It was yet another week of gains for the markets as the
Indian indices continued to outperform other major global
indices. The distinguishing feature of this week's move
was the strong uptrend seen in the heavily beaten down
oil marketing stocks. Uptrend in global markets and the
sharp decline in crude oil prices helped sustain the sentiment.
opened the week on a firm note and the Sensex settled
above 11300 and the Nifty went past 3300. Stocks of oil
marketing companies, which were rank underperformers for
the last couple of years, started a major up move and
ended with significant gains.
indices extended their gains to the sixth straight session
on Wednesday, after the Independence Day holiday on Tuesday.
Oil stocks once again led from the front and index heavies,
ONGC and Reliance Industries, also ended with good gains.
The Sensex touched 11500 in intra-day trades, but closed
below that level with gains of well over a per cent.
tried to consolidate during the last two days of the week
without much of a directional movement. Oil marketing
stocks like HPCL, BPCL and Indian Oil surged again on
Friday and closed with significant gains of around 20
per cent each for the week.
Sensex gained 274 points or 2.45 per cent during the week
and the Nifty added 83 points or 2.54 per cent over the
Mid-caps and small-caps outperformed the larger stocks
this week as well. Buying momentum continued in the larger
mid-caps and trading interest was high. After gaining
significantly for the first two sessions, the smaller
stocks saw a correction on Thursday.
recovered on Friday and overall gains for the week were
higher than the large caps. The CNX Mid-Cap 100 index
closed the week higher by 134 points, or 3.24 per cent.
Small caps continued to do even better during the week.
economic and regulatory action
exports for the month of July have increased 40.67 per
cent in Dollar terms to $10.18 billion as compared to
$7.23 billion for the same month of previous year. In
Rupee terms, the growth is even better at 50.11 per
cent. For the first 4 months of the current financial
year, exports have increased 34.03 per cent in Dollar
terms to $37.71 billion.
remaining sluggish for the first few months, import
growth has also picked up in July. Total imports for
the month were higher by 42.8 per cent at $14.14 billion
as compared to $9.9 billion for the same month of
previous year. For the April-July period, imports
have gone up by 29.24 per cent at $54.42 billion as
compared to $42.11 billion for the same period of
sustained up trend in imports, especially oil imports,
have led to an increase in the trade deficit. For
the April-July period, trade deficit increased to
$16.72 billion from $13.98 billion for the same period
of previous year.
inflows into the country during the April-June quarter
at $1.74 billion was 47 per cent higher than $1.18 billion
recorded for the same period of last year. The month
of June saw a doubling of inflows to $534 million from
$264 million during the same month of previous year.
Only inflows in the form of equity capital are included
in these figures.
government has set a target of $10 billion in FDI
inflows including equity capital, reinvested
earnings and other capital for the current
financial year as compared to $7.7 billion for 2005-06.
Total FDI inflows had increased 37 per cent during
2005-06 while equity capital inflows at $5.5 billion
had recorded an increase of 72 per cent over 2004-05.
FDI equity inflows for the last 15 years from 1991
have touched $40 billion. Total inflows, including
reinvested earnings and other inflows, over the same
period have touched $49 billion.
price inflation for the week ended 05 August increased
to 4.82 per cent from 4.61 per cent reported for the
previous week. Prices of manufactured goods and select
fuels went up during the week. Prices of primary food
articles continued to decline for the second week.
markets, global economy and oil
markets recovered considerably during the week on hopes
that slower economic growth would keep inflation under
check and would prompt the US Fed to extent the pause
in interest rate hikes. Recent inflation data has supported
this view and have re-energised the markets.
latest consumer confidence surveys also indicate towards
a slowdown in US consumer spending which could lead
to a further decline in growth rates. The decline
in consumer confidence index for the month of July
is much worse than expected.
the possibility remains, markets are currently not
focussing on a sharper slowdown in economic growth
in the coming quarters. Consensus view among economists
and analysts still point to a soft landing for the
US economy over the next few quarters.
an indifferent start, US indices maintained an up
trend for the rest of the week. The steady decline
in crude oil prices over the week helped sustain the
momentum. Even on Friday, the indices recovered from
early weakness and closed with decent gains.
The Dow index added over 2.65 per cent for the week
while the S&P 500 index ended more than 2.8 per
cent higher. Technology stocks fared much better as
they tried to correct part of their underperformance
relative to the broader markets in recent months.
The NASDAQ added well over 5 per cent for the week.
People's Bank of China this week announced its second
rate hike for the year. Benchmark lending rate has been
increased by 27 basis points to 6.12 per cent annually.
This time, the Chinese central bank has also raised
the deposit interest rates to 2.52 per cent.
rate hike is widely seen as part of renewed efforts
by the Chinese government to cool down the economy.
Similar measures over the last couple of years have
not had the desired effect and the Chinese economy
remained in its growth trajectory.
the previous rate hike in April, Chinese banks tried
to increase their lending as the deposit rates remained
the same and hence their spread had improved. This
had led to a further expansion in capital investment
during the first half of the year.
the latest rate hike is not expected to have much
of a visible impact for some time. Forecasts of Chinese
GDP growth for the current year as well as next year
do not show any meaningful deceleration in growth
rates. At the same time, inflationary pressures seem
to be building up and may force further rate hikes
in coming quarters.
Chinese government also seems to be more willing to
let the currency appreciate. The Chinese Yuan saw
its largest movement this week, after the government
announced a flexible exchange rate policy last year.
Though the extent of appreciation is very small, it
is seen as an indication that the Chinese government
would allow a gradual, but significant enough, appreciation
of the Yuan.
oil prices saw one of the sharpest weekly declines this
year, triggered by the ceasefire in the Middle East.
The oil field in Alaska was not shut down completely
as feared earlier and production from one half of the
field continued. Other developments during the week
exerted more pressure on prices.
sharper than expected slow down in the US economy
may lead to lower demand for energy. This was supported
by some analyst forecasts and weekly US inventory
data. The decline in US stocks of crude oil and refined
products was much lower than expected, giving credence
to beliefs that demand is slowing down.
sliding for the first 4 days of the week, oil prices
went as low as $70 per barrel on Thursday before settling
that level. Friday saw a modest recovery and near
month NYMEX futures settled around 5 per cent lower
for the week at $71.09 per barrel.
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above at the time of writing this article. This analysis/report
is only for the purpose of information and is not an investment
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