Caution likely to prevail in Indian Shares - RK Global

Key benchmark indices edged higher in the week gone by as the rupee extended its recovery against the dollar since hitting record low in late August 2013. Shares from auto and metal sectors were in demand on renewed buying. The HSBC Services PMI slipped from 47.6 in August to 44.6 in September, its weakest since April 2009. That marked its straight third reading below 50, the threshold between growth and contraction. It showed firms were less optimistic about the future and were cutting staff as new business dries up. Services sector accounts for nearly 60% of India's economy. The PMI's new business index fell to 45 in September from 46.6 in August, the weakest reading since February 2009 and the third month running that demand have declined. Factory activity in India shrank for a second month in September, albeit not as sharply as in August, on a dearth of new orders which pushed firms to cut staff, a survey showed on Tuesday, 3 October 2013. The HSBC Manufacturing PMI rose to 49.6 in September from 48.5 in August, but remaining below the watershed 50 mark that separates growth from contraction. The CAD was $18.1 billion in Q4 March 2013. The RBI said that the year-on-year rise in CAD in Q1 June 2013 was due to a rise in imports and some decline in merchandise exports. The trade deficit, coupled with a slow recovery in net invisibles (income and services), led to widening of CAD on year-on-year basis in Q1 June 2013, the RBI said. On BoP basis, there was a slight drawdown in foreign exchange reserves of $0.3 billion in Q1 June 2013 as against an accretion of $0.5 billion in Q1 June 2012. The combined output of the eight core infrastructure sectors rose 3.7% in August 2013, supported by strong growth in coal and cement production and electricity generation, data released by the government after trading hours on Monday, 30 September 2013, showed. It was the highest growth in core sector output in seven months.

Outlook for Next Week

Caution is likely to prevail in Indian shares ahead of the September-quarter earnings from Infosys Ltd on Oct.11, which will kick off the results reporting season for blue chips. Traders say weakening economic growth and still high inflation could have weighed on corporate earnings. India is set to report industrial output data for August on Friday. Investors will also be eyeing market regulator SEBI of India, which holds its quarterly board meeting on Saturday. India's Finance Minister, P. Chidambaram, is visiting the United States on 8-Oct. to attend the G20 Finance Ministers' and Central Bank Governors' Deputies meeting in Washington and the World Bank/IMF's annual meeting. Key events to watch Wed: India's finance minister to attend G20 and World Bank meetings, Thurs: Trade data for September, Fri: Infosys July-Sept earnings India's industrial output data for August.

Source : Equity Bulls

Keywords