Hope Springs Anew
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The RBI and the US Fed's status quoist policy disappointed the markets in the last fortnight. However, there seems to be some good news coming in on quarters like crude prices and gold imports, says Saikat Mitra.
The last fortnight started with a lot of optimism as there were expectations that the RBI will cut the interest rates to give a much-required boost to the economy. To the disappointment of all, the regulator left the rates unchanged. This was certainly not expected, which is evident from the way the markets have behaved since then. The Sensex and Nifty closed the fortnight with gains of merely half a percentage point each.
| Index | 27 June
2012 | 13 June
2012 | %
Change |
|---|
| Sensex | 16,967.76 | 16,880.51 | 0.52 |
| S&P CNX Nifty | 5,141.90 | 5,121.45 | 0.4 |
| BSE - 100 Index | 5,148.02 | 5,120.29 | 0.54 |
| BSE - 200 Index | 2,086.14 | 2,071.73 | 0.7 |
| BSE - 500 Index | 6,525.50 | 6,481.45 | 0.68 |
| NSE - CNX 100 | 5,027.15 | 5,003.45 | 0.47 |
| NSE - CNX 500 | 4,069.85 | 4,043.75 | 0.65 |
| Index | 27-Jun-12 | 13-Jun | % Change |
|---|
| BSE Midcap | 6,051.50 | 6,000.94 | 0.84 |
| BSE Smallcap | 6,444.39 | 6,365.30 | 1.24 |
Investors are still not getting a hold on the market direction. This can seen from how indices like the BSE FMCG (+1.46 per cent) and BSE Healthcare (+3.20 per cent), traditionally considered safe havens, have behaved.
On the global front, the US Federal Reserve maintained status quo, and instead of introducing QE3, it extended the ‘Operation Twist’ upto December 2012. The US and the European markets remained flat.
| Index | 27-Jun | 13-Jun | % Change |
|---|
| Shanghai Composite | 2,216.93 | 2,318.92 | -4.4 |
| FTSE | 5,470.27 | 5,478.86 | -0.16 |
| Dow Jones Ind Avg | 12,534.67 | 12,573.80 | -0.31 |
| Nikkei | 8,730.49 | 8,587.84 | 1.66 |
Between all these developments on the domestic and international fronts, there are signs of the proverbial light at the end of the tunnel. There has been some good news coming in, with declining crude prices that have helped reduce the under-recoveries of the oil marketing companies, as also the fall in gold imports. These two phenomena will help control the twin deficits to some extent.
We believe that while there may be some volatility in the markets going forward, there is certainly some optimism building up.