Weekly Market Wrap-Up - January 4, 2014 - Eastern Financiers

Vulnerable data points indicating sluggish economic activity dented investor confidence as sharp selling towards the end of the week took indices lower. Nifty ended the week at 6211.15, down 102.65 points or 1.63 percent and Sensex shut shop at 20851.33, down 342.25 points or 1.61 percent. Sectoral indices were mixed in nature with more losers than gainers. Series of data points in the form of core sector growth, manufacturing PMI had little to cheer for investors. The external debt data was however the only bright spot in amongst the macro data announced. Foreign fund flows, which remain a crucial factor in giving direction to our markets, remained supportive for yet another week. Overseas investors remained net buyers of Rs.1091.91 Cr in our markets. The INR closed flat against other international currencies for the week. The Prime Minister's address to the press had little to say in terms of policy initiatives and was also a non-event for the markets.

The week started with growth in the eight core sector industries trickling in. The output growth of eight core sector industries slowed to 1.7 per cent in November due to poor showing by natural gas, fertilizer and petroleum refinery sectors. The eight core sector grew by 5.8 per cent in November 2012. However, the data is better than the previous month, October 2013, when the eight core sectors had contracted by 0.6 per cent. Natural gas output fell 11.3 per cent in November year-on-year. Petroleum refinery production shrank by 5 per cent. Fertilizer output growth slowed down to 0.6 per cent in the month under review,. Steel production also decelerated by 3.9 per cent. Among those which put up a good performance were, cement which registered a growth of 4.2 per cent and electricity generation, which grew at 5.9 per cent. Coal output grew by 2.3 per cent in November as against (-) 2.9 per cent in the same month last year.

The other important data point that came in during the week was the HSBC Markit Purchase manager's Index, giving a gauge of manufacturing activities for the month of December. India's manufacturing sector decelerated marginally in December as slowdown in domestic order flows led to slower output growth. The PMI dropped slightly from 51.3 in November to 50.7 in December. A sector-wise analysis shows that the overall expansion in production volumes was largely centered on the consumer goods sub-sector. Moreover, export order growth was registered for the third consecutive month.

India's external debt data however, saw some improvement, giving some support to investor sentiments. At end-September 2013, India's total external debt stock stood at US$ 400.3 billion, recording a decline of US$ 9 million over the level at end-March 2013.

On the sectoral front, the monthly sales of auto companies continued to decline, owing to a sluggish economy plagued by high fuel and interest costs.

Source : Equity Bulls

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