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Date : January 04, 2012

Market Ratio of 2011

Returns in Gold


On January 3, 2011 — the first trading session of the year — the Sensex had closed at  20,561 and the Nifty at 6,157.

On December 30, 2011 — Friday, the last trading day of the year,  the Sensex closed at 15,454.92 while the Nifty closed at 4,624.30.

The benchmark indices fell 24 per cent and the Indian market was among the worst performer in the world during the year. The BSE Bankex fell 32 per cent this calendar year, while IT and pharma indices fell 15.62 per cent and 13.2 per cent respectively. The BSE FMCG index, the best performing sector for the year, grew about 9.3 per cent during the year. Volumes in the cash market dropped through the year while that of the derivatives market increased. The trades in the cash market fell 38 per cent, from 18.43 lakh on January 3, 2011 to 11.52 lakh on December 30, 2011.

Reasons for the fall:

  • INFLATION REMAINED HIGH. In JANUARY 2011, it was 9.5 and same increased to 10.25 in the month of September 2011.

  • RBI raised the REPO RATE from 6.25 (January 25.2011) to 8.50 basic points.(October 25.2011) .

  •  RUPEE AGAINST DOLLAR In January 3rd 2011 Rs/$ was 44.67 and lowest at 53.85 On 22nd nov 2011.and later on December 30.2011, Rs/$ 53.27.

  • GDP Rates in JAN-MAR was 7.80% and it fell below 7% i.e. 6.90% in month of july-sept 2011.

  • With rising crude oil prices due to political turmoils in oil-producing countries such as Libya. By then Europe had already become a worry with countries like Greece and Ireland having run up huge debts. But what triggered the fall in the markets was the August downgrade by Standard & Poor's of the US ratings. Soon, markets the world over lost ground. Indian markets followed suit.

FIIs and Retail investors cash outflows

FIIs were net sellers of equity for Rs 26,873 crore during the year on both the exchanges, while domestic investors were net buyers for Rs 2,781 crore. Retail investors on the BSE were net sellers for Rs 4,125 crore.
WHAT to hope in New Year 2012.

Thumping up with hoping market should at least better side to come across. Both Sensex and Nifty ended 2011 close to their yearly lows. We are ambivalent on the outlook for the next few months. Both Sensex and Nifty are currently in a medium-term trading range; between 4,500 and 5,500 in Nifty and 15,000 and 18,000 in the Sensex. If the lower boundary breaks, the indices can test the supports mentioned above. Such a decline will hasten the bottom-formation process in coming two three months. From second half of 2012 if monsoon takes a side, then this sideways move is a base for the next up-move. Sensex can head towards 19,000 (Nifty 5650) and its previous life-time high over the rest of 2012.

HAPPY NEW YEAR 2012.

THANKS AND REGARDS.

MIDEAST TEAM.