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You are here : IndiaNotes >> Market Action >> Technical

Market Scan: June

Prableen Bajpai | 02 Jul, 2012  | Follow Author | Add to my Favourites 


When the month of June began, the outlook for financial markets looked pretty grim. At home, the markets were droopy with dismal GDP growth number and early signs of slowdown. Globally the initial part of the month had brought in disappointing numbers along with the lingering turmoil in Europe and news of speeding down of Chinese economy; On the whole, June didn’t look exciting on the onset.

Financial markets, however, have made a stunning comeback. On the last trading day of June, the news that in Brussels, euro-zone leaders had decided to bail out troubled banks in countries like Spain directly worked as a catalyst and markets shot up. Domestically, government's clarifications on General Anti Avoidance Rules (GAAR) guidelines also gave a booster to the market sentiment. However the complete details of the changes are still awaited.

Sensex which looked dull in the first week of June went on a slow and steady hike during the month showing some consolidation. But the last day rally of 439.22 took it neatly to beyond 17K mark. BSE Sensex closed the month at 17,429.98 up by 7.47% during the last month of the first half of 2012 while the broader market index S&P CNX Nifty closed at 5,278.90 registering a gain of 7.2%.


All sectoral indices saw strong gains on the last trading day of June, taking the overall gains higher. Capital goods and power stocks especially found favour; BSE CG was the biggest gainer with 13.71% while BSE Power was up 9.57%. BSE Bankex and BSE FMCG were not far behind with 9.41% and 9.13% gains. Consumer Durables index ended flat even the technology space did not party too hard (BSE IT: 1.75% & BSE Teck: 2.75%).

For a change this time, the FIIs and DIIs have both seen markets with the same perspective (usually runs the opposite) and have been net buyers during the month. The FII pattern shows that they were net buyers on 13 out of 21 trading days accumulating equities worth Rs. 2,537.39 crores while DIIs bought on 9 of the 21 trading days resulting in a net buy of Rs. 1,171.42 crores. In the first half of the year, FIIs stand as net buyers of Rs. 38,450.76 crores worth of equities while DIIs are net sellers of Rs. 19,014.29 crores.

FII & DII Movement in 2012

 

January

February

March

April

May

June

FII

9,440.51

24,369.08

6,517.23

-1,657.19

-2,756.26

2,537.39

DII

-6,735.91

-11,433.75

-3,495.60

772.33

707.22

1,171.42


In Crores, Data Source: NSE, NSE data has been compiled on the basis of trading codes entered by the trading members at the time of order entry and corresponding client category classification provided by the trading members as part of unique client code details upload. BSE data has been compiled on the basis of marking of 'client type' while executing orders on BOLT-TWs in equity segment. DIIs include trading activity of Banks, DFIs, Insurance and MFs and New Pension System.

Globally during the month, S&P 500 index sunk below 1,280, Moody’s Investors Service downgraded global banks, and Goldman Sachs told its clients to short the U.S. stock market, saying a 5% stock market drop was coming. Things looked pretty dire. The Federal Reserve even felt it needed to launch another round of its Twist program to stimulate the economy. However, the outcomes of Brussels changed the scenario and almost all prominent indices ended in green.

Index

% Change

30-Jun

31-May

Nikkei 225

5.43%

9,006.78

8,542.73

FTSE

4.70%

5,571.15

5,320.90

Hang Seng

4.36%

19,441.46

18,629.52

S&P 500

3.96%

1,362.16

1,310.33

Dow Jones

3.93%

12,880.09

12,393.45

Strait Times

3.82%

2,878.45

2,772.54

Nasdaq

3.81%

2,935.05

2,827.34

Taiwan Weighted

-0.07%

7,296.28

7,301.50

IBOVESPA

-0.25%

54,355.00

54,490.00

SSE Composite

-6.19%

2,225.43

2,372.23



Ahead
The domestic markets have finished the first half of the year with a bang (Sensex is up by 12.78% from December 30, 2011 close of 15,454.92) as investors welcomed news that the euro zone is a step closer to solving its 30-month-long debt crisis. Now for the question: Is this rally strong enough to last for more than a day? There is no denying that an agreement by European leaders to stabilize the region's troubled banks, a pact that helped remove some of the uncertainty that has plagued markets. But the fact that this can fuel a longer-term rally is a matter of doubt!  The markets may see some positive movement over the short term. In the first week of July, the market's focus shifts to the European Central Bank (July 5) as investors wait to see whether it cuts interest rates to complement the measures taken by EU leaders to shore up banks and bring down borrowing costs for Spain and Italy. Earning season which sets in again will be crucial for both domestic and global markets.  RBI’s Q1 review of monetary policy will be keenly watched by domestic markets as they would hope for a breather from the apex bank. Markets should look to consolidate at the current level.


About Prableen Bajpai

Prableen Bajpai, who has a Master’s in Economics and is a Chartered Financial Analyst (CFA) has been in the industry for over six years. Entrusted with leading the Research division at Vantage Wealth Management Solutions Pvt. Ltd., Prableen continues to be the brainchild behind the conceptualization and compilation of the monthly financial compendium on the latest in the world of stock markets, mutual funds, investments and personal finance. Published under the medium of a monthly newsletter called moneytree®, Prableen is accredited with producing 63 editions as of July 2013. She has also authored a section of the Equity Research Module by Finitiatives Learning Pvt. Ltd (FLIP) and National Stock exchange (NSE).


For more information please write in to editor@indianotes.com

Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor IndiaNotes.com accept any liability whatsoever arising from the use of any of the above contents.



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