MyValueResearch

The Year 2009

For India, 2009 till now, been a great year with the return of a stable government at centre, good FII inflow, substantial increase in the stock market and less terror attacks. For the first time an Indian won double Oscar and Indian American received Nobel Prize for Chemistry. But H1N1 influenza claiming thousands of lives and a series of plane crashes are some events that we never want to happen again.

Meanwhile, the year 2009 saw a significant slowdown in India’s official GDP growth rate to 6.1% as well as the return of a large projected fiscal deficit of 10.3% of GDP, which would be among the highest in the world. India witnessed a weak monsoon this year, affecting the agriculture sector.

Some major events of the year in India

Jan 2: Indian Government in tandem with the Reserve Bank of India (RBI) announces the much-awaited second Stimulus Package aimed at reversing the economic slowdown.

May 18: Congress won the 15th Indian general election and Sensex gained 2,111 points from the previous close of 12173, a record one-day gain. In the opening trade itself the Sensex evinced a 15% gain over the previous close which led to a two-hour suspension in trading. After trading resumed, the Sensex surged again, leading to a full day suspension of trading.

May 19: Manmohan Singh re-elected as Prime Minister of India.

May 19: India confirms first cases of (A)H1N1 influenza.

Dec 1: Till November this year, FIIs have put in investments worth Rs.76,182 crore into the Indian stock markets. The top investor is USA which has got equity investments to the tune of Rs.21,345 crore, followed by Luxembourg, France, Mauritius, UK.

Around the world

January 20: Barack Obama inaugurated as the 44th President of the U.S.

February 3: S&P lowered California’s bond rating to A from A+.

February 17: President Obama signed the $787 billion economic stimulus package into law. The “American Recovery and Reinvestment Act of 2009″ includes a variety of spending measures and tax cuts intended to promote economic recovery.

February 27: Fourth quarter GDP decreased at an annual rate of 6.2 percent.

March 2: Dow Jones Industrial Average drops below 7000 for the first time since 1997.

March 19: Moody’s lowered California’s bond rating from A1 to A2.
Fitch lowered California’s bond rating from A+ to A.

March 23: U.S. Treasury Secretary unveils the Public-Private Investment Program.

April 26: Swine Flu declared public health emergency.

April 29: First quarter GDP decreased at annual rate of 6.1 percent.

April 30: Chrysler files for bankruptcy.

June 1: General Motors files for bankruptcy.

June 10: Fiat completes acquisition of Chrysler assets.

June 25: First quarter GDP decreased at annual rate of 5.5 percent.

July 6: Fitch Ratings downgraded California?s long-term bond rating from A- to BBB. Moody’s lowered the State’s rating from A2 to Baa1.

July 24: Dow closes above 9000; first time since January. Federal minimum wage jumps from $6.55 an hour to $7.25 an hour.

July 28: Case-Shiller index shows first rise in U.S. housing prices in 3 years.

August 27: Second quarter GDP fell 1 percent, unchanged from the advance estimate in July and following a 6.4% drop in Q1.

October 14: Dow closes above 10,000 for the first time in a year.

October 29: Third quarter GDP increased at an annual rate of 3.5 percent.

The impact on Indian stock market was as follows…

January 2009

After a positive month of December, the month of January ended on a negative note with Satyam scam being the party spoiler. During the month, Sensex lost 2.31% & Nifty lost 2.84% on the back of a scam that raised questions over the corporate governance issues & financial credibility of the companies. Midcaps & Small caps were the major losers of the month losing 9.07% & 9.34% respectively.

February 2009

The markets continued its downward slide for the month of February taking cue from the Global markets with Dow jones touching its 2004 level lows. The global recessionary trends loomed large over the market sentiments with Sensex shedding 5.65% & Nifty losing 3.87% for the month. Midcaps & Small caps were again the underperformers for the month losing 6.23% & 6.98% respectively.

March 2009

The markets bounced back from the lows of February taking cue from the Global markets with most global markets ending the month in green. The global recessionary trends, which loomed large over the market sentiments over the previous few months took a breather amidst a slew of Revival Packages from all major economies across the globe. Sensex ended the month on a positive note gaining 9.19% & Nifty gained 9.31%. Midcaps & Small caps however underperformed the markets gaining just 7.18% & 4.53% respectively.

April 2009

The markets showed immense strength on the back of more than 9% growth in March ending on a positive note gaining as much as 17.46% on Sensex & 15% on Nifty during the April month. The rally was driven by strong FII inflows in the month of April coupled with quarterly & yearly results which were better than expected. Firm Global markets were amongst the other driving factors behind the huge rally which also saw Midcaps gaining 18.86% & Small caps gaining 21.38% both outperforming the benchmark indices.

