Equity market - weekly update

April 28, 2012 by sknlakshmi

Market review  -  week ended 27th April 2012

Market declined during the last week after credit rating agency S&P cut India’s long term rating outlook to negative from stable on slowing growth and ballooning current account deficit.  The market declined in three of five trading sessions.  Sensex declined 1.38% to 17134.25 and Nifty declined 1.89% to 5190.60. 

The week opened with negative trend on Monday on weak global markets.  Market slightly higher on Tuesday Market on positive European market. Market declined on Wednesday on report by rating agency about country’s long term outlook.  Market continued its negative trend on Thursday, expiry of derivative contract also added high volatility.  Market closed flat on Friday, weak quarter results reported also weighed on sentiment. 

Corporate were announcing quarter results.  The combined net profit a total of 208 companies fell a 1.6% to Rs 22874 crore on 18.6% rise in sales to Rs 216651 crore in the quarter ended March 2012 over the quarter ended March 2011. Net profit rose 11.8% to Rs 86321 crore on 27% rise in sales to Rs 802659 crore in the year ended March 2012 over the ended March 2011.

Global crediting rating agency S&P revised its outlook on India's long-term rating to negative from stable, citing a slowdown in investment and economic growth and a widening in the current account deficit. This has resulted in a weaker medium-term credit outlook, the rating agency said. S&P affirmed its 'BBB-' long-term and 'A-3' short-term sovereign credit ratings on India. The negative outlook signals at least a one-in-three likelihood of the downgrade of India's sovereign ratings within the next 24 months. High fiscal deficit and a heavy debt burden remain the most significant constraints on India's sovereign ratings, S&P said. Finance Minister said there was "no need for panic" after the rating agency Standard & Poor's downgraded the country's outlook. India is likely to pass some financial reforms in the current session of parliament

Market outlook – week begins from 30th April 2012

Corporate results announced by companies will dictate the trend of market during the coming week.   Investors are closely watching corporate results announced by Indian corporate for the quarter ended March 2012 to gauge future earnings outlook. HSBC's monthly purchasing managers' index  is likely to be released next week. HSBC Services PMI data is also likely to be released next week. FMCG giant Hindustan Unilever unveils FY 2012 results on Tuesday, 1 May 2012. Hero MotoCorp announces Q4 results on Wednesday, 2 May 2012. Bank of Baroda unveils Q4 results on Friday 4 May 2012.

Automobile and cement shares will be in focus in the forthcoming week as companies from these two sectors will start unveiling monthly sales volume data for April 2012 from Tuesday, 1 May 2012. Market remains closed on Tuesday, 1 May 2012 on account of Maharashtra Day.

Science and Technology Minister on Thursday said that the country is likely to receive normal monsoon rains for the third year in a row, with the June-September rainfall expected to be 99% of the long-term average. But the possibility of El Nino weather conditions associated with below-normal rains can't be ruled out in the later part of the season. If El Nino does lead to reduced rains, it may prevent India from repeating the bumper harvests of summer-sown crops it recorded in 2010 and 2011 as rainfall distribution is critical for yields. The summer-sown crops in India include rice, oilseeds, pulses, sugar cane and cotton. The country is highly reliant on monsoons, as more than 60% of the country's farmland is rain-fed and the June-September monsoon season accounts for about 70% of the country's annual rainfall.

India's high savings rate and a favorable debt profile continue to support its sovereign rating, but the economy faces headwinds due to an anemic fiscal health, ratings firm Moody's said Thursday. India's Baa3 government bond ratings incorporate credit strengths such as a diversified economic structure, a relatively strong medium-term growth outlook, fairly robust domestic savings, and adequate international reserve coverage of external liabilities