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India Markets Weekahead: Volatility to continue in results season

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(Any opinions expressed here are those of the author and not of Thomson Reuters)

After a spirited rally the previous week, the Nifty moved in a band of 150 points between 5750 and 5900, ending with modest gains of 0.53 percent at 5868. It may seem small but the extreme volatility within this band caught traders on the wrong foot.

Time and again, markets prove that predicting them in the short run is hazardous. Investors welcomed the government’s bold decision to increase gas prices but reacted negatively to its ordinance on the food security bill. The already weak rupee cracked further to 60.35 against the dollar as the election gimmick could cost the state exchequer over $20 billion.

In addition to the rupee, oil also made an upward move after the political crisis in Egypt and crossed $100 after a long time. U.S. jobs data showed that employment growth was stronger than expected. U.S. markets rallied on Friday and the 10-year benchmark yield rose to 2.73 percent, the highest in 24 months. This could again lead to withdrawal by FIIs, starting another wave of correction in emerging markets, especially India.

The weakness in rupee, already down 9 percent during the last quarter, will affect company earnings. Operating margins are likely to see reversals due to the overall slowdown in the economy and higher interest costs while MTM losses on foreign exchange liabilities could further suppress net margins. Metals, cement and the construction sectors are expected to be worst hit and profits may plunge by about 40-50 percent annually. Owing to weak vehicle sales, profits of all auto companies, except Mahindra & Mahindra, may decline. Pharma, telecom and private banks could be the only sectors which could post growth of over 10 percent.

India Markets Weekahead: A spirited rally may be a distant dream

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(Any opinions expressed here are those of the author and not of Thomson Reuters)

The week began with the Reserve Bank of India (RBI) maintaining status quo on rates as expected at its mid-quarter monetary policy review. The trade deficit widened to $20.14 billion, a seven-month high and up 13.18 percent over the previous month. Gold seems to be the culprit again and government restrictions don’t seem to deter Indians from buying gold.

The markets held on to hopes that U.S. Federal Reserve chief Ben Bernanke could bring cheer but the indication of a roadmap for a QE3 pullback saw the dollar rally against most currencies. The rupee was among the worst performers, falling close to 60 against the dollar.

India Markets Weekahead – Volatility seen as RBI policy review in focus

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(Any opinions expressed here are those of the author and not of Thomson Reuters)

Volatility is here to stay and trying to predict the markets on a daily basis is a futile exercise. It’s no better than tossing a coin.

Monsoon rains are early and heavier then normal, raising the hopes of green shoots in the next few months. Macro numbers were showing signs of bottoming out but the rupee slide has thrown calculations awry. A feeble request by the finance minister urging people to shun gold won’t do much good in a country enamoured by gold.

India Market Weekahead – Inflation, FII inflows to be key

(Any opinions expressed here are those of the author and not of Thomson Reuters)

The bulls are back and their four-week winning streak saw the Nifty close at a 29-month high of 6107 on Friday, up about 2.75 percent for the week. Liquidity flows remain robust, fuelling the momentum despite political heat in New Delhi.

The Congress win in Karnataka boosted positive sentiment, followed by industrial output data that was marginally better than expectations. The overall earnings season has been favourable and along with the global rally provided the right environment for the markets to cross the psychological barrier of 6100 in the Nifty and 20000 on the Sensex. The only thing missing is euphoria on the street and broader participation by investors.

Markets Weekahead: Not the right time to buy

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(Any opinions expressed here are those of the author and not of Thomson Reuters)

The markets continued their winning streak in the past week, with the Nifty gaining another 1.52 percent to close at 5871 on Friday.

The yen impact helped Maruti surprise even the most optimistic earnings estimates and its stocks jumped 5 percent to close at a lifetime high of 1673 rupees. The company seems richly valued and does not take into account the slowdown which we may encounter over the next few months.

India Markets Weekahead: Time to wait and watch

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(Any opinions expressed here are those of the author and not of Thomson Reuters)

A volatile week saw the Nifty closing 0.45 percent lower at 5528 after disappointing numbers from IT bellwether Infosys, which missed expectations on most parameters. The Bangalore-based company’s results also affected other IT stocks, with a number of them closing lower.

The markets have again proved that the biggest challenge for industry leaders is to manage expectations. Infosys, which was given a big thumbs-up after spectacular December quarter results, was pushed back to levels from where it had earlier risen like a Phoenix.

The stock market’s delayed response to Budget 2013

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(Any opinions expressed here are those of the author and not of Reuters)

Finance Minister P. Chidambaram tried to humour the market in his budget by cutting the Securities Transaction Tax (STT) which had been one of its sore points. But the market was not amused. The Sensex continued to slide, indifferent to the budget which was presented with a lot of expectations.

This appears to be rather strange because the budget was well received by the industry, in spite of the increase in surcharge from 5 to 10 percent. It was possibly the realization that the finance minister lived up to his promise of cutting fiscal deficit to 4.8 percent which created an infectious confidence in growth revival.

India Markets Weekahead: Beware the Ides of March

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(Any opinions expressed here are those of the author and not of Reuters)

Markets ended budget week below support levels of 5800/5840 and just when the six-month rally seemed over for good, it made a spirited V-shaped recovery to close at 5946 on Friday, with gains of 3.95 percent. The Street is divided with some expecting this to be the beginning of a new rally with the market scaling highs that it missed in February; others see it as a strong pullback which will fizzle out soon.

The government seems to be responding faster to allay investor fears. It was quick to respond to FII worries over proposed changes in tax residency certificates. Finance Minister P. Chidambaram has been assuring investors of continued policy measures, including the Direct Taxes Code (DTC) bill being introduced in the current parliament session.

India Markets Weekahead – Opportunity for those who missed out rally

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(Any opinions expressed here are those of the author, and not necessarily of Thomson Reuters)

It was a second straight week of losses of 1.59 percent with the Nifty closing at 5,903. As discussed in this column a fortnight back, we are in a phase which would tire out the participants and change the mood to a negative consensus on the street.

Budget 2013: A chance to leave ‘policy paralysis’ behind

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(Any opinions expressed here are those of the author, and not those of Reuters)

In India, the government continues to both talk a good game and walk a decent game, having apparently learnt its lesson after a prolonged period of policy paralysis, before gaining a fresh lease of life with last summer’s economic reforms.

This year also, the government of Manmohan Singh has been unusually active ahead of the budget, scheduled for Feb. 28. Finance Minister P. Chidambaram has just completed a global road show.

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