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Equity Market October 25, 2010
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Global Equity markets ended the week with a decline
of 0.2%. US equities rose for the third straight day on Friday, but they still finished
the week down more than 1.2%. Euro area, UK and Japan equities declined modestly
over week. China surprised the market by raising interest rates for the first time
since Dec’07. The PBoC increased its one-year deposit and lending rates by
25 bps on inflation concern. World Bank cut East Asia growth outlook, urging officials
to curb inflation and ward off asset bubbles. Developing East Asia, that excludes
Japan, HK, Taiwan, S. Korea, Singapore and India, will expand 7.8 % next year, slower
than an April estimate of 8%. Brazil raised taxes on foreign capital inflows for
the 2nd time this month to prevent their currency appreciation. Last week, EM equities
inched up on Friday while ending the week down 1.4%. Within Emerging Market, EMEA
was the best performer with a gain of 0.7%. EMF Asia declined by 1.1% while EMF
Latam declined by 3.0%. Last week, Argentina was the best performing EM while Brazil
was the worst performing.
Global Emerging Market Monitor, Oct 22, 2010
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Best Performing Market
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Worst Performing Market
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Market (MSCI)
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Argentina
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Columbia
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Russia
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Brazil
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Israel
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Peru
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Chg. over week (%)
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3.9
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2.8
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2.0
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-4.7
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-1.4
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-1.3
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Indian Equity market
Sensex and Nifty went up by 41 points (0.2%) and 3 points (0.06%) to close at 20,166
and 6,066 respectively. FIIs invested $296 mn in cash. For current month total investment
is $2,916 mn. For CY10 total investment is $12,328 mn. Coal India Ltd., the world’s
biggest producer of the fuel, ended its IPO. Investors offered to buy almost 9.6
bn shares, or 15.2 times the 631.6 mn shares on offer. The second quarter corporate
results continue to be robust. On sectoral basis last week, the BSE Healthcare advanced
the most with gains of 2.8%, followed by BSE Oil and Gas at 2.7%. BSE Metal was
the worst performer declining 2.7%.
Index Performance
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22nd Oct, 2010
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Index
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% change
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BSE Sensex
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20,166
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0.2
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S&P CNX Nifty
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6,066
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0.1
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CNX Mid Cap
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9,450
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1.1
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BSE Small Cap
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10,724
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0.9
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BSE 100
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10,744
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0.2
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BSE 200
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2,569
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0.4
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Sector Indices Performance
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Sectoral Indices
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Price as on
22nd Oct’10
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Performance (%)
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Last week
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1m
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12m
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BSE Healthcare
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6,482
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2.8
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9.4
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50.3
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BSE Oil & Gas
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10,981
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2.7
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2.7
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6.8
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BSE Capital Goods
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16,078
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1.1
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2.2
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17.8
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BSE PSU
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10,436
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1.0
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1.7
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16.3
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BSE IT
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6,133
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1.0
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3.2
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38.2
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BSE Teck
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3,766
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0.7
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1.4
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25.7
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BSE FMCG
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3,630
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0.6
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(0.4)
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32.4
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BSE Bank
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14,116
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0.5
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1.2
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39.8
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BSE Power
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3,231
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(0.0)
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1.3
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3.0
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BSE Auto
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9,729
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(0.2)
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3.3
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51.3
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BSE Consumer Durable
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6,311
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(0.9)
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1.5
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74.3
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BSE Realty
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3,797
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(2.2)
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3.5
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(16.1)
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BSE Metal
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17,023
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(2.7)
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2.5
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10.9
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Credit Market October 25, 2010
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Sovereign Yield
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10 yr yield%
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Oct 22
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1 wk prior
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2 wk prior
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10 yr yield%
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Oct 8
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1 wk prior
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2 wk prior
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India
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8.14
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8.07
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7.98
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US
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2.59
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2.59
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2.41
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Global Credit markets
In US treasury, the yield curve steepened with yield of 2s moving down by 2 bps
and that of 10s ended at the same level.
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GOI 10-yr Yield movement
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Indian Credit Market
The Gsec market sentiment, over the week, got hurt by tight liquidity, expectation
of RBI’s rate hike and also market expectation of shift to new benchmark.
The 10-yr benchmark went up by 7 bps to close at 8.14%, highest in more than two
years. In a move to infuse liquidity in the markets, RBI announced buy back of Govt
bonds of Rs 28,552 cr with the first phase of Rs 12,000 cr purchase on Oct 25. This
improved sentiment on Friday but later Gsec pared the gains on higher auction cut
offs, higher SDL auction amount and continued tight liquidity.
