Markets at a glance

Markets ended their 14-week winning streak. The week also saw major global indices close in the negative territory on worries that the global recession would stretch longer. The Mumbai High Court's judgement accentuated the downward bias. Markets were unaffected by FM’s call for lower interest rates.

BSE Sensex lost 4.7 per cent during the week, while Nifty gave up 5.9 per cent. Profit booking by FIIs was visible as they sold stocks (net) of $350 million during the week. However, in June they were net buyers of $950 million. The week also saw inflation falling to sub-zero levels.

Markets this week

The Fed’s two-day monetary meeting scheduled during the week could give global markets direction. Expectations of a pro-reformist budget and faster progress of monsoon could improve sentiment. NSE is adopting free-float market mechanism for the Nifty from June 26 and should help stocks like L&T, HDFC, Infosys due to their increased weightages.

However, domestic markets are expected to be choppy in the June derivative expiry week. Foreign buying could be crucial for any up move ahead. It would be interesting if markets can reverse the losses of earlier week and continue the three-month rally. 

STOCK TO WATCH 

SBI
Last week's close (Rs)	1,724.47
Prev. week's close (Rs)	1,635.80
Week's high (Rs)	1,744.95
Week's low (Rs)	1,605.48
Last week's ave. daily turnover (Rs cr)	518.27
Prev. week's ave. daily turnover (Rs cr)	574.29
Number of up/down move	4/1

State Bank of Indore’s proposed merger with parent SBI will keep the stock of the largest bank in India in play this week. The decision has come a couple of weeks after the finance minister asked PSU banks to consider consolidation.

The move could be a precursor to further consolidation of SBI holdings in various associates over the next few years. If the merger with associates comes through, it will make SBI one of the bigger banks in the world.

However, union unrest could play spoilsport as it was the case earlier during the merger with State Bank of Saurashtra. At Rs 1,724.35, the stock is trading at 12.34 times its trailing 12-month earnings.