Markets This Week

Last Week Sumary

The Indian market glittered consistently throughout the week, on the back of a
surprisingly robust show from the IT bigwigs. Quarterly result season kick started with
Infosys’ Q4 result announcement on 15 April 2008. IT socks were in the limelight after
Infosys’ decent guidance for FY 2009. The other software heavyweights also joined in,
aiding the indices on Tuesday, as the Sensex gained 346 points while the Nifty added
102 points. Favorable global market conditions also helped Indian bourses. Global
markets climbed on better than expected earnings at US banks eased concerns the
slowdown in global economic growth will curb earnings. The Sensex surged 673.56
points or 4.26% to 16,481.20 in the week ended Thursday 17 April 2008. The S&P CNX
Nifty rose 180.6 points or 3.78% to 4,958.40. The BSE Mid-Cap index rose 313.17 points
or 4.8% to 6,836.39 in the week. The BSE Small-Cap index gained 449.93 points or
5.56% to 8,531.36. The annual monsoon rains in India are likely to be near normal at
96%-104% of the long-term average in 2008, Science Minister Kapil Sibal said on
Wednesday, 16 April 2008. According to a recent forecast by Columbia University’s
International Research Institute for Climate & Society (IRI), rains will be good in the first
half of the four-month monsoon season in India. The monsoon rains usually fall from
June to September. Foreign institutional investors (FII)’ outflow in April 2008 totaled Rs
288.10 crore (till 15 April 2008). FII outflow in calendar year 2008 totaled Rs 11,720.90
crore (till 15 April 2008). Mutual funds (MF)s were net buyers of shares worth Rs 5 crore
in this month, till 16 April 2008.
Thursday, i.e., 17 April, the Reserve Bank of India (RBI), has hiked CRR by 50 bps to
8% in two stages to contain inflation expectations. The first 25 bps CRR hike will be
effective April 26 while the second 25 bps hike will be effective May 10. The 50 bps hike
would drain Rs 18,500 crore from the system.
On Monday, 14 April 2008, market remained closed on account of Ambedkar Jayanti.
On Tuesday, April 15, Bulls cheered Infosys fourth-quarter performance. Though the
market opened on a weak note after overnight losses in the US markets, coupled with
weak cues coming in from the equity markets across Asia but managed to recover soon
after the declaration of the quarterly results by Infosys. Infosys FY08 sales are up 20% at
Rs 16,692 crore versus Rs 13,893 crore, PAT is 20% up at Rs 4,659 crore versus Rs
3,856 crore. The key benchmark indices surged with Sensex moving past 16,000 marks.
Buying was seen across the board, but the most popular were IT, healthcare, consumer
durables and oil & gas stocks. However the Mid-Cap and the Small-Cap stocks were in
demand. The Sensex ended up 346.02 points to close at 16,153.66 and the Nifty index
ended 101.85 points up to 4879.65.
The next day, on Wednesday, 16 April, 2008, Positive cues from the global markets
boosted domestic bourses. Also supporting sentiment, the government said monsoon
rains, vital in determining farm output and rural spending, were likely to be near normal in
2008. From the sectoral front, IT and oil & gas stocks saw buying, while some capital
goods and power stocks were plunged. However, a lot of Mid-Cap and Small-Cap stocks
were in action. Finally, the Sensex ended 90 points higher to close at 16,244 and the
Nifty index ended 7 points higher to 4,887.
The indices had a bright day for the third day in succession on Thursday, April 17, with
mid caps and small caps finding renewed favors. Tracking the strong favoring cues from
the global markets, the domestic market opened with a bang and kept of hovering in the
positive territory throughout the trading session. However decline in Inflation numbers
also boosted the markets sentiments and giving the positive signals to the government
measures to control inflation. Buying was seen across the board, but Realty, Metal, IT
and Banking stocks were the most popular. Thus, the BSE Sensex closed at 16,481 (up
237 points), while the NSE Nifty closed at 4,958 (up 71 points) during the last trading day
of the week.
On Friday, 18 April 2008, market closed on account of Mahavir Jayanti.
The wholesale price index rose 7.14% in the 12 months to 5 April 2008. This was
slower than the previous week's annual rise of 7.41%. Government data showed on
Thursday, 17 April 2008.

