Weekly Commentary (Week ended on Dec05,08)
Market Still Uncertain: Trade With Caution
Hopes of stimulus package and rate cut to boost economy helped key benchmark indices cut early losses and settle with marginal losses in the week ended Friday, 5 December 2008. The market edged lower in three out of five trading sessions. However small and mid-cap stocks outperformed on momentum buying. The BSE 30-share Sensex lost 127.52 points or 1.40% to 8,965.20 in the week ended Friday, 5 December 2008. The S&P CNX Nifty declined 40.70 points or 1.47% to 2714.40 in the week. The BSE Mid-Cap gained 46.48 points or 1.63% to 2,892.95 and the BSE Small-Cap index rose 25.81 points or 0.78% to 3,323.54. Both the indices outperformed the Sensex. Sustained selling by the foreign institutional investors (FII) to shore up resources to beat the global liquidity crunch, have weighed heavily on the bourses since 2008. FIIs outflow reached Rs 54,970.10 crore in calendar 2008, till 3 December 2008.
Trading for the week started on a dull note as weak European indices, fall in US index futures and dismal economic data heightening concerns about the weakening domestic and global economy. Weak global equities, played spoilsport in early trade before cutting losses on the back of higher US index futures in late trade.
Real estate stocks rose on reports the government will unveil measures for the realty sector, which may include incentives for low-cost housing and lower loan rates, on Saturday 6 December 2008. Banking stocks were mixed despite reports the Reserve Bank of India (RBI) may come out with cuts in repo rate and reverse repo rate on Saturday 6 December 2008 to stimulate growth after inflation slipped to a 7-month low in the week ended 22 November 2008. Lower interest rates may help revive demand over the medium term. Most auto stocks slipped on dismal November 2008 monthly sales figures. IT stocks slipped on worries about the US economy, which is already into a recession for a year now. The government has announced On Friday after market hour to reduce the price of petrol by Rs 5 a litre, diesel by Rs 2 a litre. This will add to declining Inflation rate that was 8.40% vs 8.84 on week - ended Nov 22. Exports declined an annual 12.1% to $12.82 billion in October 2008, the first year-on-year fall in nearly three years. The stock market regulator Securities & Exchange Board of India (Sebi), on Tuesday, 2 December 2008, extended the facility of cross margining across cash and derivatives segments to all categories of market participants.
The Bank of England slashed interest rates by a full percentage point on 4 December 2008 to shore up Britain's crumbling economy and head off the threat of deflation. The cut took rates to 2% their lowest level since 1951. The central bank in Sweden slashed its key interest rate by a record 175 basis points to 2%, a shock move to try and prevent the economy from sliding deeper into recession. On the same day, the European Central Bank dropped its benchmark rate by 0.75 percentage point. Federal Reserve Chairman Ben Bernanke said the central bank is mulling extreme policy measures such as buying more government bonds to revive growth. US unemployment data of Nov 2008 is about to come and that is expected to be stressful. Finally, the fear of recession is not over and its severity is more than as expected earlier, so the best trading policy is either trade for very short term view of 2-7 days or trade for a long term view of 12 months or more.
Hopes of stimulus package and rate cut to boost economy helped key benchmark indices cut early losses and settle with marginal losses in the week ended Friday, 5 December 2008. The market edged lower in three out of five trading sessions. However small and mid-cap stocks outperformed on momentum buying. The BSE 30-share Sensex lost 127.52 points or 1.40% to 8,965.20 in the week ended Friday, 5 December 2008. The S&P CNX Nifty declined 40.70 points or 1.47% to 2714.40 in the week. The BSE Mid-Cap gained 46.48 points or 1.63% to 2,892.95 and the BSE Small-Cap index rose 25.81 points or 0.78% to 3,323.54. Both the indices outperformed the Sensex. Sustained selling by the foreign institutional investors (FII) to shore up resources to beat the global liquidity crunch, have weighed heavily on the bourses since 2008. FIIs outflow reached Rs 54,970.10 crore in calendar 2008, till 3 December 2008.
Trading for the week started on a dull note as weak European indices, fall in US index futures and dismal economic data heightening concerns about the weakening domestic and global economy. Weak global equities, played spoilsport in early trade before cutting losses on the back of higher US index futures in late trade.
Real estate stocks rose on reports the government will unveil measures for the realty sector, which may include incentives for low-cost housing and lower loan rates, on Saturday 6 December 2008. Banking stocks were mixed despite reports the Reserve Bank of India (RBI) may come out with cuts in repo rate and reverse repo rate on Saturday 6 December 2008 to stimulate growth after inflation slipped to a 7-month low in the week ended 22 November 2008. Lower interest rates may help revive demand over the medium term. Most auto stocks slipped on dismal November 2008 monthly sales figures. IT stocks slipped on worries about the US economy, which is already into a recession for a year now. The government has announced On Friday after market hour to reduce the price of petrol by Rs 5 a litre, diesel by Rs 2 a litre. This will add to declining Inflation rate that was 8.40% vs 8.84 on week - ended Nov 22. Exports declined an annual 12.1% to $12.82 billion in October 2008, the first year-on-year fall in nearly three years. The stock market regulator Securities & Exchange Board of India (Sebi), on Tuesday, 2 December 2008, extended the facility of cross margining across cash and derivatives segments to all categories of market participants.
The Bank of England slashed interest rates by a full percentage point on 4 December 2008 to shore up Britain's crumbling economy and head off the threat of deflation. The cut took rates to 2% their lowest level since 1951. The central bank in Sweden slashed its key interest rate by a record 175 basis points to 2%, a shock move to try and prevent the economy from sliding deeper into recession. On the same day, the European Central Bank dropped its benchmark rate by 0.75 percentage point. Federal Reserve Chairman Ben Bernanke said the central bank is mulling extreme policy measures such as buying more government bonds to revive growth. US unemployment data of Nov 2008 is about to come and that is expected to be stressful. Finally, the fear of recession is not over and its severity is more than as expected earlier, so the best trading policy is either trade for very short term view of 2-7 days or trade for a long term view of 12 months or more.
Comments