MARKET ENDED 15.02.2010 MONDAY
SENSEX 16038.35 -114.24
NIFTY 4801.95 -24.90
NASDAQ 2183.53 +6.12
DJIA 10099.14 -45.05
RS/$ 46.46 + 0.10
Indian markets ended a choppy session on a weak note Monday as sentiments turned bearish with higher than expected rise in inflation figures. Robust jump in IIP data and positive opening of European markets failed to lift sentiments.
Inflation rose 8.56 per cent in January against 7.3 per cent in December. The wholesale price index which was highest since November 2008 beat analyst forecast of 8.2 per cent. There are concerns that rising inflation would push the Reserve Bank of India to hike interest rates sooner than expected.
WPI inflation rose by 8.56% year-on-year in January from 7.31% in December, higher than expected and above the RBI’s 8.5% projection by March, led by an across-the-board increase in primary, fuel and manufactured prices. We expect core inflationary pressures to rise further because input costs have surged much faster than output prices. We expect inflation to rise to double-digits by March and are penciling in 150bp of repo and reverse repo rate hikes and 75bp of cash reserve ratio hikes between now and March 2011
Bombay Stock Exchange’s Sensex ended at 16,038.35, down 114.24 points or 0.71 per cent. The 30-share index hit an intraday high of 16,227.04 and low of 16,011.82.
National Stock Exchange’s Nifty closed at 4801.95, down 24.9 points or 0.52 per cent. The index touched a high of 4845.60 and low of 4783.90 in today’s trade.
On the lower side, 50-week EMA currently at 4588 may remain important support for markets. On the higher side, two important hurdles to watch out for are 4940-4960 (20-week EMA) and 5020 (short-term EMA on daily charts) levels of Nifty on daily charts.
Foreign fund flows, will continue to play important role in directing course of our markets. Though markets remain oversold at this point of time, lack of domestic triggers may see markets facing extreme caution in case of an up move and in such cases global markets will remain a key dictator.
IIP December numbers, (declared on Friday) remained way above estimates as industry grows by robust 16.8% in December 2009
Index of Industrial Production grew 16.8% y-o-y in December 2009 against 11.8% y-o-y growth in November. The IIP data beat street expectations of around 12 % growth.
We expect the RBI to pursue a policy-to-policy approach; it is likely to refrain from taking any hasty decision based on point–to-point data releases. Likewise, the forthcoming union budget announcement for FY11 is also expected to be low key towards withdrawing policy stimulus. Stimulus roll-back, if any, is only expected to be gradual and selective so as to keep the industry unharmed
BSE Midcap Index was down 0.56 per cent and BSE Smallcap Index moved 0.37 per cent lower.
Amongst the sectoral indices, BSE Oil&gas Index fell 0.94 per cent, BSE PSU Index slipped 0.76 per cent and BSE Bankex declined 0.74 per cent. BSE Healthcare Index was up 0.4 per cent and BSE IT Index moved 0.26 per cent higher.
Biggest Sensex losers comprised Bharti Airtel (-9.22%), Reliance Communications (-2.92%), Sterlite Industries (-2.91%), Tata Power (-1.99%) and Reliance Infrastructure (-1.74%).
Gainers were Hindalco Industries (1.81%), BHEL (1.41%), HDFC Bank (1.41%), Tata Steel (0.72%) and Sun Pharmaceuticals (0.65%).
Bharti Group chairman Sunil Mittal’s dreams of taking the Indian telecom business model global has finally become a reality with the Indian operator buying out the Kuwait-based telco’s African assets. The board of Kuwait’s Zain Telecom has accepted $10.7 billion (Rs 49700 crore) offer from Bharti Airtel for the bulks of its African assets. However, brokers are of the view that in the short-term, this all-cash deal transaction will have negative impact on Bharti Airtel’s balance sheet.
We believe that the deal appears to be very expensive and the funding of the same would strain the balance sheet and would hence result in overhang on the stock. We continue to retain REDUCE rating on Bharti Airtel with target price Rs 250.
Market breadth on BSE remained negative with 1634 declines against 1158 advances.
Meanwhile, the European markets were in the green led by gains in commodities and financial stocks. The US markets were expected to open lower indicated the futures market. At 4:15 pm IST, Dow Jones futures was down 0.09 per cent, S&P 500 slipped 0.06 per cent and Nasdaq 100 declined 0.01 per cent.
Regards,
RAKESH MAKIN
Chugh securities Pvt Ltd
+91 9915684997,9041667797(DIRECT)
OFF 0172-4657997
PANCHKULA (Haryana).
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