Indian Weekly Market Update July 10 2009
US investors remained cautious with a negative bias for the week ended July 10, 2009, amid mixed macroeconomic signals and the anticipation of a new earning season ahead. Claims for jobless benefits fell more-than-expected for the week ended July 4, 2009, dipping below 600,000 for the first time since early January. However, the number still remains well above the 300,000–350,000 range, which signals a healthy economy. Furthermore, US retailers reported yet another sluggish month of sales in June—sales rose by a marginal 0.6 percent mainly due to higher prices, increasing concerns over the seasons ahead. Negative news emerged from the other side of the Atlantic, with the UK industrial production and manufacturing output indices declining to their lowest level (since 1992) in May 2009. Manufacturing output fell 0.5 percent month-on-month sequentially in May 2009, while factory production dipped 12.7 percent from a year earlier. Widespread pessimism among investors pushed the Dow Jones Industrial Average (DJIA) and FTSE 100 down by 1.62 percent and 2.57 percent, respectively, for the week ended July 10, 2009.
Asian economies witnessed a negative trend during the week with three of the seven major indices falling considerably and three others gaining less than a percent. Taiex, Taiwan’s benchmark index (up 1.57 percent), was the top gainer due to a lower-than-expected decline in export numbers. The BSE Sensex toppled 9.45 percent, being the worst performing market across Asia. The Union Budget fell short of market expectations as it failed to outline any roadmap for structural reforms and fiscal consolidation and thereby spooked investors.
The rupee depreciated 2.33 percent during the week due to weaker demand from foreign institutional investors (FII). Crude oil prices fell 10.0 percent to US$59.89 per barrel after decreasing 3.8 percent the previous week. Skepticism about the global economic recovery and fears of new regulations to curb future speculation led to the fall.
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