Closing Week 15-19 APRIL 2013 (Friday : Ram Navami)

MARKETS THIS WEEK

Are Bulls back and here to stay?

The week gone by saw the main indices bouncing back sharply after five weeks of weakness. The rise this week has retraced more than 50% of the fall seen in the last five weeks. In the process, the Nifty has gained 4.6% week on week.

Indian Markets

• Notwithstanding the gloomy prognosis, IIP numbers for February 2013 are a surprise, with the Index registering a 0.6% growth. Even though the Index actually registered a decline in Y-O-Y growth in Feb from the earlier month (2.4% in Jane '13), the Y-O-Y growth in capital goods at use-based level at 9.5% was unexpected. At this rate, the weighted contribution of capital goods to IIP growth was the highest since, Feb 2012.
• M3 money supply rose an annualised 12.4% in the two weeks to April 5, compared with 14% a year earlier, the RBI said on Wednesday. Money supply was 85.06 trillion rupees ($1.57 trillion) as of April 5, compared with 83.59 trillion rupees on March 22, the central bank data showed.
• Reflecting some recovery in the global markets, India's exports grew for the third month in a row, rising by 6.97% in March though on annual basis it declined 1.76% to $300.6 billion in 2012-13. Exports in March stood at $30.8 billion compared to $28.8 billion in the same month of previous year. Imports dipped by 2.87% to $41.16 billion in March, leaving a trade deficit of $10.31 billion from $13.5 billion in March last year.
• In January, it had widened to $20 billion, the second highest figure ever in a month. However, for 2012-13, the trade deficit grew to $190.91 billion as against $183.3 billion in the previous fiscal.
• Insurance and pension fund companies may get total freedom in deciding their investments to achieve higher returns and attract investments. A committee set up by the finance ministry is set to recommend removal of all limits in investments in various assets in a far reaching liberalisation move.  The recommendations may allow insurance and pension funds to invest across diversified assets like government securities, corporate securities, equity, mutual funds, securitised assets, gold, real estate and related commodities and sovereign funds of foreign countries among others.
• Slowing economy and fewer mergers and acquisitions seem to be impacting the collections of TDS for the Income Tax department. According to senior Income Tax officials, TDS collection from Mumbai circle is estimated to be 10% higher for FY2013, as compared to last fiscal. This, when the I-T department had targeted to expand its tax kitty from TDS by at least 13-14% for FY13

Key Sectoral Movement

Barring BSE IT & Teck, which ended lower by 2.3% & 0.4% respectively, all the other sectoral indices closed in the green for the week ended April 18, 2013. The top gainers were BSE Bankex, Capital Goods, Realty, FMCG and Auto, which rose by 7.5%, 5.8%, 5.3%, 5.3% and 5% respectively.

Global Markets Watch 

• China’s GDP grew at a 7.7% annual rate in the first quarter, less than the 8% economists had forecast. China's Q1 GDP is below the 7.9% growth rate recorded in the fourth quarter of last year has has prompted fears of a global growth slowdown.
• China's industrial value-added output growth eased to 9.5% Y-o-Y in Q1CY13. The pace was also 0.5% slower than the full-year growth registered in 2012. In March alone, the industrial output rose 8.9 percent year on year, decelerating 1 percentage point from the first two months of this year.
• The euro zone's trade surplus grew in February, but the positive balance was helped by lower demand for imports rather than export growth. The trade surplus for the 17 countries sharing the euro, unadjusted for seasonal swings, was 10.4 billion euros in February.
• Officials from the European Union and International Monetary Fund said they will not give Cyprus extra cash to plug the gaping holes in its finances.
• Eurozone industrial output rose by more than expected in February, but analysts warned that it was not enough to spearhead an economic recovery in the crisis-hit region. The 0.4pc rise in the 17-nation currency bloc from January was above the expected 0.2pc increase forecast by economists.
• BoE Minutes from the MPC monetary policy meeting held on 3 and 4 April and released on Wednesday revealed that the Committee voted unanimously in favour of maintaining the interest rate at 0.5%. As far as the proposition to continue with the program of asset purchases totalling £375 billion is concerned, six MPC members voted in favour while three voted against it.
• The Bank of Canada cut its growth forecast on Wednesday in a signal that interest rates will remain at historically low levels for some time. Growth in Canada will expand by 1.5% in 2013, down from January's estimate of 2%, the Bank of Canada said as it held its key overnight rate at 1%. The cut in outlook comes as the International Monetary Fund this week reduced its growth forecast for the Canadian economy.
• The April 2013 Empire State Manufacturing Survey indicates that conditions for New York manufacturers improved slightly. The general business conditions index fell six points, but at 3.1, remained positive for a third consecutive month. Similarly, the new orders index was lower than last month but still positive, dipping six points to 2.2, and the shipments index fell to 0.8.
• US Retail sales dropped 0.4% in March, marking a sluggish start to the shopping season. Economists were expecting sales to be unchanged from February.
• US Consumer confidence also came in below forecasts. The University of Michigan's preliminary reading on consumer confidence for April fell to 72.3 from 78.6 last month. Economists were expecting the index to barely slip to 78.
• The US Producer Price Index slid 0.6% in March, a more dramatic drop than the 0.1% economists had forecast. That's another sign that inflation is not a problem right now.
• Applications for US home mortgages rose last week for the second week in a row, helped by renewed demand for refinancing, data from an industry group showed on Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, was up 4.8% in the week ended April 12

Outlook for Indian Markets
The markets are now in a firm short-term up trend as the Nifty has surged strongly and also taken out the previous highs of 5754 in the process. Today’s positive closing has also led to the Nifty convincingly closing above the 200-day EMA, which is a positive signal. Further upside targets for the coming week are at 5864. Weakness could emerge if the supports of 5653 are broken.