Breaking News: Fed to continue monetary stimulus at $65bn a month; emerging economies forced to act to protect their currencies; India raises repo rate by 25 basis points. This week markets were dominated by monetary policy decisions and agenda-setting news services stoked up the tapering tremors again. The Nifty gave up 177 points to close 2.9% down at 6090 after trading in a range of 4%. FIIs were net sellers of $443mil of cash equities, as domestic institutions bought a net $231mil on daily trading averages around the twelve-month trailing average. Not surprisingly, volatility edged up but not by much: the India VIX traded up as high as 19 before settling back to close at 17 for a gain of a point on the week. Market breadth was weak with declines outnumbering advances by four to one; financials were notable on the downside with the leading names knocking the Nifty for 65 points. Index futures closed at a premium of 1.5% to cash
On the results front, the overall picture is that 63% of the top hundred listed companies have beaten or matched sales forecasts, with a similar proportion for earnings. From our own portfolio, we saw ICICI Bank reporting Net Interest Income ahead by 21.6% and profits by 12.5%, reflecting a tax adjustment charge. Pidilite Industries reported sales ahead by 15.1% but profits declined by 6.3% as currency adjustments on imported raw materials offset an otherwise excellent performance. Balkrishna Industries reported sales ahead by 25.5% and profits up by 66.5%, driven by strong export sales.