Markets correct marginally: Week that was: HDFC Securities

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Markets correct marginally

Markets corrected marginally this week after rallying in the early part of the week. The Nifty corrected from a high of 8365. W-o-W, the Nifty lost 0.3%. Market breadth was positive in only one out of the five trading sessions of the week.

Key Events - Global Markets

•  Initial claims for U.S. state unemployment benefits fell by 9,000 to 280,000 in the December 20 week, well below expectations. The level of continuing claims was 2.403 million after seasonal adjustment in the December 13 employment survey week, up 25,000 from the previous week and an increase of 80,000 from the 2.323 million level in the November 15 employment survey week.
• US crude stocks surged unexpectedly last week to their highest level on record for December, as imports jumped and refineries maintained output. Crude inventories rose by 7.3 million barrels in the last week, according to Energy Information Administration data, surprising analysts who had expected a decrease of 2.3 million barrels. US crude imports rose last week by 1.174 million barrels per day.
• U.S. personal income rose less-than-expected last month. In a report, Bureau of Economic Analysis said that U.S. Personal Income rose to a seasonally adjusted 0.4%, from 0.3% in the preceding month whose figure was revised up from 0.2%. Analysts had expected U.S. Personal Income to rise 0.5% last month.
• Orders for U.S. durable goods unexpectedly declined in November as corporate investment stagnated and demand weakened for military equipment. Bookings for goods meant to last at least three years decreased 0.7 percent, the third decline in four months. The median forecast of 77 economists surveyed by Bloomberg called for a 3 percent gain after a 0.3 percent increase in October. Excluding defense, orders dropped for a fourth month.
• From the Bank of Japan monthly report released in Tokyo. The main headlines via Bloomberg: Economy expected to continue its moderate recovery trend, Exports expected to increase moderately (citing the recovery in overseas economies), Business fixed investment projected to continue a moderate increasing trend as corporate profits improve, Excluding direct effects of sales-tax hike, producer prices are expected to continue declining for time being, reflecting movements in international commodity prices, Core CPI y/y increase likely to be around current level for time being.
• Consumer confidence in the eurozone picked up slightly in December, following recent signs that the currency bloc may be strengthening after a long period of weakness. The mood among households rose by 0.6 points to -10.9 for the 18-member eurozone, according to the European Commission's closely watched survey. Analysts had predicted a slightly more modest rise to -11.
• Italian retail sales were flat in October for the second month running, pointing to ongoing stagnation in consumer demand in the recession-bound economy. Sales were down 0.8 percent in unadjusted year-on-year terms in October, the sixth straight fall, following a 0.6 percent decline in September which was revised from a previously reported 0.5 percent drop.
• Business investment in the U.K. fell unexpectedly in the last quarter. In a report, National Statistics said that U.K. business investment fell to a seasonally adjusted -1.4%, from 3.2% in the preceding quarter whose figure was revised up from -0.7%. Analysts had expected U.K. business investment to rise to 0.7% in the last quarter.
• Germany’s import price index fell more-than-expected in the last quarter. In a report, Destatis said that German Import Price Index fell to a seasonally adjusted -0.8%, from -0.3% in the preceding quarter. Analysts had expected German Import Price Index to fall to -0.5% in the last quarter.

Indian Markets
 

The country's Gross Domestic Product (GDP) is likely to grow at a rate of 6.4 per cent on the back of pick-up in investment cycle in 2015, says a Dun & Bradstreet report. With the new government at the Centre and its effort to bring in big ticket reforms, investments are likely to come in. This will lead to a healthy growth of 6.4 per cent in 2015.

The Government has eased investment rules for the medical devices industry by allowing 100 per cent foreign direct investments (FDI) under the direct route for both new and existing projects. While 100 per cent FDI was already allowed in the sector, foreign investors had to seek permission of the FIPB for investing in or taking over existing companies. By allowing both greenfield and brown field investments under the direct route, FIPB scrutiny will now not be required even for investment in existing projects.

India’s foreign trade rose over 18 times since the launch of economic liberalisation programme in 1991 while the trade deficit widened by more than 22 times. The country’s foreign trade (export and import) has increased with an annual average growth rate of 13.42 per cent from $42 billion in 1990—91 to $765 billion in 2013—14. However, trade deficit, the difference between imports and exports, jumped to $136 billion in 2013—14 from $6 billion in 1990—91.

Sectoral movers

The sectoral indices ended on a mixed note. The top gainers were BSE Realty, Auto, Bankex and PSU, which rose by .4%, 0.5%, 0.5% and 0.5% respectively. The top losers were BSE Capital Goods, Consumer Durables, IT and Oil & Gas, which fell by 1.8%, 1.4%, 1.3% and 1.1% respectively.

Way forward

Technically, with the Nifty bouncing back after correcting for two sessions, traders will need to watch if the Nifty can now hold above the immediate supports of 8148 for the bulls to regain control. Upside resistances to watch are at 8287.