at 6776.30 with a weekly gain of 81.95 points or 1.22%. For the coming week, 6678 followed by 6580 are likely to be good support levels for the Nifty, while nifty may face resistance at 6847 and 6917 levels.

INDUSTRY & ECONOMY NEWS

In a sign of worry, foreign direct investment (FDI) in the services sector which accounts for over 60 per cent to India's GDP,declined by about 61 per cent year-on-year to $1.8 billion during April-January. The services sector, which includes banking,insurance, outsourcing, R&D, courier and technology testing, had received FDI worth $4.66 billion during April-January 2013.Overall foreign inflows into the country dipped to $18.79 billion during the first 10 months of 2013-14 from $19.10 billion in April-January 2013. FDI in services sector off lately has been on declining trajectory. In 2012-13, foreign investment in services fell to $4.83 billion from $5.21 billion in 2011-12. FDI inflows have also declined in sectors including construction development and hotel and tourism.

WORLD MARKET BEHAVIOUR DURING THE WEEK

US MARKET: The US markets traded under pressure during the passing week despite minutes of the latest Federal Open Market Committee meeting revealing a more dovish stance than investors had expected. Federal Reserve officials had a conference call in early March to discuss overhauling its communication to the market and reached a general consensus that the 6.5% unemployment rate threshold for the first rate hike was outdated. A summary of the conference was included in the minutes of the Fed's March 18-19 meeting released by the Fed. The central bankers were clearly worried that changing the forward guidance would impact markets. The minutes of the March 18-19 meeting also reveal that there was concern that markets would read too much into the dot plot which showed an upward shift in the Fed's expectations for short-term rates. On economy front, the US budget deficit narrowed sharply in March as tax receipts climbed and government spending fell broadly. The government's shortfall was $37 billion, down 65% compared to the March 2013 deficit of $107 billion. In March, the government's receipts of individual and corporate taxes were both higher. There were some other encouraging reports on the economic front. The number of job openings in the US recently hit the highest level in more than six years, a trend that could precede faster employment growth in coming months. There were 4.17 million job openings in February - the most since January 2008 - up 4% from a year earlier. Additionally, the number of people who applied for US unemployment benefits last week fell to a nearly seven-year low of 300,000, a sign the labor market might be experiencing a spring revival. Initial claims in the seven days ended April 5 sank by 32,000 from a revised 332,000 in the prior week. On the other hand, US consumer credit climbed 6.4% in February, mainly for college loans and auto purchases. US consumers increased their debt by a seasonally adjusted annual rate of $16.5 billion, slightly faster than a revised $13.8 billion increase in January. US wholesale inventories climbed 0.5% in February, although the increase was smaller than in January. The more modest gain suggests companies did not restock warehouse shelves fast enough to sharply boost first-quarter growth.Wholesale sales advanced 0.7% last month.

EUROPEAN MARKET: The European markets too traded under pressure during the passing week despite International Monetary Fund (IMF) stating that global activity strengthened during the second half of 2013 and is expected to improve further in 2014-15. IMF predicted the worldwide recovery will strengthen this year as output in richer nations picks up. But it warned that recovery is not evenly robust with rising risks in emerging economies. The Fund sharply raised its forecasts for British growth, to 2.9% this year, easing to 2.5% next year. It added that growth in the euro zone is expected for the first time in three years despite the region's high unemployment, with even Spain's economy due to expand by 0.9% this year. Among other major euro zone economies the IMF sees French growth reaching 1.0% with Germanys economy expected to gain 1.7%. The IMF repeated its warnings about very low level of inflation in the euro zone and called again for stimulus from the European Central Bank. IMF Managing Director Christine Lagarde informed that the global economy has picked up but bold action is needed to surmount serious dangers and deliver the benefits more evenly. Lagarde reiterated the IMF's advice to the European Central Bank urging it to quickly embark on operations to fend off deflation which could reverse Europe's recovery. European Central Bank's council member Josef Bonnici stated that the ECB could be forced to act should the euro strengthen further, and could use a variety of instruments to do so, including an asset-purchase program known as quantitative easing. The Sentix index of investor confidence within the Euro Zone rose less-than-expected last month. It rose to a seasonally adjusted 14.1, from 13.9 in the preceding month. The Bank of England kept the benchmark interest rate on hold and announced no change to its asset purchase facility program. BoE maintained the benchmark interest rate at 0.50%. It also maintained the stock of asset purchases financed by the issuance of central bank reserves at '375 billion.

ASIAN MARKET: Asian markets exhibited mixed trend during the passing week as investors remained concerned about the strength of the Chinese economy. Though, some support to the regional bourses came after International Monetary Fund predicted that the global recovery would strengthen this year and next as output in richer nations picked up. Meanwhile, South Korean benchmarks edged higher by around half a percent after the country's unemployment rate fell to 3.5% as against 3.9% in the preceding month. Moreover, the street had expected South Korean Unemployment Rate to fall to 3.7% last month. In China, Mainland China share market skyrocketed by around three and a half percent, on the back of across the board bargain buying, on growing speculation that Chinese government would introduce stimulus to ward off a slowdown. However, the gains remained capped up to certain extent as the trade surplus came in much wider than expected at $7.71 billion in March, comparing to expectation of $1.8 billion and prior month's $22.98 billion deficit. Exports dropped by 6.6% y-o-y, while imports dropped even more by 11.3% y-o-y. On the flip side, Japanese Nikkei tumbled over seven percent as the yen rose to a threeweek high during the week against the greenback amid fading hopes for some monetary easing by the central bank that triggered across the board heavy selling. On the economic front, core machine orders in Japan fell a seasonally adjusted 8.8 percent on month in February that was well shy of forecasts for a contraction of 3.0 percent following the 13.4 percent surge in January.