Weekly Beeps - IIP and Inflation ends The Week, Investors Eye RBI Policy And Greek Election 15-06-12

On the domestic front, the week had two releases of major data viz. the Index of Industrial Production (IIP) and the Wholesale Price Index (WPI) Inflation, both keeping the market a little nervous since they were below expectation. However, the broader indices inched higher by almost 1.4 per cent on the hope that this might make the RBI slash the rates in its monetary policy next week. Further, the markets also received a warning from the leading global rating agency S&P which has said that India could be the first BRIC’s ‘fallen angel’. 

Benchmark Indices
Index	8-Jun-12	15-Jun-12	% Change
SENSEX	16718.87	16949.83	1.38
NIFTY	5068.35	5139.05	1.39
Hang Seng	18502.34	19234	3.95
Nikkei	8459.26	8569	1.30
Shanghai	2281.45	2416	5.90
Dow Jones*	12414.79	12652	1.91
S&P 500*	1315.13	1329	1.05
NASDAQ*	2844.71	2836	-0.31
Bovespa*	52481.44	55351.67	5.47
FTSE*	5447.9	5467	0.35
DAX*	6144.22	6139	-0.08
CAC*	3047.37	3033	-0.47
* closing till Thursday

The IIP data for April was released on Tuesday which came in at a meager 0.1 per cent against the street expectations of anywhere in the range of 1.2 to 2 per cent. The finance minister expressed his disappointment over the dismal numbers and said that the ministry would take steps to beam positive signals in the economy. 

A day after that, on Thursday, the Wholesale Price Index (WPI) Inflation for May came in at 7.55 per cent, higher than 7.23 per cent in April. What was more shocking was that the March inflation figure was revised to 7.69 from the previous estimate of 6.89 per cent. During the week S&P also came out with its report titled ‘Will India Be The First BRIC’s Fallen Angel?’ which stated that the slowing GDP growth and the political roadblocks to economic policy-making could put India at a risk of losing its investment grade rating.

On the global front, the week started with the big bang as the euro region’s finance ministers agreed to bail out Spain for up to Euro 100 billion. One should note that previously Greece, Ireland and Portugal have all taken bail-outs and Spain would be the fourth European country to do so. Further, media reports suggested that Italy’s economy is also under the pain and that things could go from bad to worse. 


Now all eyes are on the RBI’s monetary meet scheduled for Monday, June 18. In this scenario it would be very challenging for the RBI to choose between growth and inflation. One should further note that a 25 basis points’ cut in the repo rate and CRR each is already factored into the market. We believe that the RBI should maintain a status quo in its meet as inflation is still above the comfort zone and if that happens one may see the broader markets moving southwards by about 2 to 3 per cent. 

Top Gainers/Losers
Gainers	CMP	% Change (WoW)	Losers	CMP	% Change (WoW)
Ambuja Cem	167.8	11.09	Adani Port	115	-7.63
Piram.Heal	485.5	10.03	Godrej Ind	231.35	-7.26
United Spi	687.55	9.70	PidiliteIn	162.35	-6.83
MMTC	752.05	8.90	Oberoi Rea	242.55	-6.35
PFC	168.05	8.81	Lupin	513.55	-5.96
Grasim Ind	2485	7.54	UNITECH	21.5	-5.70
SyndicateB	103.45	6.76	OptoCircui	145.7	-5.63
Dabur Indi	110.55	6.55	EicherMoto	2066	-4.95
ACC	1218.65	6.24	Apollo Hsp	635.1	-4.56
Indian Ban	180.8	6.23	MphasiS	339.2	-4.37

. 

Key Global Indicators
Index	8-Jun-12	15-Jun-12	% Change
Gold	29,341	30,129	2.69
Silver	53,849	54,599	1.39
Crude Oil (Brent)	97.86	97.63	-0.24
Crude Oil (Nymex)	82.31	84.69	2.89

Currency Rate
Index	8-Jun-12	15-Jun-12	% Change
USD	55.364	55.763	0.72
EURO	69.2125	70.4411	1.78
GBP	85.6398	86.6892	1.23
JYP (per 100)	69.88	70.69	1.16

Among the individual stocks, most of the cement stocks inched higher this week after the companies in the sector reported a good set of dispatch numbers for May. United Spirits closed the week higher by almost 10 per cent after the news that Credit Suisse (Singapore) has acquired a stake in the company for Rs 62 crore through a bulk deal. Other banking stocks like Syndicate Bank and Indian Bank also closed higher by 6.76 and 6.23 per cent after investors speculated about an interest rate cut on Monday’s monetary meet.

On the other hand, Adani Port was among the leading index loser that closed the week lower by 7.63 per cent at Rs 115 on the back of news that the company is examining a possible deal to buy the export terminal at Dhamra Port in Orissa.

The fertilizers’ stocks this week were more volatile on the back of major news about the urea price hike. The shares of fertilizer companies during the week traded higher but later gave up most of their gains as the government deferred the fertilizer ministry’s proposal to hike the retail prices of urea by 10 per cent for fiscal 2012-13. 

In conclusion, we expect the markets to remain volatile for the next week as we have a series of events lined up on the domestic as well as on the international front. The RBI monetary policy and Consumer Price Index numbers would be released on June 18 while on the macro front the outcome of the election results of Greece on June 17 and the Fed Open Market Committee meet on June 19 could also drive the market in either direction. The progress of monsoon may also have a sentiment impact. 

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