It's a slow climb

Last Monday, markets were down due to concerns about economic growth, but in the next three trading days, markets remained sideways as they were supported by the US markets.

Around 2,500 members of the Japan Fisheries Cooperatives protest against rising fuel prices caused by a weakened Japanese Yen, at a rally in Tokyo on May 29, 2013. The yen has weakened by a fifth since November 2012. Pic/AFP

On the last day, markets reversed their direction and ended on a flat note. Bank Nifty and Small Cap sector were seen down around 2.2 per cent and 0.7 per cent respectively. Cipla and DLF, which closed down around 10 per cent and 9 per cent respectively, remained the loser stocks for the week while Tata Motors and Sun Pharma, which closed up around 9 per cent and 8 per cent respectively, were the gainers in the stocks.

Data
The GDP data for the quarter ended March 31, 2013, was released on the last trading day of the week. It stood at 4.8 per cent which was a marginal improvement over the third quarter GDP growth rate of 4.7 per cent. The GDP data for the entire fiscal year 2013 stood at 5 per cent which is the lowest in a 10-year period.

The Farm sector output expanded by 1.4 per cent in the quarter under review, as against 2 per cent in the same quarter of 2011-12. The agriculture sector output stood at 1.9 per cent in the quarter under review as compared to 3.6 per cent in 2011-12. The manufacturing sector grew by 2.6 per cent. The Indian fiscal deficit for 2012-13 stood at 4.89 per cent of GDP against the estimation of 5 per cent which was helped by higher revenue, but which was still lower than the budget target of 5.2 per cent.

Earnings
Coal India released its earnings during the week and showed a 35 per cent increase in net profit. The net profit for the January-March quarter 2013 rose to Rs 54.14 billion from R40.13 billion a year ago period. Net sales also rose 2.5 per cent to R199.05 billion. The company supplied 465.18 million tonnes (MT) of coal to its consumers during 2012-13, registering a year-on-year growth of 7.41 per cent. According to sources, the government is also planning to auction a 10 per cent stake in the company by August or September.

Ratings
Rating agency ICRA said that India's current account deficit will decline to 4.5 per cent this fiscal from around 5 per cent last fiscal following the recent dip in gold imports as well as low crude prices. The agency also forecast the economic growth to recover from around 5 per cent in 2012-13 to 5.8 to 6 per cent in 2013-14. Also, the Japanese brokerage firm Nomura said India's GDP growth has bottomed out. It pegged economic expansion to be at 5.6 per cent in the current fiscal; this is lower than the consensus estimate of 6 per cent.

Global
Last Monday, the US markets remained closed due to a national holiday. In the following days, stronger-than- expected economic data helped the markets trade higher. US house prices were 10.9 per cent higher in March than a year earlier, the largest increase in close to seven years. US consumer confidence jumped in May to a five-year high, lifted by a better outlook for hiring and business conditions. But the concerns on global economic growth and on the FED's comment on reversing the stimulus package changed the direction of the markets. The Asian markets were trading the US markets throughout the week.

This week, the data to be watched out for include Trade data and HSBC PMI final data in the Chinese markets, the Markit Manufacturing and PMI data, and the ECB decision on interest rate and retail sales for the Eurozone, and the Markit manufacturing PMI data, Factory orders, ISM Manufacturing Index, Trade balance and non Farm Payroll data for the US markets. The Rupee lost its major support at 56.40 against the US dollar and it is likely to test the previous low of 57.3250, which was earlier tested in the month of June 2012. Nifty closed below 6000 level and it is likely to test 5933 and 5896 (100 DMA).

Investors for a medium term can consider buying Havells India, Mindtree and Siemens. Also long positions can be taken in Sterlite, Glenmark and Videocon Industries.

Alex K Mathews is the author of Financial Services And Systems, as well as Option Trading: Bear Market Strategies published by Tata McGraw Hill. He is also the technical and derivatives research head of Geojit BNP Paribas Financial Services Ltd. The author may have a vested interest in investments he has recommended. Feel free to e-mail him at alex@geojit.com. Geojit BNP Paribas has membership in, and is listed on, the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).u00a0