Friday, December 28, 2012

Performance of blue chip stocks in 2012!

So, which is the blue chip gainer for the year 2012 in the Indian stock market? It is perceptibly Tata Motors. Deemed the best stocks of 2012, Tata Motors stocks exceeded market expectations in price rise. Thanks to hopes of its luxury unit Jaguar Land Rover of exhibiting a turnaround in its performance!

Amongst the worst of performers in blue chip Stocks 2012, is Infosys Ltd. Continual apprehensions about global demand for software services have led to the fall of these IT stocks. Among the various sectors, lenders performed the best followed by real estate and FMCG. The banking index of the BSE  Sensex went up by 57 percent. ICICI gained 60 plus percent while HDFC Bank rose more than 50 percent. Equal gainers in this category include L&T and Maruti at 60 percent plus and Sun Pharma at 50 percent plus.

The RBI, after a 50 basis points rate cut in April, may further cut the repo rate more firmly next year.

Tuesday, December 18, 2012

Repo rate hold by the RBI!

RBI’s holding of the repo rate is no big surprise as it was already reported that a rate cut was ‘highly improbable’ though India's main inflation gauge WPI rose 7.24 percent from a year earlier against the expectations of 7.6 percent. Of course, a rate cut of 8 percent is possible in January and leading international economists forecast a series of rate cuts in 2013 and this will definitely show gains in the BSE Banking Index. Thanks to possible easing of inflation in the next few months!

The RBI kept interest rates on hold though the government put pressure on the central bank to reduce borrowing costs. The bank assured of a rate cut in January and shifted focus towards enhancing a flagging Indian economy. BSE Banking Index at NSE went up with both the sensex and nifty trending at a moderate rate.

One of the reasons for the RBI holding the repo rate was the low GDP growth (below 6 percent) posted for the past three quarters.

Friday, December 14, 2012

The WPI Data and Possible After-Effects

Just the utterance of the topic ‘inflation’ will transport you to a world of apprehension in the context of economy. A high inflation rate has no wonder affected the Indian economy to a great extent for several months. The report is now somewhat otherwise.

Recently with India's main inflation gauge WPI (wholesale price index) rising 7.24 percent from a year earlier against the expectations of 7.6 percent, the Indian economy may be escaping a long period of price pressure. A rate cut by the Reserve Bank of India (RBI) is possible in the New Year month. The RBI’s policy meet on December 18 may not see a rate cut but an 8 percent cut is possible in January as per market experts.

It is in 10 months in November that the WPI cooled to its weediest pace. According to a leading economist, India’s inflation will drop below 6 percent next year. A chain of rate cuts is then possible.

Thursday, December 6, 2012

Unpredictable Nifty's U-Turn!

With UPA winning the FDI vote in Lok Sabha, stock market experts and traders had predicted that Nifty should breach the 6000 level on Thursday December 6. However, Nifty took a U-Turn and opened 43 points low in the opening trade at 5857.

IT shares and profit booking were the main reasons hurting the Market; Infosys, TCS pulled market down after their shares fell 2.1% and 2% respectively. Shares of retail firms Pantaloon and Shopper's stop gained in the early trading session to fall later. Pantaloon had gained substantially after the Bill to allow FDI in retail was passed and it was the top traded stock in early trade.

Market stayed volatile through the day with Nifty hovering below 5870 mark. Experts had expected Nifty to scale up as the Govt's win indicates a boost to the reforms and market sentiment. Despite given political positivity, Nifty failed to scale up and once again proved that Nifty is Unpredictable and  a trader should take Market volatility in stride!

Tuesday, December 4, 2012

Moody’s outlook for the Indian banking system and BSE Banking Index!

Banks’ profits are likely under pressure over the next 12 to 18 months. Yes, the Indian banking system, as projected by the rating agency Moody’s, would remain in the negative owing to a challenging operating environment. The negative atmosphere follows from a blend of weak local currency, high inflation, high interest rates, and of course slow economic growth! It is the slowest growth in a decade that is being witnessed for the fiscal year that ends in March 2013. In the September quarter, the Indian economy grew by 5.3 percent.

Moody's representative pointed that the negativity of the situation of the Indian banking system may further lead to a further worsening in asset quality, fall in profitability, and an increase in provisioning costs. Thanks to the decision by the government of injecting additional capital into the state banks within the next few weeks; but the injection would not exceed the Rs.150 billion mark.

Moody's rating did not show any major impact on the BSE Banking index. Infact, SBI shares were up by 2% in the morning session, trading near INR2239/- The capital infusion news by the Finance Minister has given a spur to the Banking Index. The government is likely to take decision on the capitual infusion this week, however it will be restricted to the 150 billion rupees mark as suggested in the fiscal budget 2013.