Capital Market Weekly

Equity

Market continued to drift downwards consistently for most part of the week. The mood of investors remained negative despite a small pull back later in the week.The apprehensions regarding global liquidity getting dried out if US Fed rolls back its bond buying programme and the inaction by the Bank of Japan to stabilize its bond market caused sell off in global equities. Global cues impacted the sentiments and FIIs flows turned negative on a cautious outlook. Also, poor set of IIP numbers accentuated the fall. Mid-caps and small-caps witnessed huge unwinding on margin calls.

Market Outlook

Markets are expected to trade volatile with a cautious outlook at higher levels. The near term direction will be dictated by the two crucial policy meets. RBI will undertake mid-quarter review of the monetary policy.Investors will focus on rate changes by RBI. Also, US Fed Reserve policy makers will hold two day meet to decide on the interest rates changes.Investors are fearful that if US Fed withdraws its stimulus the liquidity will dry up, unsettling financial markets. Movement of rupee will also play a key role in prescribing the market trend. Trend in investment by FIIs,who have turned net sellers recently, will also be watched by investors Stock specific action could be expected on announcement of advance tax numbers by the companies.

Important News

IIP for the month of April, 2013 came at 2% which was lower than estimates of 2.4%.

WPI for the m/o May’13 came at 4.7% vis-à-vis 4.89% during April’13.

Concepts

Ultra ETF – a class of ETFs that employs leverage in an effort to achieve higher return than a set benchmark.