Other Markets

US
The US Markets ended the week rallying on earnings news. The Dow had its best week since Feb 1 and rallied 256.8 points on Wednesday and another 228.87 points on Friday, its biggest point gains since April 1st. The producer price index (PPI) and consumer price index (CPI) continued to show signs of inflation, but the core numbers, ex-food and energy, came in as expected. Commodities continued to surge with both oil and grains hitting multiple record highs, stemming food riots globally. The markets were cheered by better than expected quarterly results from JP Morgan and tech giants Google and IBM, which alleviated some worries associated with the credit crisis and slowdown of the U.S. economy. The major averages saw gains throughout the week, with the Dow ending the week up 4.3 percent, the Nasdaq up 4.9 percent and the S&P 500 up 4.3 percent. With the gains, the Dow set a three-month closing high, while the Nasdaq and the S&P 500 set two-month closing highs.
Crude oil continued to surge on Friday and again extended to a new trading record of $117 a barrel. Light sweet crude for May delivery closed at $116.69 a barrel, up $1.83 on the New York Mercantile Exchange.

Asia
Asian stocks dropped for the first week in four amid concern global
economic prospects have weakened and financial market losses will continue. Samsung Electronics Co. and National Australia Bank Ltd.dropped after the Group of Seven released a statement saying the world's economy faces downside. Japan's stocks rose, capping the longest
weekly winning streak in six months. Carmakers led gains as the weakening yen boosted confidence exporters profits will hold up this year.
On Wednesday Chinese govt has asked commercial banks to set aside more of their deposits as reserves for the third time this year after the economy grew by 10.6% in the first quarter and inflation stayed close to an 11-year high. Lenders will have to raise the required reserve ratio by
50 basis points to 16% from April 25. Japan's consumer confidence index rose to 36.7 in March from 36.1 in February.

EUROPE
European stocks rose this week after profit from Tesco Plc and Yara International ASA beat analysts' estimates and record oil prices boosted energy companies, fueling speculation earnings can weather an economic slowdown. On Wednesday European inflation accelerated more than
initially estimated in March The inflation rate rose to near a 16-year high of 3.6 percent from 3.3 percent in February, exceeding an initial estimate of 3.5 percent published on March 31. Stocks extended gains on Friday after Citigroup Inc. posted a first-quarter loss of $5.11 billion, less than the most pessimistic analysts' estimates. Tesco had its biggest weekly gain in six months, leading retailers higher, while Yara paced gains by chemical makers. BP Plc and Royal Dutch Shell Plc led oil shares to a fourth week of gains as crude reached $116 a barrel. The Dow Jones Stoxx 600 Index added 3.2 percent to 320.69, rebounding from last week's decline. Germany's DAX Index added weekly gain 3.6 percent, while France's CAC 40 rallied 3.4 percent. The U.K.'s FTSE 100 climbed 2.7 percent.

Markets This Week

NIFTY may see slightly higher levels of 5000, which also happens to be strong resistance. Nifty is oscillating in 4600—5000 range in intermediate term. Currently 5000 is immediate resistance and 4850 is the immediate support. If 5000 level is broken then higher levels could be expected else downward bias could return at the higher level of this range accompanied with huge volatility.Nifty has been unable to test higher levels and selling pressure comes back with every rise. Avoid going long.
Good buying interest helped market end on a strong note. IT and banking stocks were in demand throughout the session. Realty and metal stocks picked up momentum in the last hour of trade. Banking stocks rose after inflation eased from more than three years' high hit in late March 2008. Initial forecast of a near-normal monsoon this year by the Indian Meteorological Department boosted market sentiments today besides positive global cues. The wholesale price index rose 7.14% in the 12 months to 5 April 2008, as per latest data. This was slower than the previous week's annual rise of 7.41%. For the next trading day Nifty will face resistance at 4999 and 5039 having support at 4903 and 4849.

until stability returns. Investments in equity can be made with a long-term perspective in blue chips. Credit woes and US dollar weakness can further fuel the turmoil in financial markets, the world over. Lower inflation of 7.14 is good news for the markets but CRR hike wont go down wellwith investors.

