All Eyes On Q4 Numbers, Markets Play Safe

After a short but decent rally, the markets shed some weights on April 3 to prepare for the next week, when the crucial Q4 numbers would start pouring in. The markets have however gained consecutively for the last four sessions. The announcement of the Ambani brothers signing the optical fiber deal on April 2 bolstered the confidence of the bourses with the BSE Sensex gaining almost one per cent (176 points) in intraday trading.

A big drop in direct tax collection by around Rs 17000 crore against the revised estimates acted as a big dampener for the markets. This clearly indicates a gloomy picture for the overall economy, which is already reeling under creeping inflation, high CAD and bad manufacturing and core sector data. Going forward, things now depend on the performance shown by Indian Inc. in the March 2013 quarter and more importantly on the decision of RBI on interest rates.

During the last fortnight, the BSE Sensex opened at 18926 points on March 21 and touched its pinnacle on the same day at 19082.29 points. Since then, apart from some positive cues, the markets remained largely range bound and haven’t been able to touch their highest level.

The Sensex touched its lowest level of 18568 points on March 28 before closing at 18801 points on April 3, shedding 124 points thereby slipping marginally from the crucial 19000 points mark. Similarly, the NSE Nifty opened sober at 5705 points on March 21 and touched the highest point of 5757 points on the same day. However, soon after the CAD and PMI numbers came in, it plummeted to 5604 points on March 28 before closing at 5672 points, marginally losing 33 points during the fortnight.

As far as the global indices are concerned, the US Dow has also shown some resilience with a 1.04 per cent jump. During the fortnight, Singapore’s STI remained the biggest gainer with a 2.11 per cent jump, followed by Taiwan Weighted, UK’s FTSE and South Korea’s Seoul Composite that gained 1.08 per cent, 0.90 per cent and 0.86 per cent respectively.

On the contrary, Japan’s Nikkei 225 lost heavily to shed 4.67 per cent during the last fifteen days owing to bad recovery numbers. Likewise, China’s Shanghai composite and Brazil’s Bovespa were other prominent losers with a 4.15 per cent and 2.03 per cent drop respectively.

In spite of the prevailing uncertainty in the markets, the confidence that FIIs have in the Indian bourses is a silver lining. Since quite a few sessions the FIIs in particular are parking their riches into Indian equities and the last fortnight saw this trend continuing. Till March 28, FIIs purchased equity worth of Rs 3251 crore. Indian mutual funds followed suit and netted equities worth Rs 2007 core as far as the turnover is concerned. The combined turnover of NSE and BSE wandered between Rs 8869 crore and Rs 17202 crore portraying sharp fluctuations in the interest of investors during trade.

With respect to individual scrips, 1696 stocks out of the total listed entities moved forward while 999 declined. 58 stocks remained unchanged. With regard to gainers, core project remained the biggest gainer with a 33.43 per cent rise, followed by Opto Circuits, Adani Port, GSPL and RCom, which gained 29.59 per cent, 16.46 per cent, 15.48 per cent and 15.19 per cent respectively. On the contrary, Motherson Sumi lost almost 11.68 per cent to become the biggest loser of the fortnight, followed by MMTC, Hero MotoCorp, Mahindra Satyam, and Torrent Power that lost 8.57 per cent, 5.55 per cent, 5.30 per cent and 5.04 per cent respectively.

Looking at the present scenario, Sensex performance and financial crunch and the key inflation and interest rate parameters, it is likely that the Q4FY13 results and global cues especially from the Europe will be the most important factors to decide the fate of the Indian markets going forward. It also in a way depends on the RBI’s stands on interest rates.