RBI held policy rates status quo, Fed did not say anything new and the ECB brought out its differences with the most influential central bank in the Euro zone. Equity markets, which were expecting more from central banks exhibited strength despite the disappointment leading to expectations of markets rising in the coming weeks.
Equities were helped by better than expected job data from the US and by prospects of the ECB buying bonds of Italy and Spain. The US economy added 163,000 jobs in July against expectations of 100,000 job additions. US unemployment rate rose to 8.3% from 8.2% as more workers entered the job market. The positive job numbers helped US equities close week on week almost flat despite being in the red during the week.
The ECB is expected to commence bond purchase of Italy and Spain in a few weeks time. ECB will buy bonds at the short end of the curve to help stabilize bond yields and bring down risk premiums. European equity markets got over the disappointment over ECB’s differences with the German central bank, the Bundesbank and rallied smartly on the last trading day of the week
Indian equities rallied on prospects of ECB bond purchases and closed in positive territory week on week. The derivative markets are showing positive trend ahead with rise in Nifty near month futures open interest and fall in near month Nifty index options implied volatility.
Select gainers and losers in BSE 500 last week.
Contributed by research associates Ketan Verma and Ajith BP
- United spirits gained on positive effect of Q1 result.
- TTK Prestige rose on European acquisition buzz.
-As per a media report, TTK Prestige is looking at acquisitions in Europe to have an exclusive brand for the overseas market. The size of the acquisition would be about Rs 300 crore.
- Pipavav Defence and Offshore Engineering Company (Pipavav) gained after company and DCNS have decided to establish a strategic partnership for bringing DCNS technologies, methods and skills into Pipavav.
–Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) have put Pipavav Defence under 5% circuit filter after consultation with SEBI.
- Shares of FMCG major Marico fell on profit taking, even after the company reported better than expected numbers in the quarter ended June 2012.
- Telecom industry has been disappointed with Cabinet decision on fixing minimum or base price at Rs 14,000 crore for spectrum. The telecom industry on Friday said the recommendations will prove to be “regressive” for the sector’s growth and that operators would be forced to raise tariffs for consumers. The effect of the news can be clearly seen on the telecom stock.
- Coal india declined this week on poor market sentiment on the stock.