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9am with Emkay |
Contents
Emkaynomics; Dec 03 2010; Fortnightly round up of key banking and economic indicators
n The growth in non food credit has moved up to 22.9% for the week ended Dec 03, 2010 however growth in deposit mobilisation remained low at 15.1%
n The CD ratio has expanded to 74.3% for the week ended Dec. 03, 2010 with TTM CD ratio moving past 100%. The incr. CD ratio also remained worryingly steep at 100%+
n Money supply growth has moderated further to 16.1% and the money multiplier remained stable at 4.93x
n Call money rates remained stable for the last fortnight at 6.45% on average suggesting that the infusion of liquidity from RBI has calmed the short term money market
n The shortage of liquidity in the system was to the tune of Rs388bn. The net repo balances stood at ~ Rs1.43tn for the week ended Dec 16, 2010.
n The spread between the long and short end OIS has increased and stand at 39bps as opposed to 20 bps last fortnight partly factoring the liquidity infusion by the RBI.
n However, if the spreads continue to move up, it would imply that the bond markets are expecting some more positive news on liquidity from the RBI
n Dealer Comments
The markets started the day’s session on a negative note with almost 95 odd point’s downward gap tracking weak cues from the global markets particularly the weak trading by Chinese markets. Post weak opening markets had a very choppy session in the absence of any major flows and continued to trade in the green till almost noon time. The weak trading was mainly led by geo political concerns on the Korean fronts and continued worries over Europe’s sovereign debt woes. Post noon markets staged a remarkable recovery and just surged in the green territory backed by good all round buying across the board. But the day’s limelight was stolen only by Hero Honda which was up a whopping 18% on the back of clarification that the royalty payout to Honda would subsequently come down going ahead. Besides IT pack continued to sizzle for second day in a row with good buying seen in Infosys, TCS and Wipro. Even buying in other Auto stocks, cement, and select metal stocks aided the day’s rally while selling in banking, power and telecom stocks halted the day’s rally. The markets will continue to be driven by the news of the day, sometimes positive and sometimes negative but the only console is that the underlying long term sentiment and the outlook growth story shall continue to remain positive. Finally the markets closed the day on a mixed note towards the end with Sensex gaining a mere 24 points or 0.12% higher to settle at 19889 levels while Nifty lost just 2 points or 0.03% lower to settle at 5947 levels. The overall traded volumes were lower compared to the earlier day by almost 21% and were at Rs 1172 bn. While delivery based volumes were almost flattish compared to the earlier day at 37.9% of the total traded turnover. Among the Fund activities FII’s were net sellers to the tune of Rs 2.60 bn 16th December 2010. While on 20th December 2010 FII’s were net sellers to the tune of Rs 1.09 bn in the cash segment while in the F&O segment FII’s were net buyers to the tune of Rs 7.79 bn while Domestic Funds were net buyers to the tune of Rs 1.39 bn.
n Technical Comments
Above the upper boundary of the falling channel
Nifty ended absolutely flat in a seesaw session, as it continues to struggle against the 50-DEMA on a closing basis. On a positive note, the index has closed above the falling trend channel resistance, which if held for another session would be an encouraging sign for the bulls. Momentum oscillators on hourly and daily chart are trading with a positive bias that will continue to favour the upside. Overall market breadth was marginally in favour of advances; whereas Nifty 50 stocks A/D ratio was marginally weak at 1:1.3. The Nifty is likely to be stuck in a trading range of 6030 and 5855 in the immediate short-term, where declines to supports should be used to initiate trading longs.
BSE Auto:
BSE Auto index has surpassed the resistance of 20-DSMA and hence in the near term this index has a potential to heighten upto the upper Bollinger band packed at 10,400 level.
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