Straight from the Specialists
(Any opinions expressed here are those of the author and not of Thomson Reuters)
Investors pressed the panic button on Friday with the Nifty diving 4 percent, its biggest single-day fall in two years, to end at 5508.
Measures taken by the Reserve Bank of India (RBI) on the eve of the Independence Day holiday to prop up the rupee were among the triggers for the fall. The rupee didn’t do all that well either, falling to an all-time low of 62.03 to the dollar early on Friday.
Recent policy actions have backfired, with markets fearing that the announcement of ad hoc measures could further undermine the confidence of foreign investors.
Macro numbers during the week also showed a declining trend. Industrial production contracted 2.2 percent in June. The trade deficit in July remained high at $12.27 billion with inflation powering along at 9.6 percent. With the rollout of populist measures such as the food security bill, I wonder how the finance minister will achieve his deficit targets.
(Any opinions expressed here are those of the author, and not necessarily of Thomson Reuters)
Infosys stumped Indian markets again but for a change — positively. Recent management comments had built expectations of underperformance which led to cautious to negative views on the stock. Institutional investors were light on Infosys whereas the more adventurous speculators were short. And we were all caught on the wrong foot when the company declared a revenue growth as well as a net profit much better than consensus expectations.
A resolution for the U.S. “fiscal cliff” helped the markets cross the psychological Nifty benchmark of 6,000 to close the week up 1.82 percent at 6,016.
Though I expected a spirited rally, what we witnessed last week is a strong consolidation around 6,000 which could form a solid bottom for the next leg of the rally. This is also facilitating the entry of domestic retail investors which is visible in the mid-cap and small-cap volume and performance. The BSE small-cap index moved up 3.71 percent whereas the BSE mid-cap index gained 3.13 percent.