Trends in Indian Stock Market

Most of the trading in the Indian stock market takes place on its two stock exchanges: the Bombay Stock Exchange (BASE) and the National Stock Exchange (ONES). The BASE has been in existence since 1875. The ONES, on the other hand, was founded in 1992 and started trading in 1994. However, both exchanges follow the same trading mechanism, trading hours, settlement process, etc Equity spot markets follow a T+2 rolling settlement. This means that any trade taking place on Monday, gets settled by Wednesday. All trading on stock exchanges takes place between 9:55 am and 3:30 pm, Indian Standard Time (+ 5. Hours GMT), Monday through Friday. Delivery of shares must be made in demoralized form, and each exchange has its own clearing house, which assumes all settlement risk, by serving as a central counterparts. The two prominent Indian market indexes are Senses and Nifty. Senses is the oldest market index for equities; it includes shares of 30 firms listed on the BASE, which represent about 45% of the index’s free-float market capitalization. It was created in 1986 and provides time series data from April 1979, onward.

Another index is the S CNN Nifty; it includes 50 shares listed on the ONES, which represent about 62% of its free-float market capitalization. It was created in 1996 and provides time series data from July 1990, onward. Indian Stock Markets Trends – April 2013 to June 2013 The following document tries to identify trends and observe events that had happened through the quarter from April 2013 to June 2013 BASE – SENSES Source: Yahoo India Finance ONES – NIFTY 50 Foreign Institutional Investors (Falls) Ell’s are the foreign institutions organized outside India which invest their money in the Indian securities market.

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The inflows from foreign institutional investors are DATES I Foreign Institutional Investors – Investments (RSI. Core) I I Gross Purchase Gross Sales Net Purchase/Sales I June-2013 1 54,317. 73 | 65,743. 14 | -11,425. 41 May-2013 | 70,499. 57 | 56,033. 67 | 14,465. 90 | April-2013 | 55,439. 86 | 50,798. 29 | 4,641. 57 | April 2013 The Benchmark indices ended positively for the month of April 2013. While BASE Senses rose by 3. 5%, Nifty gained by 4. 3%. The better than expected SQ results posted by major movers in the market acted as a positive trigger for the markets to end higher Indian’s foreign exchange reserves were down by $485. Million to$294. 76 billion, in the wake of fall in core currency assets. All sector indices ended in the costive (except IT, Deck, and Metal) in the month of April. The top four gainers for the month were FMC, Banker, Auto and Healthcare, which rose by 10. 63%, 10. 21%, 9. 64%, and 8. 53% respectively. IT, Deck and Metal, the only losers, fell by 17. 08%, 10. 94% and 1. 22% respectively The rupee sentiment was helped by a drop in March retail inflation as it gives room for RIB to cut rates on its May 3 monetary policy review.

The Indian rupee continued to rule firm against the American currency on persistent selling of dollars by banks and exporters in view of renewed capital inflows from foreign funds into equity market. Hopes of lower current account deficit (CAD) on steep fall in headline inflation and fall in global crude oil prices also boosted the rupee sentiment Indian G-Sec bond yields ended lower by 22 BSP at 7. 73% at the end of April 2013 over March 2013. Yields fell 22 BSP in April, the biggest fall in 11 months, largely on hopes of more central bank easing on falling commodity prices.

Falls were reported as net buyers in April. May 2013 The Benchmark indices ended positively for the month of May 2013. While BASE Senses rose by 1. 31%, Nifty gained 0. 94%. The Reserve Bank of India cut interest dates by 25 basis points this month and India saw its WHIP inflation figure ease below 5 percent. However, GAP data on May 31 came in line with expectations, dampening hopes of further rate cuts Indian’s foreign exchange reserves increased $1. 60 billion at $ 296. 37 billion in the week ended April 26.

In the previous reporting week ended April 19, the FORCE reserves had declined $ 485. 9 million to $294. 76 billion All sector indices ended in the positive (except Banker, Capital Goods, Metal, Oil and Gas, Power, US and Realty) in the month of May. The top four gainers for the month ere IT, Consumer durable and FMC which rose by 6. 23%, 3. 69%, 3. 53%, and 3. 41% respectively. Realty, Capital Goods, US, Metal, Banker, Oil & Gas and Power fell by 1 1. 4%, 3. 2%, 3. 04%, 1. 71%, 0. 71%, 0. 65% and 0. 38% respectively.

Gold fell after a report showed that the number of Americans filing claims for Jobless benefits unexpectedly dropped last week, easing pressure on the Federal Reserve to expand monetary stimulus and as a stronger dollar curbed demand for the metal as an alternative investment Rupee fell against the dollar after the greenback continued to strengthen against other currencies overseas. Increased demand for dollars from Federal Reserve will scale back stimulus measures that have contributed to inflows to emerging markets.

Rupee fell to hit its lowest level since September 2012 as the US currency rallied at the prospect that the Federal Reserve might scale back its stimulus programmer this year. Carrying on from April 2013, the month of May 2013 saw the Nifty surging higher in the first half of the month to touch a high of 6229. The bulls were however not able to support the markets as selling pressure pulled the index sharply lower in the second half of the month. Though there were pullback allies in the last week of May, they did not sustain and the Nifty finally ended with modest M-o-M gains of 0. 94%.

Falls were reported as large net buyers of RSI. 17637 cry in May 2013 (In April, they were net buyers of RSI. 6412 cry). Indian Government Security bond yields ended lower by 48 BSP at 7. 24% at the end of May 2013 over April 2013. Amid lower inflation and expectations of further interest rate cut by the Reserve Bank of India, the yield on the benchmark security fell sharply. June 2013 The Benchmark indices ended negatively for the month of June 2013. While BASE Senses fell by 1. 8%, Nifty lost by 2. 4%. Market concerns over capital outflows coupled with increasing weakness in the rupee had a negative impact of stock markets.

Depreciation of rupee value against the dollar continued to weigh on the market sentiments All sector indices ended in the negative (except IT, Oil & Gas, and Deck) in the month of June. The top four losers for the month were Consumer Durable, Realty, Metal and Power, which fell by 20. 28%, 10. 32%, 8. 81%, and 7. 55% respectively. IT, Oil & Gas, and Deck, the only gainers, rose by 3. 13%, 2. 84% and 2. 12% respectively Indian Government Security bond yields ended higher by 20 BSP at 7. 4% at the end of June 2013 over May 2013. T rose to six-week high, as foreign funds continued to sell domestic debt as the rupee touched record low. The rupee has depreciated against the US dollar by around 10% since May (touching a closing low of 60. 59 on June 27 and then recovering a bit). A weak rupee would impact the imported component of inflation, of which crude oil is a major component. In the month of June 2013 Nifty was in decline mode for a major part of the month. A strong pullback rally in the last week of June helped to curb the losses however, Nifty finally ended with month on month losses of 2. 4%. Ells were reported as net sellers of RSI. 0845 cry in June 2013 – till June 27 (In May, they were net buyers of RSI. 17637 cry). One needs to closely monitor the reform measures in the coming months. Despite being an election year, if the government is able to announce a few more reform measures to lift the economic growth, then the market downside would be protected. Also, the current valuations of Senses are not very expensive (around 14. 5-1 expense PEPS). Hence,the markets could continue to remain in a range and is unlikely to be re-rated until we see a turnaround in earnings, sharp recovery in rupee and quick moderation CAD.