India Infoline Weekly Newsletter – November 01, 2013

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Rajesh Desai

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Nov 1, 2013, 10:04:58 PM11/1/13

to LONGTERMINVESTORS, library-of-eq...@googlegroups.com, DAILY REPORTS

It turned out to be a memorable week for the bulls as the BSE Sensex hit an all time high for the first time after five years and ten months while NSE Nifty closed just shy of hitting the peak. The rally was aided by strong fund flows in the equity markets, as the FIIs pumped in ~Rs160bn in October.

As widely expected, RBI raised the policy repo rate by 25 bps to 7.75% affirming its stance of curbing inflationary pressures and containing inflation expectations. With currency stabilizing post abatement of external sector risks, the central bank further reduced the MSF rate by 25bps to 8.75%. Absence of any negative shocks in asset quality within PSU banking results announced so far fuelled markets hopes that the worst is over for them. Trading at abysmally low valuations, PSU Banks rallied this week.

With the RBI meet out of the way, market participants would again shift their focus on global cues. The Services and Composite PMI for month of October would be one of the data to watch out for. Corporate results on the other hand will continue to pour in with heavyweights like BHEL, Tata Motors and PNB to announce their earnings next week. For markets to sustain at historic levels, broad based participation is indispensable going forward.

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