Indian Summer Brings Heat Back to Nifty Fifty
3 Pages
English
Downloading requires you to have access to the YouScribe library
Learn all about the services we offer

Indian Summer Brings Heat Back to Nifty Fifty

Downloading requires you to have access to the YouScribe library
Learn all about the services we offer
3 Pages
English

Description

Indian Summer Brings Heat Back to Nifty Fifty PR Newswire LONDON, August 1, 2012 LONDON, August 1, 2012 /PRNewswire/ -- Indian stocks finally rebound on central bank anticipation Video of Colin Cieszynski's Nifty Fifty analysis here India's Nifty Fifty Index fell through the back half of 2011 and the first part of this year. In recent months, however, it has finally started to trend higher, maintaining its recovery course despite a normal trading correction in July. Seasonal and interest rate trends suggest that the index could start to attract even more attention in the coming month. Following these recent changes, Colin Cieszynski (Senior Market Analyst at CMC Markets) has compiled a special report into India's Nifty Fifty. Colin's report looks at three key areas to provide an analysis into what the future holds for the Nifty Fifty: positive seasonal trends that have emerged, the sector weighting that is unique to India's stock market and finally, its recent recovery trend. The Reserve Bank of India's interest rate was left unchanged for the second time since June today in an effort to temper inflationary impulses. After two years of tightening, the RBI had previously cut interest rates in April this year. It had been expected to announce another 25 basis point interest rate cut in June but held off as did many other central banks around the world pending the Greek election and EU summit. The economic growth outlook for the fiscal year has also been revised down to 6.

Subjects

Informations

Published by
Reads 15
Language English

Exrait

Indian Summer Brings Heat Back to Nifty Fifty
PR Newswire
LONDON, August 1, 2012
LONDON
,
August 1, 2012
/PRNewswire/ --
Indian stocks finally rebound on central bank anticipation
Video of Colin Cieszynski's Nifty Fifty analysis
here
India's
Nifty Fifty Index fell through the back half of 2011 and the first part of
this year. In recent months, however, it has finally started to trend higher,
maintaining its recovery course despite a normal trading correction in July.
Seasonal and interest rate trends suggest that the index could start to attract
even more attention in the coming month. Following these recent changes,
Colin Cieszynski (Senior Market Analyst at CMC Markets) has compiled a special
report into
India's
Nifty Fifty.
Colin's report looks at three key areas to provide an analysis into what the
future holds for the Nifty Fifty: positive seasonal trends that have emerged, the
sector weighting that is unique to
India's
stock market and finally, its recent
recovery trend.
The Reserve Bank of
India's
interest rate was left unchanged for the second
time since June today in an effort to temper inflationary impulses. After two
years of tightening, the RBI had previously cut interest rates in April this year. It
had been expected to announce another 25 basis point interest rate cut in June
but held off as did many other central banks around the world pending the
Greek election and EU summit. The economic growth outlook for the fiscal year
has also been revised down to 6.5% from the initial 7.3% assumed in April.
1. Positive seasonal trends emerging
Seasonal trends in
India
are quite different from other stock markets around
the world. The three weakest months of the year for trading in the Nifty have
traditionally been March (start of summer), June (end of summer) and October
(end of monsoon) which obviously coincide with the changing of seasons.
The strongest period of the year is the winter, running from November to
February, which coincides with 'wedding season' in
India
. Interestingly,
seasonal trading in
India
is most similar to gold which is also influenced by
Indian seasons due to high consumer demand for precious metals.
The first three months of monsoon season have also generally been positive for
the Nifty. This year, the index has been trending higher since late May and
kicked off July with a breakout from a long-term downtrend suggesting that
after a year of slowdown fears in emerging markets dragging on the Index,
normal seasonal trends may be re-asserting themselves.
Average Monthly Return 1987-present
Month
Dow
India
Gold
January
0.37%
1.01%
0.12%
February
0.38%
5.53%
0.28%
March
1.13%
(0.48%)
(0.15%)
April
2.39%
0.47%
1.04%
May
1.16%
4.62%
0.11%
June
(0.64%)
(1.05%)
(0.06%)
July
1.70%
2.24%
0.09%
August
(1.02%)
2.98%
0.68%
September
(0.97%)
2.10%
1.72%
October
0.52%
(2.41%)
(0.01%)
November
1.29%
1.14%
2.15%
December
2.02%
3.62%
0.69%
Source: CMC Markets
2. Sector Weighting
Relative to other major indices around the world,
India's
Nifty Fifty tends to be
more heavily weighted in the energy, information technology and financial
sectors. In comparison with other Asian economies, the technology sector is
more focused on IT services than semi-conductors or software. The index could
benefit from a rebound in energy prices, and improved sentiment toward banks
and the more steady IT service sector not being impacted by the economic
slowdown in the same way that chipmakers could be.
Market Cap Weighting By Country May 2012
US
Asia
India China Australia Europe Latin Am World
Total
100% 100%
100%
100%
100%
100%
99%
100%
Energy
11%
8%
13%
8%
7%
12%
11%
11%
Materials
3%
6%
8%
13%
23%
10%
19%
7%
Industrials
10%
5%
7%
17%
7%
10%
5%
10%
Consumer
Discretionary
11%
9%
9%
9%
3%
9%
5%
10%
Consumer Staples
11%
2%
11%
8%
8%
15%
18%
11%
Health Care
12%
0%
4%
5%
4%
12%
0%
10%
Financials
15%
30%
27%
33%
40%
18%
20%
19%
Information
Technology
20%
28%
13%
3%
1%
3%
0%
13%
Telecom Services
3%
8%
2%
1%
5%
6%
16%
5%
Utilities
4%
4%
4%
3%
2%
5%
6%
4%
Source: CMC Markets
3. Recent recovery trend and the RBI rate decision
Through the first half of this year, export sensitive emerging economies such as
China
,
India
and
Brazil
have been losing steam with key customers in
Europe
,
and to a lesser extent the US. Recognizing the need to stimulate internal
demand, central banks in
China
and
Brazil
have already lowered interest rates
this month.
It is clear from the RBI governor's quotes today that the risk of higher inflation
was key to the RBI decision, with Governor Duvvuri Subbarao stating that
lowering interest rates would only 'aggravate' inflationary 'impulses'.
An additional video is available here, looking at the market outlook
for the US during August.
Traditionally August has been one of the
weaker months of the year for stock markets.
Between central bank
meetings and political developments, this August could be potentially
quite active.
The material (whether or not it states any opinions) is for general information
purposes only, and does not take into account your personal circumstances or
objectives. Nothing in this material is (or should be considered to be) financial,
investment or other advice on which reliance should be placed. No opinion
given in the material constitutes a recommendation by CMC Markets or the
author that any particular investment, security, transaction or investment
strategy is suitable for any specific person.