The week culminated with the epic deal that is seen as the biggest FDI into India post the Posco’s USD 12 billion investment announced years ago for a steel plant in Orissa that is yet to take off. The government approved the long awaited $7.2 bln deal between RIL and British Petroleum. CCEA approved the company to sell 30% stake in 21 hydrocarbon blocks to British oil major BP Plc. The government has held back approval for stake sale in two of Reliance Industries’ blocks.
The week though initiated trade on dismal note amid uncertainty over European and US debt trepidations, recuperated all their losses on easing of the turmoil brought in by second bailout plan worth $ 159 bln by the European Union, that bumped up the mood of the markets world-wide. Easing weekly inflation numbers and pick-up in the annual monsoon rains may be attributed to the optimism that seems to have set in towards the end of the week amid assorted set of first quarter earnings.
The escalation in the annual monsoon rains has improved crop prospects. Rainfall between July 14 and July 20 was reported to be 7% above the long-term average, following two successive weeks of below-average rains that raised concerns about crops.
Weekly food inflation for the week ended for the week ended 9th July eased to three week low to 7.58% equated to 8.31% in the previous week on the back of cheaper pulse prices and a high base last year. Primary Articles group inflation notched lower to 11.13% in the week under review, from 11.58% in the week ended 2 July 2011. Inflation in the Fuel & Power group remained static at 11.89% as compared to the previous week. However going ahead we feel that inflation may persist to be at elevated levels. Cynical comments by Mr. Pranab Mukherjee on Inflation and India’s export growth amid lingering concerns over Euro-zone debt mayhem dented the market sentiments prior to the rally that creeped in post the bailout.
Markets eroding away last week’s losses to the tune of almost 1.5%, piled up gains of about a percentage point with the Nifty finishing off above the psychological 5600 mark at 5633.95, accumulating gains of 52.85 points, and the Sensex shut the week with gains of 160.38 points at 18722.30. The broader indices gathered returns of about 0.5-1.2% during the volatile week with assorted events in domestic as well as global markets. The sectors were primarily driven by the first quarter earnings of major corporates like Axis bank, Wipro, Mindtree and HDFC Bank among others. Telecom was the primary gainer for the week with gains of almost 2%, followed by FMCG, IT, Metal, Realty and Oil & Gas that added 0.75-1.75% to their kitty. Consumer durables, Healthcare, Auto and Power flaked away 1-1.7%.
