Dec 15, 2013

Market Update 15/12/2013

The euphoria over the state-election results proved to be short-lived. The index ended lower for the last 4 trading sessions of last week. The Sensex closed 1.3% lower from the previous week.

Subdued growth numbers (IIP and Exports) and higher than expected inflation no's (CPI- 11.2%) dampened the market mood. There was also uncertainty over tapering in the US which decreased investor risk- appetite.

Technically we are close to the Bollinger center band and also the 50 DMA. A small bounce back is thus on the cards. But, a break beyond both these supports would mean that the market will move lower in the short term. The RSI and the MACD have moved in to the neutral territory with slight bearish over-tones.

The RBI policy review is expected on Wednesday. Markets will trade in a narrow range till then. The 10 year G-Sec currently trades at 8.91%, almost unchanged from the previous week. It is difficult to predict how the RBI will react as inflation continues to remain stubbornly high and at the same time economic growth continues to remain weak.

There is also a Federal Reserve meeting this week that will need to be tracked closely. US Treasury yields have moved  up slightly. This indicates that the debt markets are gearing up for an announcement around "tapering".

Crude Oil moved lower in the week on account of global macro-uncertainty. WTI closed the week at $96.6, while Brent closed at close to $108/ barrel.

The USD moved up sharply against the INR. The INR touched its resistance of 61 before giving up its gains to end at 62.15 to the dollar. Technical indicators suggest that the Rupee is over-sold and there should be a small bounce back.

Gold moved up slightly before ending the week at $1238/oz. Domestic prices will depend on the Rupee movement.

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