May 2009

The Return of UPA government to power with a clear mandate by the people of India led the markets to a historical rally in the month of May. The victory was followed by first ever double upper circuit on the markets in the history. Sensex gained 28.26% & Nifty gained 28.07% in the month of May, continuing its three months rally. The rally was marked by strong FII inflows in the month of May with Net inflows of Rs. 13,886 crs. Midcaps were the flavor of the rally, gaining 43.91% & small cap gaining 51.92%, both outperforming the benchmark indices.

June 2009

Indian equities registered a fall with strong volatility during June 2009. The market commenced the month on a positive note helped by huge FII inflows and strong global cues. The rally in the market was continued till mid of the month. During that period, the BSE Sensex touched 10-month high of 15,467 on expectations that the government will increase public spending in the budget to spur economic growth. The markets then saw profit booking at higher levels. It witnessed continuous drop towards the end of the month on concern over delay in monsoon and FII outflows. However, recovery was seen in the final few sessions on the hope that the government will make policy announcements in the budget. On the whole, the market closed on a negative note.

July 2009

July 2009 turned out to be favorable for Indian stock markets. The Indian markets rallied on the back of good quarterly earnings, huge overseas inflows, positive global developments and announcements by the Government, regarding financial sector reforms and stake sale in PSUs in order to raise funds.

On the US front, the economic news was mixed but mostly positive. Despite a drop in consumer confidence, better than expected GDP numbers, boost in new home sales and home prices, and rise in the Chicago PMI report all pointed to stabilisation in the economy.

August 2009

The month of August saw a mixed action on the India front. Better-than-expected economic data and the draft new direct tax code on hopes of higher disposable income in hand of individuals triggered recovery in the markets. It was unable to sustain level towards the end of the month on weaker Chinese markets. On the whole, the market closed on a flat note amidst concerns about rainfall deficit & drought being declared across various villages of the country. So, the capital markets witnessed a lot of volatility taking cues from the global markets. On the economic front, the India`s Gross Domestic Production (GDP) grew to 6.1% in Q1 June 2009, that was lower than 7.8% achieved in Q1 June 2008 but it was better than the 5.8% expansion witnessed in Q4 2009. There was a sharp surge in food prices in the August due to scanty rains that might stoke inflationary pressures in the economy. But the revival in the monsoon rains cheered the prospects for rice and sugar cane. Further, the planning commission projected the GDP growth rate of 6.3% for the current fiscal year and a growth rate of 8% in the coming fiscal before the economy returns to 9% growth in 2011-12.

September 2009

The month of September ended with BSE’S bellwether index, Sensex, breaching the 17000 mark buoyed by the powerful tide of liquidity. The main drivers were the improved data across global economies & festival season ringing in improved sales in consumer driven segments. Another positive was that India’s exports fell by annual 19.4 per cent in August Vs 28.4 per cent in July as demand for merchandise picked up in the big global markets ahead of Christmas.

October 2009

Between Diwali of 2008 and the one just gone by, Indian stocks moved only in an upward direction with BSE Sensex posting a 74% growth. However, the week after Diwali, saw a stunning turnaround. The month of October saw the Sensex shed over 7%, the worst one-month fall in the year. Poor corporate results by some of the industry giants could be blamed for the fall in the market. The FIIs also played their part with foreign funds being infused to the tune of $14.4 billion (over Rs 67,000 crore) in Indian equities till October this year. But, under intense pressure to realise profits, the traditional pre-Christmas sell-offs by FIIs has advanced by a couple of months this year with ruinous effect on stock prices.

November 2009

The Markets bounced back from the lows of October and ended the month of November on a positive note, amidst heavy buying by both the FIIs and DIIs. Sensex ended Positive gaining 6.48% and Nifty gaining 6.81. November was a month with a mixed bag of news. The IIP numbers, India’s industrial output, grew 9.1 percent in September from a year earlier, helped by fiscal stimulus and festival demand adding to the debate on the timing of exit policy. Next in line was a slightly cautious number for that of the wholesale price based inflation data which would now be announced on monthly basis instead of every week. The wholesale price index was up 1.34% in October from a year earlier, compared with 0.5% in September and 11.06% a year ago. Another interesting and a positive number was India’s strong GDP data that cheered the investor sentiment that the economic recovery is gaining momentum. India’s economy grew at a spectacular 7.9% in the July-September period, the fastest pace in six quarters, bolstered by government stimulus measures and rising industrial production.