Markets remained mixed during the week; euphoria led rally may continue but profit booking advisable..
benchmark indices jumped on Thursday after government bond prices surged
followed by the news that Reserve Bank of India (RBI) fully sold the Rs
20000-crore worth of debt on offer, accomplishing the country's biggest-ever
auction on 17th April, 2014. Domestic bourses closed on a flat note
during the truncated week as Thursday’s 352-point rally offset initial losses.
March quarter earnings season kicked off with top four IT companies reporting
numbers, while March inflation started northward move. Sensex fell 0.12 point
to close at 22628.84 and the Nifty rose 3.10 points to 6779.40 after rallying
1.2 percent last week. There were only three trading sessions during the week.
was also a big week for Lok Sabha elections - the fifth phase (the biggest
among nine phases) of voting for 121 constituencies across 12 states was held
on Thursday, which included all of Karnataka, some parts of Maharashtra and
Rajasthan. Political experts feel this phase may give some indication of
general elections outcome that will be announced on May 16.
agency Standard & Poor’s says it can upgrade outlook on India to stable if
new government manages economic problems while it can downgrade outlook if
economic challenges are not addressed. “New government must address fiscal
challenges for outlook upgrade,” it says in its report. In case of economic
data, March WPI inflation and CPI inflation started rising again and even
industrial output (announced on Friday after market hours last week) has seen
contraction in February. WPI climbed to 5.70 percent, the highest level since
December 2013, as against 4.68 percent in previous month due to higher food,
manufacturing and fuel costs while CPI rose to 8.31 percent from 8.03 percent
month-on-month. India’s index of industrial production in February came in at
negative 1.9 percent versus an expansion of 0.8 percent in January, which was a
nine-month low. Meanwhile, top four IT companies kicked off the March quarter
earnings season with positive commentary for the year ahead (FY15), though
numbers were mixed. The BSE IT index climbed gained 0.8 percent as Wipro and
TCS rallied 3 percent each while HCL Technologies and Tech Mahindra climbed 1.7
revenues were lower than analysts’ forecast while margin and profits were
better. The company also beat on guidance front as it expects 7-9 percent
growth in FY15 dollar revenue as against street forecast of 6-8 percent. Top
software services exporter TCS missed expectations in terms of Q4 dollar
revenues (up 1.9 percent Q-o-Q) and margin (down 60 basis points) while profit
was higher but the management reiterated its outlook saying FY15 will be better
than FY14 . In case of Wipro, EBIT margin in March quarter grew 150 bps
sequentially and revenue was in line but its Q1FY15 guidance is muted. HCL
Technologies and midcap IT company Mindtree reported strong numbers in the
quarter ended March 2014 with their dollar revenue growing 3 percent and 4.4
percent, respectively. Private sector IndusInd Bank too announced its earnings
during the week, which were higher-than-expected. Net interest income grew 18.2
percent and profit rose 29 percent as against expectations of 15.4 percent and
13.5 percent growth, respectively. Among sectoral indices, the BSE FMCG topped
the buying list with 2.2 percent upmove while Auto and Oil & Gas gained
over 0.6 percent. However, Realty fell 4 percent while Metal and Capital Goods
were down 0.8-1 percent. Bank index slipped 0.4 percent. United Spirits was the
biggest gainer among Nifty 50, rising more than 11 percent after Diageo
announced open offer to buy further 26 percent stake in the company at Rs 3,030
ahead, the week would be a truncated on account of an election holiday. All
eyes would be on Reliance Q4FY14 result to be announced during the weekend.
Markets may consolidate unless there are specific triggers from global markets.
We recommend investors to be stock specific and accumulate companies having
economic moat. Dependence on the fate of election outcome could be risky if
results turn out to be unfavourable, as a result suggest partial profit booking
since rally has been sharp from 5800 levels due to discounting of expectation
that BJP government would come into power and that FII inflows will continue.