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30-04-2012 11:44 AM
The markets in India were flat with negative bias during most of the trading sessions barring the Tuesday rally which was driven by the impressive Q4 show and optimistic revenue guidance by Indian IT major TCS. On the positive side, the markets survived the S&P downgrading of Indian economy and not so impressive quarterly earnings by major companies. The Nifty has not broken the psychological barrier of 5200 assertively. The key indices Sensex & Nifty finally ended the week with the losses of 1.38% and 1.89% respectively.
The market breadth on the BSE for the week closed in negative. Advances and declining stocks were in a ratio of 1036: 2179.
BSE has trimmed INR 1,42,357.04 crore (2.3%) from its market cap whereas NSE has removed INR 1,42,183.58 crore (2.36%) from its market cap. RIL, TCS, ONGC, Coal India, and ITC were the top 5 contributors to the BSE market cap.
S&P downgrade
The big story of the week is that the International credit ratings agency, Standard & Poor (S&P) has revised India’s economic outlook from ‘stable’ to ‘negative’ due to the large fiscal deficit, low expectations of economic reforms and a slowing down of GDP growth. The ratings agency affirmed 'BBB-' long-term and 'A-3' short-term sovereign credit ratings on India. The negative outlook signifies that there is one in three chances of sovereign rating downgrade in next two years if the situation does not improve. S&P has estimated India’s GDP growth at 5.3% in FY13 as compared to the government’s estimate of over 7%. S&P is also not hopeful of the government achieving fiscal deficit target. The fiscal deficit is pegged at 5.1% of GDP for the FY13 and stood at 5.9% of GDP in FY12, which is one of the highest amongst emerging countries.
Sensing the nervousness Finance Minister Pranab Mukherjee assured the markets that the Indian economy will grow at a 7% rate and that the fiscal deficit targets would be achieved.
Market confidence was restored further after another international rating agency Moody's Investors Service came to the rescue by reaffirming ‘stable' outlook on India, citing that present negativity will not sustain too long. Moody's affirmed Baa3 rating on India, while Fitch has a BBB (-) rating. These ratings are also the minimum investment grade ratings as is the case with S&P ratings, a step above so-called junk status.
TBZ IPO
Tribhovandas Bhimji Zaveri Ltd IPO for 1.66 Crore equity shares, that opened for subscription on Akshay Tritiya Day finally subscribed 1.15 times (0.68 time in retail) on Thursday. The price band for the issue was Rs. 120- Rs. 126 per equity share. The issue had begged the IPO Grade 3 from CRISIL.
Key Quarterly Results (for the period ended 31st March 2012)
TCS became the first Indian IT company to cross the ten billion dollar milestone posting annual revenues of $ 10.17 billion. The company Posted 22.6 per cent y-o-y rise in Q4 net profit (consolidated) and is confident of beating Nasscom revenue guidance for the fiscal. Wipro Limited on the other end reported 7.7% y-o-y rise in net profit (consolidated) for Q4 ended 31st March 2012 but posted weak Q1 revenue guidance. Earlier in the previous week Infosys also shocked the market with weaker than Nasscom average revenue guidance for next fiscal.
Forex Market
On the forex front rupee continued its southward journey against USD. As per RBI ref data INR depreciated 1.31% from Rs. 52 (previous week close) to Rs. 52.68 per US Dollar. Against the Euro it depreciated 1.43% on w-o-w basis. The market expects RBI intervention once INR crosses 54 to a USD.
Going forward
Investor to watch out for: Special trading session on April 28 (Saturday), quarterly earnings, global cues et al.
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CFA
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Sunil Patni
CFA
Over 13 years of exp in Financial Research & Analysis, Financial Product Development, Business Analysis and Business Development; Hands on domain exp of U.S. and Indian Financial Securities Markets (Variable Annuities, Mutual Funds, Stocks)
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Sector
Companies
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