High rate of volatility seen in Indian indices during April. Market witnessed an upward trend during the first half of the month, whereas in the second half there was continuous selling pressure. Sensex touched a height of 18047 and a low of 17277 in April. Both sensex and nifty closed just a few points above last month’s closing figure.
Considering the global scenario, Greek crisis and Goldman Sachs issue were the major ones. U.S. Securities and Exchange Commission sued Goldman Sachs Inc. for fraud tied to collateralized debt obligations. The firm is facing inquiries in UK and Germany. A 110 billion euro ($147 billion) plan to bail out Greece reduces the risk of a debt default of that country. But according to experts it will not be a complete solution for the problem. The residue of these crisis remains now and investors across the globe are more cautious.
Considering Indian market, RBI credit policy announcement was the major event. The central bank hiked the key rates by 25 basis points. The rates which are now effective are Repo-5.25%, Reverse Repo-3.75% and CRR-6%. RBI is optimistic about bringing down inflation figures which is at 9.9 percent in March. The food inflation figure is even more dangerous which is at 17.65 percent according to the latest data.
The closing figure of sensex for April is at 17559. It gained 31 points (0.18%) against it’s March closing rate. Nifty recorded a gain of 0.55 percent to close at 5278. It touched a height of 5399.65 during April. Buying interest scaled down to Smallcap and Midcap stocks. Both were up by 8.4% and 5.6% respectively. Consumer durable stocks were the major gainers, the sector was up by above 10 percent. Reality (6.6%) and Banking stocks (4.7%) were also hot favorites among investors. Oil and gas stocks were under severe selling pressure. The sector was down by 2.3 percent. Metal and Engineering stocks were also in the negative terrain. FIIs continued their buying activity in stocks, in April they bought equities worth Rs. 9361 crore. Whereas domestic institutions sold Indian equities worth Rs.1715 crore. During the last week ahead of F&O expiry the turn over in Indian market was much higher.
According to RBI estimate the final real GDP growth for 2009-10 may settle between 7.2 and 7.5 per cent. Which itself is a decent one. The Euro zone crisis is not over yet. There are reports that apart from Greece, countries like Portugal, Spain and Ireland may face difficulties in the near future. Concern about these crisis is clouding above Indian market also. Recently China hiked it’s CRR rate also. These developments may prove bad for Indian equities as well. There will be range bound movement in Indian market in the near term. Little caution is the need of the hour. At the same time an eye for opportunity is not a bad idea.