CIPLA is looking to test higher levels in near term. 235 level is likely to be seen by the pharma major. Indicators too are generating bullish signals. Investors can remain long.

JP HYDRO is heading towards 72 level in near term.Traders can remain long to test higher levels. RSI too heading into buying zone.

HINDALCO has taken a strong breakout. Traders can remain invested for higher levels of 200/210.MACD is indicating robust recovery. RSI too ismaking headway into buying zone.

IDBI is looking to test 110 level where it can encounter some resistance. A breakout from 110 level can propel the finance counter upto 120 level. Investors can remain long.

MARUTI is looking weak and the incessant decline doesn’t look like halting too soon. 735 level can be seen in near term. RSI is looking weak and bear pressure is likely to remain in immediate future

EDELWEISS is looking weak and lower levels upto 750 is a strongpossibility. RSI & MACD are looking inconclusive. Trders can avoid it as of now until stability returns to the markets.

Markets stage a big rebound on the back of strength in global equities and in line numbers from IT bellwethers like INFy. Most of the global markets also recover part/most of the lost ground on better US corporate numbers. On the global front, good results/guidance from Intel Corp, JPMorgan Chase & Co and other blue chips eased worries that weak US economy would sap corporate profits. Morgan Stanley expects 23% growth in net earnings of 104 out of 108 firms in its Indian coverage universe in Q4 March 2008 over Q4 March 2007. Q4 March 2008 results of India Inc. will dictate the near term trend on the markets. Q4 March 2008 results of Sensex heavyweights like Wipro, Tata Consultancy Services, Satyam Computer Services, Grasim Industries, Reliance Industries, Maruti Suzuki India, HDFC Bank and Bharti Airtel are due next week. However, the earnings season has started on a positive note. The market surged last week after Infosys gave a decent guidance for the year ending March 2009 on 15 April 2008.
High inflation and rising crude oil is a cause for concern for the market in the near term. Everybody will be closely watching what the company managements have to say about the outlook for the year ending March 2009. Also have to scrutinize disclosures that companies may make regarding foreign exchange derivatives products that they have bought on the advice of their bankers. A steep decline in the value of the US dollar against the Japanese Yen and the Swiss Franc hit Indian corporates which have used these two currencies (Yen and Franc) extensively to swap their rupee denominated debt.
India's monsoon rains are likely to be near normal this year, the Indian Meteorological Department forecasted on Wednesday, 16 April 2008, promising robust harvests which could bolster growth in the country and soothe global food worries. This time it's expected that the forecast should be more reliable as the IMD was using a combination of statistical and dynamic models, unlike earlier when only statistical models were applied.
In the calendar year so far, FIIs sold shares worth a net Rs 11720.90 crore (till 15 April 2008), to offset their huge losses in the US sub-prime mortgage market. Meanwhile, a weaker dollar and a surprise drawdown in US crude inventories sent Nymex crude futures to a new intraday record of $115.07 per barrel on Wednesday, 16 April 2008.
Securities & Exchange Board of India (Sebi) had said short selling and securities lending and borrowing will be operationalised from 21 April 2008. The rate of inflation for last two declared numbers was the only cause for the markets to worry as the IIP number also staged a big rebound above 8% mark. Commodities have also continued their northward march for second week in row. Crude infact is now trading at new all time high of 115 $.
Indices are now trading well above the multiple resistance zone of 16371/4879. They are now trading just below their respective 200 day EMAs. Continue to hold on to quality portfolio, which we have mailed on 8th of this month and recommend to accumulate more on any panic kind of day.