US benchmark indices posted positive gains on account of encouraging economic data that was reported last week. The GDP growth was reported at 2.8% in the third quarter of 2013 compared to 2.5% growth in second quarter of 2013. The Non-Farm payroll data was reported at 2,04,000 job additions in October 2013 as compared to 1,48,000 in September 2013. The Unemployment rate climbed back to 7.3% in October 2013 from 7.2% in September 2013. The jobless claims for the previous week were reported at 3,36,000, which is below the week before last numbers of 3,40,000. The Dow Jones Industrial Average rose marginally by 0.93% and NASDAQ declined 0.23% on a week on week basis.
The Sensex and Nifty are likely to trade circumspect on US NFP numbers. On one hand it is positive for equities as the world’s largest economy is showing growth in employment. On the other hand, positive job numbers could make the Fed taper off its asset purchase program sooner than expected leading to FIIs selling off equities.
The Sensex and the Nifty declined 2.51% and 2.63% respectively in the last week that saw markets reach record highs of 21,239 for the Sensex on the eve of Diwali during Muhurat trading on the 3rd of November 2013. The FII inflows have helped the markets register record highs amidst mixed Q2FY14 numbers for companies. The HSBC Services Purchasing Managers Index (PMI) rose to 47.1 in October 2013 compared to 44.6 in September 2013. PMI below the level of 50 indicates a weak business sentiment for the services sector. Services contribute about 60% to the GDP of India.
The major currencies depreciated against the USD. The Euro declined 0.89% against the USD to 1.336 USD per Euro and Japanese Yen declined 0.39% on a week on week basis. The US Dollar Index strengthened 0.59% to 81.20 on a week on week basis. ECB rate cut of 25bps took the policy rate to record lows of 0.25% and this helped weaken the Euro.
Crude oil prices declined 0.83% to USD 105.12 /bbl and gold prices declined 2.05% to USD 1289 /Oz on a week on week basis. Gold prices declined as positive economic data in the US economy gave way to speculation that the Fed might reduce the stimulus in monthly asset purchases earlier than expected.
The equity derivatives market saw fall in open interest in Nifty Index futures by 11.95% while implied volatility of Nifty index options increased week on week. FIIs were net buyers to the tune of Rs.1100 crores in the equity market in the last week. Domestic Institutional Investors were net sellers to the tune of Rs.2860 crores in the equity market in the last week.
Industry and Stock Specific trends
The sectoral indices declined significantly last week with only the S&P BSE IT index closing positive with a 1.47% increase on a week on week basis. S&P BSE Auto, Bankex, PSU and Oil and Gas indices declined 1.64%, 6.15%, 1.63% and 3.13% respectively in the last week.
Tata Motors stock rose 0.41% to Rs.385 in the last week as the company reported stellar performance of the Jaguar Land Rover Company for Q2FY14. The company reported an increase of 71% in the consolidated net profit to Rs.3542 crores with a 31% increase in revenues to Rs.56,882 crores on a year on year basis for Q2FY14.
BHEL stock declined 5.58% to Rs.135 as the company reported a 64.22% decline in the consolidated net profit to Rs.456 crores and an 11.31% decline in the revenues to Rs.9482 crores on a year on year basis for Q2FY14.
Tata Steel stock rose 5.8% to Rs.356 on a week on week basis.
Mahindra and Mahindra declined 5% to Rs.879 on a week on week basis.
ONGC stock in the Oil and Gas space declined 3.61% to Rs.277 on a week on week basis.
State Bank of India stock declined 7.19% to Rs.1744 as the bank announced upward revision in the base rate from 9.8% to 10% and the benchmark prime lending rate from 14.55% to 14.75% in the last week.
Table 1. Weekly Market Movement
Table 2. Weekly Gainers and Losers