Euro concerns drive markets down
Equity markets sank 3.2% this week to close at 16445. This is the 3rd weekly fall out of 4 weeks. Since the start of the week, markets carried a bearish tone and closed in red on 3 out of 5 trading days. Largest fall was observed on Wednesday when sensex fell 2.7% or 467 points and closed at 16408.49. Index did correct a 110 points on next day but Friday again saw markets plunging to day’s low of 16187, but bargain buying at lower levels made up for most of the loss.
Euro zone related concerns were main drivers of market this week. Euro fallout talks and German ban on short-selling of certain securities led to a considerable downturn in foreign markets which in turn affected Indian markets as foreign funds were withdrawn. So far in May, foreign funds have withdrawn $1.3 billon from stocks so far in May.
Earning results from companies like L&T and ITC did provide some comforts to the markets. L&T’s 4th quarter profit was up 44% whereas ITC reported a 27% rise in profits.
Govt approved a hike in Administered Price mechanism (APM) gas price from Rs 3,200/scm to Rs 6,818/scm which is close to $4.2/mmbtu price approved for RIL’s KG-D6 basin. This was a big positive for ONGC and OIL India as it substantially improves their profitability. As the news came in, both the stocks rse 9% above their previous day’s close. This however is negative for companies like NTPC which uses gas and would increase their costs.
For next week, major factors that would drive the markets would be earnings of companies like Tata Motors, Aban Offshore, Bank Of Baroda, HUL, BHEL, Tata Steel, BPCL and Sun Pharmaceuticals; roll over of F&O positions due to expiry of May contracts and ofcourse foreign factors. All these are expected to keep the market volatile but with a positive bias.
Author name: Praveen Bajaj