Stock Market Analysis – 12 March 2011

Market mood was negative on account of Japan Earthquake and ongoing unrest in Libya and middle east region and constant threat of spike in crude oil prices.

In the week closing 11 March 2011, the Indian stock Index S&P CNX Nifty traded in a tight range of 5560-5410. Nifty closed in red in three out of five trading days. Week-on-week basis, the Sensex was down by 312 points or -1.7%, to close at 18174.39 levels. The Nifty also closed in the red down by 93 points, or 1.7%, to close at 5445 for the week. Metals, Capital Goods and Banking stocks were the major losers, with heavy weights like Tata Steel, L&T, BHEL, State Bank faced selling pressure, where as Reliance Industries and Reliance Capital were the major gainers. Food inflation for the week ended Feb 26, 2011 was 9.52% (v/s 10.39% last week). IIP numbers were positive in India. In Feb 2011, exports were $23.6 bn (49.8% growth YoY) while imports were $31.7 bn (21.2% gr wth YoY). IIP nos for Jan 2011 came at 3.7% (street estimates: 2.7%) while the December IIP was revised from 1.6% to 2.5%.

Rising oil prices are hitting the US economy as the cost of imported crude helped widen the trade gap and consumer confidence was shaken by the most expensive gasoline since 2008. The deficit in goods and services increased 15 % in Jan 2011 to $46.3 billion from $40.3 billion the month before. Imports increased 5.2% in January, the most since March 1993, reflecting a gain in oil prices and purchases of business equipment and consumer goods. Applications for unemployment benefits increased by 26,000 to 397,000 in the week ended March 5, 2011.

UK manufacturing production jumped in Jan2011 by the most in 10 months, a sign the economy is resuming growth after a winter freeze dented the recovery.
Credit rating of Spain was cut to Aa2 by Moody Investors Service, which said the cost of shoring up the banking industry will eclipse government estimates. The euro weakened and Spanish bond yields rose.

Overall the unrest in middle east region and rising crude prices arrested an increase in equity prices.

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