New Samvat Ushers In Hope

The Indian corporates’ second quarter results have surpassed expectations and brought hope to the markets for the remaining part of the fiscal. Now, the government’s role is crucial to bring stability to the market, says Saikat Mitra

The markets ended almost flat during the last fortnight, managing to end in the positive. In its monetary policy review, the RBI yet again left the rates unchanged, much against the expectations of the market. However, it did cut the CRR, pumping in an additional Rs 17500 crore into the system. This left the market looking for other cues to take course. The Sensex and Nifty closed up 0.72 per cent and 1.18 per cent respectively over the fortnight.

Index	41222	41213	% Change
Sensex	18638.68	18505.38	0.72
S&P CNX Nifty	5686.25	5619.7	1.18
BSE - 200 Index	2309.01	2276.15	1.44
BSE - 500 Index	7218.32	7118.77	1.4
NSE - CNX 100	5577.95	5503.2	1.36
NSE - CNX 500	4508.8	4448.85	1.35

We are coming to the end of the second quarter earnings season. The performance of companies for the September 2012 quarter has been above expectations, with the top-line and bottom-line having gone up reasonably on an aggregate basis (more on this in our next issue).

On the global front, for the second time the US went in to elect Barack Obama to be its 44th President. But fears of toppling off the fiscal cliff took center stage as soon as this happened and hurt markets there as well as in other parts of the world. The US stocks saw their biggest weekly decline since June. All 10 groups in the Standard & Poor’s 500 Index dropped.

On the European front, the stocks fell last week on concerns that the US will slip back into a recession if lawmakers fail to reach a budget compromise and as the European Commission said the Euro zone economy will stagnate in 2013. China is set to get its new premier on November 14. This is being keenly watched as it could set the tone for its economic future. The next fortnight we will see the release of data for industrial production, existing home sales and GDP in the US, which again is important to watch out for.

Index	09/11/12	31/10/12	% Change
Shanghai Composite	2069.07	2068.88	0.01
FTSE	5769.68	5843.02	-1.26
Dow Jones Ind Avg	12815.39	13107.21	-2.23
Nikkei	8757.6	8928.29	-1.91

Back home, most of the indices have closed the week with decent gains. The BSE Midcap and the BSE Smallcap Index closed up by 1.44 per cent and 1.15 per cent respectively. On a sectoral basis, only two of the 13 indices closed in the red during the last fortnight. The BSE Realty index has been able to secure the top spot, with a gain of more than seven per cent. The BSE CD (+6.04 per cent) and the BSE Auto index (+3.99 per cent) were the other top gainers. The upward movement in the consumer durable and auto indices can be attributed to the festive season. Laggards of the last fortnight included the BSE Oil & Gas and the BSE Metal indices, closing the fortnight down by 2.02 per cent and 0.14 per cent respectively.

Money inflows remained muted this time, with FIIs pumping in a net of just Rs 2983 crore, taking the total to Rs 96862 crore on a YTD basis. DIIs ended the fortnight in the red, selling off equities worth Rs 517 crore in the last fortnight.

Going forward, the markets are looking forward to the implementation of reforms and to the winter session of the Parliament. The government has also decided to divest a 10 per cent stake in HAL, which will be very keenly watched as its success will determine what the government does on the divestment front. Expect a good trading fortnight with the commencement of the new Samvat.

Happy investing!