A Good Fortnight Indeed

The markets have been in quite a cheerful mood, thanks to the positive sentiment set in by government action on the reforms front. All eyes will now be on the RBI to act on the interest rate front to ensure that the good times last.

There is optimism all over the market place, thanks to the government having finally managed to move ahead in the reforms process. While developments on the domestic front have been pretty positive, even the international scene has not been bad. Of course there is a lot of anxiety around the US toppling over the 'Fiscal Cliff' and Europe slipping into a major recession, but this hasn’t kept the markets low over the past fortnight. The Sensex and the Nifty closed the fortnight with a gain of 2.72 per cent and 2.80 per cent respectively.

One significant feature of the markets over the past fortnight or rather the past one month or so is the return of companies to raise money from the primary market. Quite a few Initial Public Offerings (IPOs) have been completed over the past fortnight with each one managing to raise a decent amount. Meanwhile, on the secondary market front, volumes have already started increasing on the bourses though only marginally. The volumes have increased at a sustained pace rather than in sudden spikes, which again is a very positive sign.

On the data front, two major economic indicators were announced in the past fortnight; the HSBC Purchasing Managers Index (PMI) manufacturing data and the HSBC PMI Services data. The manufacturing PMI witnessed a better up-move and stood at 53.70, up from 52.90 in October. It has been the highest in the past five months. Expansion in manufacturing is a positive sign in the Indian context. However, the Services data witnessed a marginal decline and stood at 52.10 against 53.80 in October 2012. The IIP numbers for the month of October 2012 grew at a solid 8.20 per cent the fastest in the last 14 months.

On the global front, some improvement has been witnessed in the Chinese PMI data too. This data also came in as a positive surprise, which hints that there are signs of recovery across Asia. In Europe, despite the ECB revising its GDP growth forecast for the Euro zone downwards by 20 basis points to 0.3 per cent, the markets managed to close in the green, with the FTSE gaining 2.39 per cent in the last fortnight. The US markets too remained positive, but there are concerns that persist over the so-called 'Fiscal Cliff'.

Back home, most of the indices have closed the fortnight in the green. Both, the BSE Midcap and the BSE Smallcap closed in the green gaining handsomely by 4.41 per cent and 3.30 per cent respectively.

On a sectoral basis, out of the 13 indices, there are only two indices that have closed in the negative. The BSE Realty index has secured the top spot with a gain of more than seven per cent. The BSE Bankex (+5.60 per cent) and BSE Metal index (+4.19 per cent) were the other top gainers. The two draggers in the last fortnight were the BSE IT and the BSE Teck Index closing the fortnight down by 4.22 per cent and 5.12 per cent respectively.

The inflows remained strong during the last fortnight with FIIs pumping in a stupendous Rs 10896 crore in equities. On a YTD basis, FIIs have pumped in Rs 110804 crore so far. DIIs ended the fortnight in the red, selling off equities worth Rs 2584 crore during the last fortnight. Going forward, all eyes will now be set on the RBI's monetary policy that is slated for December 18, 2012. The RBI's take on the interest rate front will guide the future course of the market at least for some time now.