Latest Indian Share Market Updates

Get all the latest Indian & global stock market market updates, corporate & commodity news along with outlook for the week ahead with the SAMCO Weekly Market Update.

Stock Market Updates for January, 2017

20th January, 2017

Demonetization Ends - Rally Begins

Market began the week in lacklustre mood before the news 'CBDT circular kept in abeyance on indirect taxation' again rekindled the bullish interest but later met with profit booking by the close of the week. The market was ripe for correction in the short term and therefore no amount of good news could propel it higher. Banking sector is still in a state of flux inspite of positives expected from demonetization. Some banks like Axis Bank have reported 73% fall in PAT while others like Yes Bank have surprised by 31% rise in quarterly numbers. Reliance Industries reported just 4% rise in PAT on a consolidated basis, wherein currently 60% of the capital deployed is generating close to nothing, it is the earnings on this capital -the telecom venture, that will be the game changer for the stock price. FPIs have just started to report positive numbers but it would be too early to say whether the outflow trend has reversed. The macro numbers are robust and soon the FPIs are expected to pour huge money and coupled with domestic liquidity the markets are expected to make new highs this year.

Key events of the week:

At last all the outstanding issues between the Centre and States have been ironed out and therefore GST seems to be reality from 1st July. Digital economy coupled with GST should make India into elite club where corruption would be watered down to minimum and merits would rise which will bring in a kind of revolution in entrepreneur culture in India. As merits starts getting rewarded more and more people will dare to take risk by starting their own ventures rather than searching for employment.

Technical Outlook:

Last week we had suggested "Traders should book profit near the upper resistance levels and re enter at lower levels". Indeed the market faced heavy resistance near the upper levels of 8450 - 8500 in Nifty50. The correction has started and the entire rise of 550 Points in Nifty50 since last month should settle down at or around 8250 to 8150 levels which represent 38% to 50% of the entire rise. On the weekly chart, the formation is dark cloud cover indicating that the market is witnessing cracks in bullish strength. Traders should start building long positions at lower levels near 8150 to 8250 with appropriate stops below the support zone.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

The rally is expected to rest for a while, probably waiting for the budget to show the next course of action. Political parties have swung into full action for upcoming elections in many states. The Centre too is mulling welfare schemes similar to US in the form of social security for all the underprivileged, if implemented, would be dubbed as the biggest pro poor scheme which entails a payment of Rs 1500/- per month to all eligible unemployed citizens. In US, Trump too is expected to take radical steps for the benefit of US citizens, concrete details of which would be available only after his taking over office. There are many imponderables in the short term for the markets to assimilate and hence the market will enter into wait and watch mode and complete the ongoing correction in the intervening period, so that once the clarity emerges, it can begin to race again. Investors should keeping on accumulating quality stocks in their portfolio.  Nifty50 closed the week down by 0.60% at 8349.35

13th January, 2017

Market defying Demonetization Gravity

Market began the week in profit booking tone but soon resumed its upward journey after the result of IndusInd Bank, which buttressed the demonetization argument ruthlessly. IIP numbers for November too were a pleasant surprise for critics of demonetization which reported a growth of 5.7% compared to previous year. Trump's press conference has now sent out a loud message of Make in USA, which should be a cause of worry for all export oriented industries in India, plans by these companies will surely have to be redrawn. Inspite of Trump's strong message, IT and Pharma companies have remained calm which depicts their unwillingness to go down further. IndusInd bank reported 29% rise in Q3 PAT numbers, while Infosys and TCS both reported below 3% growth in quarterly PAT numbers while revising guidance lower to 7.2% from earlier 9%. As the expectations are becoming lower and lower, greater is the potential for the stocks to go up when actual numbers throw positive surprises, as soon as this starts happening, the rally will restart in the entire sector.

Events of the Week

Ongoing Vibrant Gujarat summit 2017 has acted as a catalyst for attracting investments of billions of dollars year after year. Such kind of summits have begun in some states but if all the states follows such footsteps, India can actually become magnet of capital inflow for its own Industrial and economic progress.

Technical Outlook:

Market is gliding higher and higher on the back of improving sentiments. On the upper side there will be overhang selling at or around 8500 levels in Nifty50. The bounce from double bottom should hopefully restart the higher top higher bottom sequence which will set a solid base for grand rally in times to come. On the lower side there is support at 8300 and on the higher side there will strong resistance at 8500 Nifty50. Traders should book profit near the upper resistance levels and re enter at lower levels.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

