25 Apr 2014

Markets globally very slow

With a spate of public holidays around the Easter weekend market action was quiet with global sentiment most influenced by continuing uncertainty in Ukraine. Regional voting days affected stock exchange opening in India, where the market moved sideways again as concerns about the impending monsoon season offset recent election-driven exuberance. The Nifty added just four points to close virtually unchanged at 6783, after trading in a range of less than 1.5%. Average daily trading volumes slipped to $2.9bn which is still higher than the twelve-month trailing average. Foreign portfolio investment turned positive again, with FIIs buying a net $188mil, substantially from domestic institutions, which sold a net $172mil. Volatility stayed around the previous week’s levels, as the India VIX opened at 31 and traded up to 38 before closing where it opened. Market breadth was even with advances balancing declines but there were some concentrated points’ contributions. The two Consumer majors, HUL and ITC, cost the Nifty 45 points between them but this was almost offset by a 35-point contribution from Larsen & Toubro. The three-month Nifty futures closed at a premium of 1.5% to cash.

18 Apr 2014

Public holidays impacted on stockmarket results

This week was dominated by the Ukrainian crisis and signs of a settlement from talks in Geneva on Thursday, allowed global equity markets to relax for the Easter weekend. Public holidays cut the week to three trading days in India and the market shuffled sideways, adding just three points to close barely higher at 6779 after trading in a range of 2%. Average daily trading volumes stayed relatively high at $3.1bn as FIIs turned net sellers of $11mil amid signs of a global “risk-off” stance, joining domestic investors who sold a net $104mil. Volatility stayed elevated, with the India VIX trading around last week’s close of 29, before adding a couple of points to close at 31. Market breadth was neutral, with as many advances as declines but there was little evidence of concentration and a broad range of stocks made small points’ contributions, positive and negative. The three months’ futures closed at a premium of just 1%.

The fourth quarter results season kicked off with Infosys pleasing the market with figures in line with expectations: sales grew 23% year on year and profits by 25%. More importantly, margins were stable at 25% and revenue guidance for FY15 was 7-9% in constant currency, slightly better than expected. The market liked this and the company’s stock rose just under 1% on the day. Intriguingly, TCS stock rose by over 4% that day and a couple of days later the company duly reported its results: revenues ahead by 31% and profits by 52%! The third announcement of interest to us came while the market was closed on Friday: Reliance Industries announced sales ahead by 13% for the quarter and profits by 1%. 

11 Apr 2014

Average daily trading volumes risen well above twelve-month trailing average

In India the general election has pushed company news well into the background. In the meantime global equity markets appear to be going into reverse, led downwards by overvalued technology counters reaching for support at a more reasonable level. The Nifty added eighty points to end up at 6776: a gain of 1.2% after trading in a range of 2.5%. Average daily trading volumes have risen well above their twelve-month trailing average, to $3bn as foreign portfolio investors continue to be net buyers of cash equities, investing a total of $788mil. Domestic investors sold a net $596mil. Volatility jumped sharply, however, with the India VIX rising from the high teens to touch 30 before closing at 29, adding ten points. Market breadth was strong with gainers more than two to one ahead and very little concentration: only two stocks made big points’ contributions either way: Sun Pharma on a takeover story and Infosys as it retreated before its Q4 results. The three month futures contract closed at a premium of 1.3% to cash

The general election has started its nine-session course and all opinion polling is now banned, so the media only has anecdotal evidence on which to build a story. So far, the news is that with an additional 100 million voters eligible since 2009, turnout is running 10-15% ahead in the constituencies which have voted. Exit interviewing suggests that the BJP is holding its reported advantage among voters, who are expecting the party to take rapid steps to restore the pace of growth. The AAP (Common Man Party) is also making headway where it has candidates running.