The
markets opened the new fiscal year on a positive note and held the
gains for the short three-day week after closing the first week of FY13
marginally in the green zone. Both Sensex and Nifty closed the week at a
higher level by almost 0.50 per cent. One
of the major events was in the form of the HSBC Purchasing Managers
Index (PMI) which provided a hint of the economy still facing headwinds
and that growth may come after a while. For March the services’ PMI
decreased by 420 basis points to 52.3 while the manufacturing index at
190 basis points was 54.7, indicating that the feeling of confidence
among Indian businesses is still lacking. With inflation for March
inching upwards there is a diminishing chance of the RBI cutting the
interest rate in its next meet. It seems that the economy may once again
move towards a high inflation and high interest rate environment.
Yet
another important factor was the government initiating a presidential
directive to force Coal India (CIL) to sign fuel supply agreements
(FSAs) with power companies to assure 80 per cent fuel supply. This move
will benefit power companies currently affected by coal shortages but
on the other hand, it will be difficult for CIL to meet the increasing
demand from the power sector. Another twist during the week was that the
government left the petrol and diesel prices unchanged. After crude
hovering around USD 125 per barrel, the markets had expected a hike in
fuel prices from April 1 but the government did not take any action.
However, consumers should be prepared for an upward revision in prices
in the near term as this may just be a postponement of sorts.
On
the global front, the Spanish and Italian bond auction received a poor
response, resulting in the bond yield to move higher, thereby raising
fresh concerns over the sovereign debt crisis. The US economy continued
to be in the negative zone after investors considered the reality of no
new monetary stimulus from the Federal Reserve. Among the other Asian
markets Japanese market closed lower the week following the other global
markets while Hang seng and Shanghai closed higher this week. This was
after the Chinese government announced that it would double the limit of
foreign investors who wish to invest in equities, bonds and fixed
deposits.
Back
home, among the sectoral indices, consumer durables was among the
leading index gainer that closed higher with a whopping 6.39 per cent.
Other sectors like capital goods, power, Bankex and Realty closed the
week higher in the range of 1 to 3.50 per cent. There were only two
sectors which closed the week at a lower level viz. auto and healthcare
at 0.70 and 0.84 per cent respectively.
Among
the individual stocks, Pantaloon Retail was one of the biggest index
gainers, up by 20 per cent to Rs 174.40 on the back of news that the
company is planning to reduce its debt of around Rs 5,000 crore. Rural
Electrification Corporation (REC) closed the week higher by 16.53 per
cent to Rs 226.95 after the Tamil Nadu Electricity Commission (TNEC)
increased the power tariff by 37 per cent. REC’s shares zoomed up on the
hope that the electricity board may now repay its dues in a timely
manner. Other stocks like Bajaj Finserv, TTK Prestige, Crisil, etc
closed the week higher by more than 13 per cent. BHEL closed the week
higher by almost 6.5 per cent to Rs 273.55 after it announced its flash
results for FY12, wherein both net sales and profit after tax increased
by 14 per cent on a YoY basis.
On
the other hand, Opto Circuit was one of the biggest losers, down almost
by 6 per cent to Rs 187.90. Suzlon Energy also closed down by 4 per
cent to Rs 25.15 after the company divested in its wind farm assets to
raise around USD 40 million and also on the back of the reconstitution
of its board of directors. Some of the other stocks which were in the
negative territory for the week were Jindal Steel & Power, Apollo
Hospitals and Pidilite Industries.
In
conclusion, we expect the market to remain volatile for the next week
as the result season will take off. IT major Infosys will come out with
its earning next week and one must watch out for the management guidance
which will provide cues for the sector as well as for the markets. We
advise investors to remain cautious and stick to stock-specific bets
rather than go bullish on any particular sector ahead of the March
quarter results. Broadly
speaking, the market remains in a trading range and may continue to be
so in the run up to the April 17 policy meeting of the RBI.
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