Saturday, August 13, 2005

The Week Ahead - Slowdown in FII inflow may trigger correction


After a long haul, FIIs have turned net sellers on the bourses. The net FII outflow on Wednesday (10 August 2005) was Rs 101.20 crore. Sebi released FII data relating to Wednesday's trading after the close of market on Thursday, and it triggered a fall on the bourses on Friday (12 August). The Sensex lost 49 points on Friday to 7, 767.49.

For the week ended 12 August 2005, the Sensex gained 13.49 points or 0.17% to settle at 7,767.49. The S&P CNX Nifty ended almost unchanged for the week at 2,361.55.

The solid rally on the bourses in the past three months was largely because of immense liquidity, with strong inflow from FIIs. Any slowdown in FII inflow may therefore trigger a correction on the bourses.

The Sensex gained 220.94 points in two trading sessions of Wednesday (10 August) and Thursday (11 August) after the US Federal Reserve raised interest rates by 25 basis points to 3.5% in line with market expectations. Just before the two-day rally, a major correction emerged on the bourses and the Sensex plunged 201.51 points in three trading sessions between 5 August 2005 and 9 August 2005.

Meanwhile, economic data continues to be strong. Data released on Friday showed that India's industrial output rose a robust 11.7% in the year through June, accelerating from a 10.8% rise in May.

Cement, FMCG, auto and pharma stocks may gain further ground on prospects of a good crop this year following a recovery in the monsoon in July - a crucial month for sowing. Rural demand is a key demand driver for sectors like auto, cement and FMCG.


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source: c-market

The Last Week In Market - Sensex cools after hitting a new high at above 7,850


The major correction that took hold of the bourses in the initial part of the week was shrugged off with a rebound in two trading sessions on Wednesday and Thursday. Federal Reserve signaled on Tuesday that it would stick with its steady pace of rate increases. The Fed decision was the trigger for the rebound on the bourses.
However, the market cooled off on Friday after it hit a new high at above 7,850 in early trading on that day.
Low US interest rates have been one of the major reasons for the surge in FII inflow across emerging markets including India in the past few months. Therefore, Fed's signal that a steep hike in the US interest rate in future may not be on the cards set domestic equities on the ascent.
But FII data released after trading hours on Thursday showed that FIIs turned net sellers (after a long haul) on Wednesday. This triggered profit taking on Friday. FIIs offloaded shares worth Rs 101 crore on Wednesday (10 August 2005).
Sensex gained 220.94 points in two trading sessions of Wednesday (10 August) and Thursday (11 August) following the Fed decision.
Just before the two-day rally, a major correction emerged on the bourses and Sensex plunged 201.51 points in three trading sessions between 5 August 2005 and 9 August 2005.
For the week ended 12 August 2005, Sensex gained 13.49 points or 0.17% to settle at 7,767.49. The S&P CNX Nifty ended almost unchanged for the week at 2,361.55.
US crude futures hit a record high of $ 66 a barrel on Thursday.
Stocks in auto, FMCG, cement and pharma sectors were in demand on prospects of a good crop this year following a recovery in the monsoon in July - a crucial month for sowing. Rural demand is a key demand driver for sectors like auto, cement and FMCG.
Cellular services major Bharti Tele-Ventures (BTL) edged higher on the back of surge in July 2005 cellular subscriptions. BTL's addition by way of new subscriptions, of 5.33 lakh, in July 2005 was much higher than the addition of over 4 lakh users each in May 2005 and June 2005. The company's total subscriptions, as at end July 2005, stand at 12.789 million.
Tata Tea moved strong following media reports that it is zeroing in on a major $ 1-billion overseas acquisition of either a brand or a company or both with a strong presence in the US or Latin America, during the next six months.
Housing finance major HDFC struck a lifetime high on renewed buying interest.
Shares of Ingersoll-Rand India spurted on Wednesday after its parent Ingersoll-Rand said it proposes to buy all outstanding shares of the company by way of reverse book-building process.
Tyre shares like MRF, Apollo Tyres, J K Industries and Ceat surged following a sharp fall in prices of natural rubber tracking a sharp setback in overseas rubber futures prices.
Steel scrips strengthened on reports that steel companies will hike prices in September 2005.
GTC Industries jumped after the company said its board will consider preferential issue of shares and/or warrants to promoters/directors of the company, their relatives, friends, associates, in accordance with SEBI's guidelines for preferential issues.
i-flex surged as the rumour mill had it that Oracle may upgrade its open offer price for the acquisition of 20% stake in the Indian software solutions firm.
Two index heavyweights Reliance Industries and Infosys Technologies slipped on profit taking at higher level.
Shares of print media firms like Deccan Chronicle Holdings and Sandesh edged higher on Friday after RBI notified changes in overall FDI/FII ceiling in print media firms to 26%. Government of India has permitted foreign direct investment and portfolio investment within the composite limit of 26% of the paid-up capital of an Indian company publishing newspapers, periodicals and dealing with news and current affairs. Accordingly, RBI has issued a notification withdrawing the prohibition placed on FIIs to purchase shares of print media companies.
Infrastructure financing firm Infrastructure Development Finance Company (IDFC) made a sparkling debut on the bourses on Friday. The stock settled at Rs 69.55 on BSE – attracting a huge 104.5% premium to the IPO price of Rs 34.
Meanwhile, economic data released on Friday showed that India's industrial output rose a robust 11.7% in the year through June, accelerating from a 10.8% rise in May.
 
source: c-market

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