Weak and bleak

Feb 18, 2013, 07:48 IST | Alex K Mathews

Things look decidedly dark for this week

Last week, the markets ended on a flat note, as the selling seen in midcap and smallcap stocks indicated. Nifty closed down around 0.2 per cent on a weekly basis. The smallcap sector witness a sell off of 3.8 per cent and the midcap sector closed around 2.4 per cent.

In the largecap stocks, Tata Motors and Sun Pharma remained the weekly gainers, which were up around 6.8 per cent and 5.5 per cent, respectively. The losers were Siemens and DLF, each closed down around 7.5 per cent, respectively. Nifty has resistance at 5921 and 5958, movements above these two levels can only give strength to Nifty.

The IIP data for December shrank shockingly. Weak investor and consumer demand weighted it. The data fell to a contraction of 0.6 per cent in December, well below the estimates and against a contraction of 0.1 per cent in November. The manufacturing output contracted to 0.7 per cent against a growth of 0.3 per cent in the previous month, which remained the worst output growth since September. Consumer goods also contracted at 4.2 per cent against a growth of 15 in November. The cumulative growth of the core industries stood at 0.7 for the April---December 2012-13 period, as compared to 3.7 per cent, same period in the previous year.

HT Media came out with a good set of quarterly numbers where the net profit saw a jump of 11 per cent, on the back of growth in revenue and cost optimisation. The profit of the company rose to Rs 53.6 crore for the quarter ended 31, December 2012 from Rs 48.2 crore in a year ago period. The revenue also rose 5 per cent to Rs 570 crore from Rs 542.9 crore in the same period last year.

The inflation data for January 2013 also came out last week. It dipped to a low of three years. The WPI based inflation data stood at 6.62 per cent as compared to 7.18 per cent, in December 2012. The inflation level was seen below the 7 per cent mark for the first time since November 2009. But food inflation, which is a component of the WPI, remained rising - it stood at 11.88 per cent in January as against a contraction of 0.68 per cent, in the same month last year.

India's trade deficit, which came out last week for January widened on the back of surging imports. The trade gap widened to $ 20 billion from $ 17.7 billion in December and $ 17.6 billion in a year ago period. Exports grew for the first time since the start of the fiscal year in April last year, on the back of better sales of engineering goods, drugs and gems. The imports grew at a faster pace by 6.1 per cent to $ 45.58 billion, which was driven by oil imports.

Counters like Siemens, Maruti, Dr. Reddy, Ranbaxy, L&T, Grasim, BPCL, BOB, ACC and Bajaj Auto are looking extremely weak and these counters will decline further in coming days. The Indian rupee is weak and it is likely to test 54.25 and 54.60 in the short term. Rupee has resistance at 54.04 and 53.95. Some of the corporate earnings that may come out this week include that of Glaxo Smithkline, Gujarat Gas, Abbott India, ABB and Thomas Cook. Now the major trigger for the markets may be the Budget and the GDP numbers, which are due on the February 28, 2013.

On the global front, the week remained subdued due to less trading volumes. The Chinese markets remained closed for the whole week on the lunar holiday. In the US, the markets swung in between red and green through last week. On the European front, the GDP of the euro area fell by 0.6 per cent in the fourth quarter of 2012 comparing to (-) 0.1 per cent in the third quarter of 2012. This week, the major data in the US may be the Core CPI data for a month on month and on a yearly basis.

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