Market Macro Environment

Last week ended with the market gaining over 1% though it came under pressure on the last day of the week. Positive sentiment prevailed during the week as the commodities continued to remain under pressure with most of the industrial commodities down by double digit during the calendar. FIIs were net buyers of Rs. 31 bn worth of equity during the week. RBI cut interest rate third straight time to revive growth by cutting Repo rate by 25 bp. However, the governor was hawkish in his tone citing the possibility of a resurgence in inflation pressures and a high CAD it described as “by far the biggest risk to the economy” thereby capping the market gains. A report yesterday signaled Indian manufacturing expanded at a slower pace in April with HSBC PMI index falling to 51 from 52. Gains during the week were led by FMCG (7.5%) and Technology (4.4%).

As we go into next week market will be looking forward to BoE rate decision and initial Q1 GDP estimates for Indonesia and HK besides host of data from US and Eurozone. India too announces IIP for March and Export data for April. HDFC and NTPC are the major companies due to announce results next week. Out of 12 sensex companies that have announced results till date, only 2 have missed estimates. Outcome of Karnataka election which goes to poll on Sunday would also have a bearing on market sentiment. Currently BJP is at the helm. We expect markets to broadly remain range bound with profit booking emerging at higher levels.

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