Markets started the week on a firm note, helped by gains
across Asian markets. Cement stocks rallied ahead while
telecom stocks continued their up trend. ONGC and select
technology stocks also ended with good gains
saw a major correction as the frontline indices lost well
over a per cent each. Weakness in the US markets on Monday
triggered a sell-off in technology stocks. Metal and oil
stocks also lost substantial ground, exerting pressure
on the indices
recovered on Wednesday, but gave up most of their gains
in afternoon trades. Cement stocks resumed their rally
and were supported by select pharma and FMCG stocks. Oil
stocks remained under pressure as retail fuel prices were
last day of settlement for the November series of F&O
contracts on Thursday saw some volatility in the indices.
After opening firm, they gave up most of their gains in
the afternoon before a late rally lifted them back to
earlier highs. Technology stocks and banking stocks did
well while oil-marketing stocks extended their losses.
the mixed trend in Asian markets, the indices rallied
on Friday and set new lifetime highs. The Nifty crossed
4000 for the first time ever in intraday trades while
the Sensex moved closer to 14000. The rally was led by
engineering, autos and PSU banking stocks, supported by
select telecom stocks and heavyweight Reliance Industries.
The Sensex gained 141 points or 1.03 per cent during the
week and the Nifty added 47 points or 1.19 per cent over
Mid-caps and small-caps mostly followed the trend in frontline
stocks and did modestly better than the large caps for
the week. They started the week on a strong note and came
under pressure on Tuesday. After Wednesday's recovery,
they again lost ground on Thursday before resuming the
rally on Friday.
CNX Mid-Cap 100 index closed the week with gains of 74
points or 1.47 per cent for the week.
economic and regulatory action
decision to cut fuel prices was clearly forced on the
government and came as a surprise for the markets. The
oil minister had earlier stated that a price cut would
be considered only if crude oil prices fall to $52 per
barrel. After the decline to around $55 per barrel during
the second week of November, prices have recovered again
and are currently hovering around $63 per barrel. Crude
oil prices may rise further, if winter demand is higher
as predicted. For next year, some analysts have forecast
an average price of over $70 per barrel.
that the prices have been reduced under pressure from
the political leadership, it won't be easy to increase
prices in the short term even if crude prices rise
further. Oil marketing companies, which were limping
back to profits, would once again see heavy losses
and would have to be partly rescued by the government
through oil bonds.
on diesel, petrol, kerosene and LPG for all the PSU
oil marketing companies together were in excess of
Rs33,000 crore during the first half of the current
financial year. The government shared part of the
burden by issuing oil bonds worth Rs14,500 crore while
the rest was shared by oil companies including
upstream companies like ONGC and Gail. If prices average
between $60 and $65 per barrel for the current quarter
and the next, total under recoveries for the full
year may be close to Rs50,000 crore.
the positive side, the government expects lower fuel
prices to help in holding inflation at the current
levels of below 5.5 per cent. This may not happen,
as much of the inflationary pressure is coming from
higher prices of primary food and non-food articles.
FII inflows into the country since 1993, when portfolio
investments by overseas investors were allowed for the
first time, have crossed $50 billion as of end-November.
Over the last 13 years, India has been a happy hunting
ground for overseas investors. The $50 billion they
have invested in Indian shares have appreciated substantially
and the value of their current portfolio holdings is
estimated at a staggering $115 billion.
are many who argue that portfolio investments by overseas
investors do not generate the kind of economic benefits
foreign direct investments (FDI) bring to the country.
While FDI finances the creation of new assets, more
employment opportunities and are more committed long-term
investment, portfolio investors are generally seen
as short-term opportunists who can trigger a financial
crisis during a downturn in the economy.
arguments ignore the effect portfolio investments
have on domestic companies. If the country can now
boast of a very dynamic private sector, confident
and ready to penetrate overseas markets, part of the
credit should go to fund inflows from overseas investors.
Apart from improving fund availability, the influence
of global investors has forced domestic companies
to think and plan on a global scale. Their corporate
governance standards have improved beyond recognition
and the increased visibility has helped Indian companies
to access overseas financial markets.
price inflation for the week ended 18 November increased
to 5.45 per cent from 5.29 per cent reported for the
pervious week. Higher prices of manufactured goods and
minerals were mostly responsible for the rise even as
primary food articles became marginally cheaper. Inflation
was at 4.27 per cent during the same week of previous
markets, global economy and oil
markets declined for the week, continuing the downtrend
from the previous week. The indices saw one of their
steepest falls in recent months on Monday as the weakening
dollar and higher crude oil prices raised concerns about
lower consumer spending. These fears were supported
by subdued sales growth by major retailers and all the
indices lost out substantially. After recovering modest
ground for the next two sessions and a flat closing
on Thursday, the indices again came under pressure on
Friday after a report showed that US manufacturing sector
may be turning weak even as input prices are rising.
Dow lost 0.7 per cent for the week while the S&P
500 gave up 0.3 per cent. Technology stocks, which
have been out-performing for many weeks now, were
the worst hit and the NASDAQ ended 1.9 per cent lower
for the week.
oil prices sustained the up trend during the week on
continued forecasts of a colder winter in the US and
more talk about another production cut by OPEC. Lower
than expected US fuel inventory put additional upward
pressure on prices. Stocks of heating oil in the US
declined for the latest reporting week, even as winter
demand is peaking. Stocks of crude oil and refined products
were also lower than expected.
said the oil market is overall oversupplied as the
cartel prepares to start discussions to go on for
another production cut. OPEC had announced a cut of
1.2 million barrels daily in October. However, some
analysts believe that further production cuts may
be delayed if winter demand keeps oil prices around
month futures on the NYMEX maintained an up trend
for most of the week and went past $63 per barrel
by Thursday. The commodity gained around 5 per cent
for the week
and settled at $63.43 per barrel. This is the biggest
weekly gain for crude oil prices in recent months
and comes after a 6 per cent decline two weeks ago.
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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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