Equity Markets Weekly Snapshot. Nifty declines on intensified selling
On 21 Feb 2012: Moneyline Nifty Positional Sell Call - Sell Nifty advised at 5689 for Targets 5365, 5185 & 5005. Add more was advised on a sustained momentum below 5005, for Targets 4915, 4690 & 4465. Result: Target 5 of 4690 is close by— Nifty Futures at 4767.45 on 18 May 2012. Expect a weaker opening & lower levels next week.
After witnessing a bounce back last week from the 4800 levels on the Nifty, Indian Equity Markets found resistance at higher levels and slid lower. Selling intensified on Friday. The market breadth remained weak. Reflecting slowdown in the economy, the growth rate of eight infrastructure sectors has slowed down to 2.2% in April because of poor performance of crude oil, natural gas, petroleum refinery products and fertilizers. The eight core sectors, which also include coal, electricity, cement and finished steel, and have a weight-age of 37.9% in the Index of Industrial Production (IIP), had grown by 4.2 per cent in April 2011.
India’s manufacturing sector slipped marginally in May as the marked growth in output was impacted by slowing domestic order book. The HSBC India Manufacturing Purchasing Managers’ Index (PMI) - a measure of factory production - slipped slightly to 54.8 in May, from 54.9 in April. Activity in the manufacturing sector kept up the pace in May with output, quantity of purchases and employment expanding at a faster pace. New orders decelerated slightly led by domestic orders.
The country’s fiscal deficit narrowed to 5.75% of the gross domestic product (GDP) in 2011-12, compared with 5.9% in the revised estimates, despite the actual GDP being slightly lower than that assumed in the Budget. This was because expenditure was also less than that estimated in Budget 2012-13. Fiscal deficit stood at Rs 5.09 lakh crore in 2011-12, lower than the revised estimate of Rs 5.21 lakh crore. Actual GDP stood at Rs 88.5 lakh crore, against the Budget estimate of Rs 89.12 lakh crore.
All sectoral indices except FMCG and Teck finished the week in red. FMCG was constant while Teck rose by 0.3%. The top losers were Auto, Capital Goods, Consumer Durables, Bankex and Oil & Gas, whch ended lower by 6%, 3.5%, 2.3%, 2% and 2% respectively.
Global Markets Update:
Investors are rushing to safe havens in preparation for financial Armageddon, the long-feared run on European bank deposits that is expected to develop once Greeks awake some Monday morning this summer to find out the euros in their bank accounts have turned into devalued drachmas. Indeed, unconfirmed reports out ofSpain are that some depositors are already withdrawing euros.
German CPI, down by 0.2 point in May (to 1.9%), reached its lowest level since December 2010. The harmonized inflation (HICP) also eased (to 2.1%). According to regional data, inflation fell in food and clothing sectors. Over the month, consumer prices fell by 0.2% m/m in line notably with a decrease of prices in the leisure, clothing and in energy sectors.
Germany’s unemployment rate dropped below 7% in May, the labor agency reported Thursday, as Europe’s largest economy performed well despite problems in the eurozone. However, the labor market’s momentum showed signs of slowing. The jobless rate fell to 6.7% in May from 7% in April, with the total number of people registered as unemployed down 108,000 to 2.86 million - the lowest level since December. Compared with May 2011, there were 105,000 fewer Germans without jobs.
Serbia has no room for fiscal expansion and would be punished by financial markets if it loosened policy as it seeks to restart talks on its bailout loan, central bank Governor Dejan Soskic said. The government to emerge from May 6 parliamentary elections must quickly trim the Balkan nation’s budget deficit after it hit 6 percent of gross domestic product in the first quarter, compared with a full-year goal of 4.25%, while public debt hit 46.7% of GDP, Soskic said in a phone interview in Belgrade yesterday.
French consumer spending rebounded more strongly than expected in April despite rising unemployment, as higher energy spending due to unseasonably cold weather more than compensated for a decline in manufacturing output. March’s figure was also revised up slightly to a 2.6% fall, versus the initial reading of 2.9%.
Italy’s consumer price inflation slowed in May, after holding steady in the previous two months. The consumer price index (CPI) rose 3.2% year-on-year, following a 3.3 percent gain in April. Core inflation, which excludes energy and food, fell to 2.2% from 2.3%. Month-on-month, the CPI was flat in May, after a 0.5% gain in each of the previous two months.
Eurozone Consumer Confidence grew in May to -19.3 points, from -19.9 points in April, according to data released today by the European Commission. Eurozone inflation surprised to the downside, falling to a 15-month low of 2.4% in May, Eurostat reported on Thursday.
The U.K.’s broad money aggregate, M4, declined at a slightly slower pace in April. M4, which is a measure of the quantity of U.K. money supply, dropped a seasonally adjusted 3.8 percent annually in April, after falling 4.8 percent in the previous month. Money supply fell for the nineteenth month in a row. On a monthly basis, M4 money supply rose 1.1 percent, marking an increase for the first time in three months.
Japanese factory output rose in April at a slower pace than expected, in a discouraging sign that China’s slowing economy and Europe’s debt crisis will weigh on Japan’s fragile recovery. The 0.2% increase in production was much slower than a 1.3% rise in March and less than the median estimate for a 0.5% gain, trade ministry data showed on Thursday, as some manufacturer’s curbed production due to an increase in inventories.
Japan’s unemployed people swelled to 3.15 million in April, leaving the unemployment rate at 4.6%, up o.1 percentage points from March. The jobless rate of men dropped 0.1 percentage points to 4.8% and the rate of women rose 0.1 percentage points to 4.2%. The ministry said the unemployment rate rose as more workers quit their jobs and seek for better pay or positions.
The US Conference Board’s Consumer Confidence Index for May fell to 64.9, after falling to 68.7 last month. The S&P Case-Shiller 20-city Index, which tracks home prices, fell at a 2.6% annual rate in March, after falling at a 3.5% rate in the prior month.
National chain store sales edged down 0.9% in the first four weeks of May from April, according to Redbook Research’s latest indicator, released Wednesday. Redbook said holiday traffic and promotions ahead of Memorial Day boosted sales slightly above target. Seasonal demand is expected to continue to drive sales through June, but will likely moderate in July ahead of fall re-stocking and the back-to-school period. Sales for the week ended May 26 rose 3.2% year-over-year.
The number of Americans signing contracts to buy previously owned homes fell in April by the most in a year, indicating the U.S. housing recovery remains uneven. The index of pending home re-sales dropped 5.5% following a revised 3.8% gain the prior month.
U.S. equity markets & stocks tumbled, falling for the fourth time in five weeks and erasing the Dow Jones Industrial Average’s 2012 gain, amid concern the global economy is slowing and Europe’s debt crisis is worsening. The Standard & Poor’s 500 Index slumped 2.5% Friday. Energy shares sank 4.6%.as oil had the biggest monthly decline in more than three years. An index of homebuilders tumbled 10%, the most since August, amid worse-than-expected housing data. Facebook Inc. plunged 13%. The S&P 500 lost 3% to 1,278.04 for the week, trimming its gain for the year to 1.6%. The Dow dropped 336.26 points, or 2.7%, to 12,118.57, putting it below 2011’s closing level and erasing a year-to-date rally that had been 7.1% as of May 1. US unemployment rose to 8.2% in May. U.S. added just 69,000 jobs in May, the smallest net increase in non-farm payrolls in a year. The Institute for Supply Management reported Friday that conditions for the nation’s manufacturers slipped in May, with the ISM index falling to 53.5% from 54.8% in April.
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