| Equity Market | Monthly Return % As on 31st Jan 08 |
| BSE Sensex | -2.31% |
| S&P Nifty | -2.85% |
| BSE MID CAP | -9.08% |
| BSE SMALL CAP | -9.34% |
| BSE100 | -3.96% |
| BSE200 | -4.28% |
| BSE Bankex | -10.17% |
| BSE IT | 0.38% |
| Dow Jones | -8.84% |
| FTSE | -6.42% |
| HangSeng | -7.71% |
| KLSE | 0.88% |
| Kospi | 3.35% |
| Nikkei | -9.77% |
| MSCI Emerging Markets Index | -3.12% |
| BSE Realty | -26.65% |
| Market Levels | As on 31st Jan 09 |
| INR USD | 48.875 |
| Inflation | 5.64 |
| Gold | 927.85 |
| Crude (Brent) | 44.94 |
| 10 Year US Treasury | 2.83% |
| 10 Year G Sec | 6.21% |
| 5 Year AAA | 8.85% |
| 5 Year G Sec | 5.95% |
| Source: Bloomberg, MFI | |
The benchmark indices fell in January 2009 erasing out the gains reported in late December’08 and early January’09. This was despite the moderating inflation and the better-than-expected IIP numbers for November 2008 (reported in January). The weakness likely came in due to the over-riding concern on economic growth & quarterly numbers and the consequent FII selling. There were serious corporate governance and management concerns post the Satyam episode and this also impacted sentiment. It has also led to corporate governance concerns on several other companies, which has impacted stock prices. While some companies may have corporate governance issues, companies with good governance practices and managements will once again attract investor interest.
The IIP for November 2008 rose 2.4% as compared to 4.9% growth in November 2007. The quarterly results have not provided any additional visibility on prospects in FY10. Thus, in February, the focus is expected to shift, once again, on the macro factors like stimulus packages and their potential impact. Inflation also started its decent due to falling inflation rates in manufactured items and primary articles. Inflation had raced into double digits in June last year after the government raised state-set fuel prices, and peaked just under 13% in August. The RBI said in its monetary policy review on Jan 27 that it expected annual inflation to be below 3% by the end of the 2008/09 fiscal years in March.
In the absence of a full-fledged budget this time, the vote-on account will be placed in the Parliament today (Feb 16). Additional announcements around this may impact specific sectors, apart from the impact of the macro factors. Financial numbers of midcap companies were disappointing, thus hitting the midcap index. Earning revisions in the Midcap sector may be more severe & March quarter earning may be expected to be under pressure as well, however price impact likely to be lower.
Events to be watched out are March 2009 earnings, General Elections and Disclosures of pledged shareholding.
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| Source: Kotak Investment Bulletin | |
