At the very outset let me wish all the readers a happy Diwali and a Prosperous New Year. As per the Hindu Calendar Samvat 2068 is ending and Samvat 2069 would begin. One hopes that this Samvat brings joy to the investors.
A week is a long time and specially in the markets. The week gone by had plenty of action and drama and kept the market on tenterhooks. The US election was won by President Barack Obama quite comfortably in the end. However issues of “Fiscal Cliff” increased as the Democrats failed to gain control of the House and the government stands divided today. The Democrats and Republicans need to come to some sort of a compromise to avoid the impending crisis which could emerge.
Results were the key drivers for the Indian markets and we had plenty of them, some good and some bad. SBI, India’s largest bank reported net profit growth of 30%, but also reported a fresh slippage of over Rs 8,400 crs for the quarter. The bank’s provision coverage ratio was also reduced this time in keeping with the steep increase of slippages. ONGC reported results where the subsidy sharing in the quarter has doubled compared to the year ago quarter. This too had an impact on the numbers.
Global steel prices have been falling and this caused Tata Steel to report losses on a consolidated basis of Rs 363 crs against a net profit of Rs 212 crs in the year ago quarter. Pharma Company Ranbaxy reported a good set of numbers. The week ahead is the Diwali week and there would be Muhurat trading for 75 minutes on Tuesday followed by a trading holiday on Wednesday. This would break the momentum of trading and this would be marked by low volumes.
When RBI Governor Subbarao kept key rates unchanged, an agitated FM threatened to walk alone. In the immediate week after that he virtually changed his stance and accepted the fact that maintaining the fiscal deficit at 5.3% of GDP would be a challenge. He also accepted the fact that a GDP of 5.5% is closer to reality than the 6.5% that the officials are talking of.
In a situation where the country is plagued by scams and corruption, the next session of Parliament would be crucial as the government has to get a number of bills cleared. These were part of the reforms which were announced post the change in FM and the reason for the sharp rally in the markets in September-October 2012. The time to deliver has come and it would be difficult to sustain.
In the coming days, volatility is likely to increase. The markets as a whole may go nowhere but individual stocks are likely to be the key to making money and keeping the market place healthy. Trade and invest cautiously.