The liquidity in the system continued to remain tight during the week on Coal India
IPO and higher currency with public during festive season. Banks were net borrowers
but the net LAF balance improved from negative Rs. 89,000 cr at the start of the
week to Rs 37,000 cr towards the end of the week. This week, the G-Sec markets are
expected to take cues from Gsec auction cut-offs, liquidity scenario, policy makers’
statements and global developments.
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RBI auctions
Last week, the G-Sec auction held on Friday was fully subscribed. The cut-off yields
for 7.99% GOI 2017, 8.08% GOI 2022 and 8.30% GOI 2040 were at 7.93%, 8.11% and 8.47%
respectively. In the T-Bill auctions, the 91-Day T-Bill auction worth Rs 4,000 cr
saw a cut-off yield of 6.77% (previous: 6.56%). In 364-Day T-Bill auction worth
Rs. 2,000 cr saw a cut-off yield of 7.09% (previous: 6.86%).
This week RBI will auction 10 yr SDL for 11 states worth Rs 8,226.80 cr on 26th
Oct. RBI will also auction 91-day and 182-day T-bills worth Rs 4,000 cr nd Rs 2,000
cr respectively on 27th Oct.
Forex Reserves
Reserves went up by $641 mn to $296.43 bn for week ending Oct 15 primarily driven
by Foreign currency assets ($582 mn).
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US$ Mn.
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Change over
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As on Oct 15, 2010
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Last week
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End-Mar, 10
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End-Dec, 2009
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Total Reserves
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296,433
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641
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17,376
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12,963
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Foreign Currency Assets
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268,682
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582
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13,997
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10,099
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Forex and Commodities October 25, 2010
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Currency Monitor
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Base currency : INR
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USD
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GBP
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EURO
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YEN
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October 22nd
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44.46
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69.98
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62.07
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54.84
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1 w prior
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44.03
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70.55
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61.95
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54.24
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2 w prior
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44.38
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70.37
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61.80
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53.87
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Source: RBI
Currencies: US Dollar had a minor rally last week
after depreciating for past four weeks. The US Dollar inched down on the euro (-0.1%
to 1.393$/euro) and up on the yen (+0.1% to 81.38yen/$) on Friday though it appreciated
more materially against its other trading partners with the dollar trade weighted
index rising 0.3% on the day. Since Bernanke’s Jackson Hole speech, the US
Dollar has fallen over 7% trade-weighted and dollar shorts have hit record levels.
India’s rupee declined last week by 1%, the most in two months on speculation
that importers were buying US Dollars to meet month-end oil payments and to take
advantage of a slump in gold prices. The INR closed at 44.46 per US Dollar.
Global Commodity Monitor
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In USD
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Gold
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Silver
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Crude (WTI)
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Copper
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Aluminium
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October 22nd (EOD)
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1,328.45
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23.29
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81.16
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8,334
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2,365
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1 w prior
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1,377.38
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24.50
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81.25
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8,400
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2,377
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2 w prior
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1,346.74
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23.25
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82.66
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8,310
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2,420
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Source: Bloomberg
Commodities: Commodities last week declined by about
1%, helped by US Dollar appreciation. This consolidation after the year-high reached
last week is consistent with profit taking seen in other markets. The outlook remains
bullish in the medium term on emerging market demand but weakening global industrial
production growth in 4Q might limit the near-term upside. Copper has gained almost
4% since early this month. According to JP Morgan, Chinese copper consumption for
next year will be higher by 8% - 10%. This coupled with the view that copper production
will be below demand in 2011, make the experts bullish on Copper on a 12-month basis.
* REER is defined as a weighted average of nominal
exchange rates adjusted for relative price differential between the domestic and
foreign countries, relates to the purchasing power parity (PPP) hypothesis. Here
it is basically REER on trade basis for 6 countries.
* Latest available.
For more details on our schemes,
click here
By : Geetima Das Krishna - Economic Research, Reliance Capital Asset Management
Ltd
*Disclaimer
The information contained herein is the independent and personal view of the author
and should not be construed as an investment advise or a standard investment procedure
and are not the views of the Company. Neither the AMC, the Trustees, the Fund nor
any of their affiliates or representatives assume any responsibility for the authenticity
of such information.
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