Last week, the domestic stock markets set many new records. After the election results, the markets hit the upper circuit filter on Monday, for
the first time in the history of the domestic stock markets . On Tuesday, the markets set a record in terms of volume. The stocks in most beaten-down sectors such as banking, real estate, infrastructure , oil marketing and capital goods remained the favourites in the market.
Large-cap stocks ruled the markets during the initial part of the week while the mid-cap and small-cap stocks remained in the limelight during the later part of the week. Profit booking and consolidation was seen in the markets towards the end of the week.
On the macroeconomic front, the inflation rate, based on the wholesale price index (WPI), reported a slight rise and went to 0.61 percent. The rise was mainly due to the higher prices of food articles.
On the commodity front, the price of crude oil remained firm as it traded around USD 60 per barrel. Gold prices firmed up in the international markets due to the weakness in the US dollar against major world currencies.
Here are some significant developments that happened last week. Investors should track these factors to get a sense of market direction in the coming days:
Budget expectations
After the election results, the market's expectations of the full fledged budget to be presented by the newlyelected government are mounting. The budget is expected to come in the next couple of months, and many analysts are expecting some reforms and measures. The reforms on the top of the list include freedom to oil marketing companies to set the fuel prices here in line with those in the international markets, reforms in the insurance and pension sectors , and divestment in some public sector undertakings .
However, some analysts advocate realistic expectations from the budget as some reforms need a longterm roadmap, and will take a few years. Yet, it will be interesting to see the first step towards them during the next few months.
Global developments
Many analysts believe the worst is over in the global economic slowdown. The rate of negative GDP growth seems to be slowing down in many developed countries. But there are some countries which are yet to see signs of stabilisation . For example, the first quarter of 2009's numbers reported by Germany, Japan and Mexico shows that the worst is still not over there. Their GDP numbers contracted during the first quarter of this year.
Increased confidence
After the decisive mandate , it seems like the confidence levels of both the domestic and global institutional investors has gone up in the India Inc story. Many global rating agencies have upgraded the investment ratings and recommended the domestic markets as an investment destination. The foreign money started flowing in again, as there are early signs of a recovery even in many global markets as well. Many large projects here have been successful in attracting funds over the last few days. Many large companies in infrastructure , power and telecom could get funding by way of private equity placements or floating debt instruments.
Rupee appreciation
The rupee appreciated against the US dollar last week and breached its fourmonth high of Rs 48 per dollar . The sharp rupee appreciation was attributed to expectations that there will be an increase in the foreign funds inflows after the formation of a stable government . The weakness in the US dollar against all major world currencies is also responsible to some extent. Some analysts feel the Reserve Bank of India (RBI) should intervene and prevent sharp currency movements as such movements in either direction are not good for the economy, especially businesses that involve exports or imports.
the first time in the history of the domestic stock markets . On Tuesday, the markets set a record in terms of volume. The stocks in most beaten-down sectors such as banking, real estate, infrastructure , oil marketing and capital goods remained the favourites in the market.
Large-cap stocks ruled the markets during the initial part of the week while the mid-cap and small-cap stocks remained in the limelight during the later part of the week. Profit booking and consolidation was seen in the markets towards the end of the week.
On the macroeconomic front, the inflation rate, based on the wholesale price index (WPI), reported a slight rise and went to 0.61 percent. The rise was mainly due to the higher prices of food articles.
On the commodity front, the price of crude oil remained firm as it traded around USD 60 per barrel. Gold prices firmed up in the international markets due to the weakness in the US dollar against major world currencies.
Here are some significant developments that happened last week. Investors should track these factors to get a sense of market direction in the coming days:
Budget expectations
After the election results, the market's expectations of the full fledged budget to be presented by the newlyelected government are mounting. The budget is expected to come in the next couple of months, and many analysts are expecting some reforms and measures. The reforms on the top of the list include freedom to oil marketing companies to set the fuel prices here in line with those in the international markets, reforms in the insurance and pension sectors , and divestment in some public sector undertakings .
However, some analysts advocate realistic expectations from the budget as some reforms need a longterm roadmap, and will take a few years. Yet, it will be interesting to see the first step towards them during the next few months.
Global developments
Many analysts believe the worst is over in the global economic slowdown. The rate of negative GDP growth seems to be slowing down in many developed countries. But there are some countries which are yet to see signs of stabilisation . For example, the first quarter of 2009's numbers reported by Germany, Japan and Mexico shows that the worst is still not over there. Their GDP numbers contracted during the first quarter of this year.
Increased confidence
After the decisive mandate , it seems like the confidence levels of both the domestic and global institutional investors has gone up in the India Inc story. Many global rating agencies have upgraded the investment ratings and recommended the domestic markets as an investment destination. The foreign money started flowing in again, as there are early signs of a recovery even in many global markets as well. Many large projects here have been successful in attracting funds over the last few days. Many large companies in infrastructure , power and telecom could get funding by way of private equity placements or floating debt instruments.
Rupee appreciation
The rupee appreciated against the US dollar last week and breached its fourmonth high of Rs 48 per dollar . The sharp rupee appreciation was attributed to expectations that there will be an increase in the foreign funds inflows after the formation of a stable government . The weakness in the US dollar against all major world currencies is also responsible to some extent. Some analysts feel the Reserve Bank of India (RBI) should intervene and prevent sharp currency movements as such movements in either direction are not good for the economy, especially businesses that involve exports or imports.
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