Category: Economy, Markets and Macro Views

We had anticipated a strong market rally, in our view the 20-25% higher closing prices of several index heavyweights reflects the strong pull from the futures market rather than genuine price discovery in the cash market. The substantially higher activity in futures and options (US$560m) supports anecdotal evidence that futures were the preferred choice of participants for gaining exposure to the expected market rally on the basis of cost and effectiveness.

The extent of the rally in some names is not that surprising if viewed against the (more…)

Equities triggered final upper limit on Monday in response to Congress-led United Progressive Alliance’s (UPA) unparalleled victory at the general elections.

When the market halted for the day, the Sensex was at 14, 272.63, up 2099.21 points or 17.24%. Similarly, the Nifty gained 636.4 points or 17.33% to 4308.05 at that time. The base for calculating the percentage rise was SENSEX and NIFTY closing figures of March-31st. I don’t know who did this rule, but this is the rule.

According to the new rules, if there is 10% movement of either Sensex or the Nifty, trading is halted for an hour market, if this happens before 1 pm. Post 1 pm but before 2.30 pm, there is halt for half-an-hour, while after 2.30 pm, trading does not halt at the 10% movement. (more…)

The situation of ambiguity has come to an end. This is a big relief for the Investor fraternity as this is a mandate to the run the Government for the next five years and most importantly Congress would have a say as far as the policies and the key ministerial berths are concerned.

Political risk premium, in our opinion, certainly would recede significantly with this decisive mandate. This is likely to help India improve its sovereign rating going forward. The weightage assigned to the Indian Equity within the emerging market (more…)

55 of the Top companies have reported results. Aggregate earnings fell 3.2% YoY against streets’ expectation of a 7% fall YoY. In terms of surprise breadth, for 53%, or 29, companies’ net profits exceeded expectations by 5% or more, while 16 companies reported results that trailed our analyst expectations by 5% or less. Only three companies of this pack have reported losses.

Eighteen companies in the BSE Sensex have reported thus far, with aggregate earnings down 11% YoY, compared with expectations of a 7% fall. Excluding the energy sector, the Sensex earnings are down 14%, below expectations. (more…)

India has been one of the best performing markets since mid March with ~ $2.0 bln of FII inflows moving into Indian equities in the past 2 months. Expect to see signs of stress on account of the slowdown, Indian companies’ earnings have been among the least volatile among emerging markets. Earnings are likely to remain under pressure for the next one to two quarters, as the full effects of the earlier monetary tightening measures and the credit squeeze feed through the economy.

Indian markets will continue to take cues from global developments and global market movements. The correlation of Indian markets to global markets has increased significantly over the last 12 months. (more…)

How to read the election numbers is probably the most important question on Investor’s mind. Here are some combinations and its impact on the market.

The best case with a negligible chance is a scenario where the leading coalition gets over 200 seats. This would be expected to cause the markets to soar immediately and would be good longer term too.

The worst is the scenario where both leading coalitions have less than 160 seats. Bad for equities in the short and long term. (more…)