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Action in frontline shares on Indian bourses was muted on Monday morning after last week’s rally, but the mid-and small-cap stocks were buoyant. Consumer durables and real estate shares advanced, while capital goods, power and oil majors proved a drag.

Global cues were mostly positive, but domestic concerns like inflation and speculation about a 25 bps rate hike by the RBI on Tuesday weighed on sentiment.

Apart from Dr YV Reddy announcing follow up measures on April 29, the US Fed, probably will be announcing a pause in the rate-cutting spree on the 30th, but not before cutting down the rates by another 0.25 per cent. The first reading of the US Q1 GDP will also come on the same day and all eyes will then be on the April employment numbers that will come on Friday.

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The RBI move perhaps has changed the financial landscape quite significantly. All markets will react on Monday, but there is considerable surprise at what the RBI has done, in changing the CRR and the repo rate.

It is very bad news for markets. It is almost certain that stock markets and bond markets will both sell off on Monday morning. Being led by the rate sensitive sectors, Markets are in for a blood bath on Monday morning because this has come as a surprise, particularly because the markets were expecting that rates might actually start cooling down in the end of April as inflation cools down but the RBI has not even waited for its monetary policy meeting.

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Inflation eased off a bit and was seen at 7.19 pc on April 5 compared to the previous week’s 7.41 per cent. Inflation figures for a particular week are generally announced on Fridays, but Friday being a public holiday, the figure was announced earlier this week.

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Is this going to be the turning point for the sensex? Will this be a firm support level for some time to come? Will the much talked about ‘Result Season’ bring the glorious days of the sensex back? Is this the right opportunity to enter the market again with ‘all guns blazing’? With uncertainty all around (high growth projections, high inflation, election fever etc.), that only time can tell. For the time being, we can only relish the good news as it comes and hope that the peaks are found again.

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Unfazed by the stock market volatility, leading financial institution Macquarie says 2008 could still turn out to be a great year for the Indian investors, who should stay put.

“India is now too important a market to ignore and we recommend investors to stay invested in the market. We think that 2008 has the possibility of being a great year for the Indian market,” Macquarie said in its first edition of Asia Equity Guide 2008.

The Sensex has slipped 4,000 points within a gap of two months taking global cues. Rise in crude prices, a fear of recession in the US and large-scale selling by FIIs had contributed to the fall.

“We believe that India will be in a sweet spot in 2008, with strong growth accompanied by falling interest rates. India is also a strong relative play on the global growth slowdown as it is relatively more immune than most other countries in Asia and earnings’ risk are isolated to certain sectors,” it said. Moreover, India is more isolated than other Asian countries with exports only 15 per cent of Gross Domestic Product (GDP).

Macquarie said that ahead of elections, scheduled in the first quarter of 2009, some sectors could be negatively affected by ‘election inertia’, at the same time, some sectors would benefit. “We believe that careful stock selection will make India an attractive market in which to hide from the global turmoil,” the report observed.

“We think the best play on the elections is the infrastructure and capital goods space, as the Government races to finish projects ahead of the pools. Our top picks in the country are, therefore, DLF, Reliance Communications, HDFC Ltd, Tata Steel and Reliance Industries,” it said.

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After months of mirroring the Wall Street (Indian markets going down with it), domestic markets ‘decoupled’ again this week from global markets (sadly, when the global markets were recovering). In the beginning of this year, the domestic markets were supposed to have ‘decoupled’ due to India’s high GDP growth trajectory. Continue Reading»

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Inflation numbers (at 7%) are still very much out of RBI’s comfort zone (of 5%) and show no signs of relenting. While the banking system is once again flooded with surplus cash flows, price levels too are rising to newer highs. CRR (Cash reserver ratio) hike seems to be next on the cards. This would help to reduce liquidity in the markets and hopefully in the process, lower inflation rates. Bad news for investors and retailers .. Stock markets may tumble further due to this news and the eventual liquidity crunch. Continue Reading»

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Investors mostly got a raw deal from the stock markets, with as many as 1,000 companies, including top five IT firms Infosys, TCS, Wipro, Satyam and HCL Tech, collectively losing over Rs 2,50,000 crore in market value in 2007-08. Infosys, TCS and Wipro lost Rs 18,000-42,000 crore, while Satyam, HCL Tech and Patni lost Rs 2,000-4,500 crore.

Tata Motors, M&M, Hindustan Zinc, Cipla, Container Corp, Dr Reddy’s, Tech Mahindra, i-Flex, Videocon, MTNL, Bharat Forge, Sobha Developers, United Breweries, Amtek Auto, Cadila, Wockhardt, Aventis Pharma, Ansal Properties, Aurobindo Pharma, Mindtree Consulting, Hexaware, Subex and NIIT Tech all lost between Rs 1,000-10,000 crore each.

Flagship companies of two Ambani groups, Reliance Industries and Reliance Communications, are among the five biggest losers in the Sensex market capitalisation league during the first three months of 2008. Among the top five companies which suffered the most, Reliance Industries, DLF and Reliance Communication are promoted by richest Indians, Mukesh Ambani, K P singh and Anil Ambani respectively. ICICI Bank and Reliance Communications lost Rs 51,425 crore and Rs 49,079 crore respectively. Continue Reading»

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Foreign Institutional Investors were net sellers in equities on last day of the quarter, amid the Sensex plunging over 700 points. The Sensex ended the day at 15,644.44, a fall of 726.85 points or 4.44 per cent from the previous close.

FIIs made gross sale of equities worth Rs 3,824.84 crore and gross purchase of Rs 2,959.05 crore, resulting in a net sale of Rs 865.79 crore. According to the information available on the SEBI website, FIIs sold shares worth Rs 114.30 crore on Friday.

Domestic institutional investors, however, were net investors in shares worth Rs 566.03 crore, provisional data available on the Bombay Stock Exchange showed. Brokers also invested in shares worth Rs 310.21 crore for their clients or retail investors.

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Its been a sorry state of affairs for global stock markets in 2008. All major market indices in the world have corrected significantly from their peak levels. The indices in India (Bse and Nse) crashed over 30 percent from their peak levels.

Negative investor sentiments, high interest rates, rising subsidy bill of the government (specially the fuel subsidy and agricultural loan waivers), cautious outlook projected by some large corporates, and elections due at the end of 2008 did not help the Indian markets.

The global markets (esp. US) plagued by negative sentiments and news flows related to the US sub-prime crisis, weak US economic data (job market data, property prices, and consumer purchase data) and the views and predictions of a slowdown in the US economy. Analysts feel this was bound to happen as the trading deficit of the US was on the rise from the past many years and it has reached USD 760 billion in 2006.This means a deficit of two billion dollars every day. This huge trade deficit triggered depreciation of the US dollar against all major world currencies (euro, Japanese yen, Canadian dollar, British pound etc).