News - Weekly Cursor for 13th October 2012 in COMMUNITY CENTER - Global Market This Week
Markets shredded from Wall Street to European markets as IMF’s decision to slash its global growth ...
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10-13-2012 04:53 PM
Weekly Cursor for 13th October 2012
Markets shredded from Wall Street to European markets as IMF’s decision to slash its global growth forecasts and concerns over the upcoming corporate earnings season weighed on sentiment. The Washington based lender warned of even slower expansion unless officials in the US and Europe address threats to their economies. Economic reports during the week showed confidence among US consumers unexpectedly jumped in October to the highest level since before the recession began five years ago and jobless claims fell to the lowest since 2008. US markets had the biggest weekly retreat since June as the IMF reduced its global growth forecasts. Most stocks wrapped up their worst week in four months, led lower on Friday by financial shares as results from Wells Fargo and JPMorgan ignited concerns about shrinking profit margins for big lenders. Among the 35 S&P 500 companies that have reported so far, 69% beat analysts’ estimates. The S&P rallied 14% this year on FedR actions. However, for the week, Dow lost 2.0% for the week, followed by NASDAQ at 2.9%. European stocks declined for the fourth time in five days as IMF Managing Director Christine Lagarde said global growth is not fast enough to curb unemployment. Euro region industrial production unexpectedly increased in August. Output in the 17-member Euro area rose 0.6% from July. However, none of the major European indices could digest the production numbers, the DAX fell by 2.2%, followed by CAC 40 (-1.9%) and FTSE 100 (-1.3%) fell for the week. The Asian markets after an all green start traded mixed on the last trading day of the week. Some of the indices are maintaining their gains on good data from US. The Hang Seng remained the only index that gained (0.6%), however, Nikkei fell by 3.7% and Straits Times fell by 2.1% for the week.
Market Outlook for Next week In the week ahead, Central bank fueled gains took markets within reach of five year highs in September, but now US stock market participants are shifting their focus back to corporate outlooks, and the picture is not pretty. Profits of S&P 500 companies are seen dropping 3% this quarter from a year ago, the first decline in three years, hurt by China's slowing growth and Europe's debt crisis. That gives a cautious stance for the coming week. Financial stocks will be especially in focus, with Bank of America Corp, Citigroup Inc , Goldman Sachs Group Inc and Morgan Stanley all set to report. European leaders were urged to consider the pooling of national bill sales and setting up a Euro-zone budget with its own borrowing powers as steps toward overcoming the debt crisis. That might take some shape.
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10-13-2012 04:53 PM
Domestic Market This Week Distressed markets witnessed denting on this week’s trade with benchmarks ending the weekly session with a cut of over half a percent. The combination of domestic as well as global factors led to the selling across the board and the domestic gauges snapped the session below their crucial 5,700 (Nifty) and 18,700 (Sensex) levels. The bourses snapped a five week streak of gains on Friday, as bellwether Infosys slumped after disappointing investors with its growth outlook, with caution also setting in ahead of key inflation data next week. Worries that India would post high inflation data on Monday and erode prospects of an interest rate cut by the RBI at the end of the month hit financial stocks such as ICICI Bank. On the other hand, showing signs of turnaround, industrial production grew by 2.7% in August, grew at a slower pace than 3.4% recorded in August 2011. On sequential basis, IIP contracted by (-) 0.18% in July and (-) 1.8% in June. Industrial output during April-August was 0.4% down from 5.6% in the same period in 2011-12. Manufacturing, which accounts for the bulk of industrial production, rose 2.9% in August, lower than 3.9% from a year ago. The growth for the April-August was flat, as against 6% growth in the year-ago period. However, stocks were not impressed by the modest improvement in India’s industrial output for August, while inflation slowed, improving the case for a cut in interest rates that both businessmen and politicians have been pleading for.
Market Outlook for Next week In the week ahead, the market is likely to move sideways for a better part of the coming week. There might not be some smart rallies during the course of the week, as markets will be expected to remain volatile due to more Q2FY’13 results, so a sustained upside looks highly unlikely, given the uncertain near term outlook for the global economy. Activity will be mostly stock specific. On a sectoral basis, the automobile and cement sections are likely to be in focus. A reduction of the withholding tax on rupee infrastructure bonds from 20% to 5% is high on the government's agenda, the RBI’s Deputy Governor HR Khan said on Friday, on the sidelines of an industry event. Many prominent companies are set to announce Q2 September 2012 results in the forthcoming week. Investors and analysts will closely watch the management commentary that would accompany the results which could cause revision in their future earnings forecast of the company for the current year or the next year. RIL and Axis Bank unveil Q2 results on Monday 15th Oct’. HCL Technologies will unveil its Q1FY’13 results on Wednesday’ 17th Oct’. ITC and TCS unveil Q2 results on Friday’ 19th Oct.
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