The rally is expected to continue with bouts of profit booking at regular interval. The market is ready to welcome quarterly numbers next week. It is expected that bad numbers will be quickly discounted with rebound in their stock prices while good numbers will keep the stocks on a firm footing. PSU banks lead by Bank of Baroda has slashed the housing finance rate to industry low at 8.5% thus triggering favourable ecosystem for consumerism in India. Lower housing interest rates will have all round cascading effects in the economy. Magic of Nifty Index reshuffle is an unfailing signal. Whenever a stock enters the indices the stock underperforms and when pushed out, it widely outperforms. During the last reshuffle all three stocks that were thrown out of Nifty, viz Cairn India, PNB and Vedanta all of them have risen on an average of 50% to 100% and stocks that were included viz Eicher Motors, Bharti Infra and Aurobindo Pharma have just delivered net to net 10% to 0% returns. Currently the stocks that are on the throw out list are Idea and BHEL. History can again repeat itself in these stocks. Investors should keeping on accumulating quality stocks in their portfolio. Nifty50 closed the week up by 1.89% at 8400.35

6th January, 2017

Expectations and Actuals to begin Convergence

Market began the week with a muted start but later gained traction by the close of the week on expectations of normalcy returning in the economy post demonetization. What the RBI couldn’t do, demonetization has done it, Banks have suo-motto reduced interest rates by as much as 0.9% across categories. SBI and HDFC Bank have taken the lead and others are expected to follow. However such heavy interest rate reduction could harm in the medium term profitability of the banks but at the same time dramatically increase the profitability of at least debt ridden companies. Tata Motors has posted 30% rise in US sales for the month of December and 24% rise in annual US sales which makes Tata Motors a truly multinational company that we Indians should be proud of.

Key events of the week:

Ford changed its plans to start manufacturing in Mexico and shift back to the US courtesy Trump policies. This is the most important signal to the world that America is changing. The change is inward looking and more protectionist than ever before. The world has to now embrace a new normal emanating from the US. At last the consolidation begins- BhartiAirtel has begun talks to acquire Telenor’s business, a signal that historically has heralded the beginning of a new bull market in the sector.

Technical Outlook:

Market has taken a solid support at 7900 Nifty50 levels which is incidentally the 50% retracement of the entire rise of 2016. The bounce back from double bottom seems solid and sustainable and this rally is expected to continue from here onwards with intermittent profit booking at regular intervals. Significant penetration above 8300 levels in Nifty 50 would further confirm the beginning of secular bull market rally. Traders should buy on dips.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

The swift rally of the previous week is likely to see some amount of profit booking early next week. The result season will begin and companies that are ready to start their innings are 8kMiles, IndusInd Bank, BajajCorp, Infosys, MCX etc. Markets around the world have started to correct the previous moves. US Treasury yields have started to fall dramatically and correspondingly precious metals too have bounced backed sharply. Similar movement is expected to continue for some more time. Sugar prices have again started their upward ascent after a long and deep correction in the International Commodity Exchanges which will have positive effects on the Indian listed Sugar stocks. Dollar Index has started to retreat, easing pressure on emerging market currencies which is very positive for countries like India. Beginning Monday, global Fund Managers will be back on their chairs which will drive the market’s direction in the short term. Traders should book profit at higher levels and re-enter at lower levels. Investors should keeping on accumulating quality stocks in their portfolio. Nifty50 closed the week up by 1.13% at 8243.80

Stock Market Updates for December, 2016

30th December, 2016

Demonetization Ends - Rally Begins

Market began the week with negative bias but midway completely turned the wheels to close the week with substantial gains. The rise in market in the middle of bad economic news is a confirmation of bottom. Headlines appearing “Two Wheelers sales set to crash 35%...", "White Goods by 38%...", "Street remains cautious.." suggests that majority of market participants are always caught on the wrong side, the swift rise in the market is an indication of the above fact.  We had observed last week that convincing proposition for investors to invest who believe in the adage "buy when others are fearful" reallyturned out to be fruitful for investors having the courage to go against the crowd.

Key events of the week:

Skirmishes between the Tata's and the Mistry camp is getting uglier by the day. They are catching media headlines since weeks together. Had they remembered the principle "Winning without Fighting is Best" which is taught in all business schools in art of war strategies, so much good would have been done to the companies and for the all the stakeholders instead of spending time and money fighting for self righteousness and egos. Humans howsoever big or small always get carried away by emotions, just like stock market participants, but those who can win over emotions will win every war.

Technical Outlook:

Market has completed the ongoing correction of the entire rally which had begun in March of this year in approximately 50% of the time. Price correction too has been done with 50% retracement of the entire rally. Market has made a solid double bottom with volume confirmation to support the rally.  A firm bottom at 7900 Nifty50 is in place for the market to move higher and higher in times to come. Last week we had observed - "The market has entered into a period of low volatility, low volumes and low open interest which is a symptom of ongoing correction nearing an end". Indeed the market did bottomed out this week. Aggressive Traders should buy on every rise and conservative traders should buy on dips. The big bull market has started.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

The beginning of the rally has coincided with the end of demonetization of high value currency notes. There are many instances in India and across the world wherein the market's turning points have coincided with the end or beginning of major events, like budgets, elections, wars, calamities and now demonetisation. When the market starts rising after a lull, the feel good factor will come automatically no matter how the subsequent events unfold. The result season is ahead and although it is expected that the results will not be rosy of at least a few sectors, but the same has already been discounted and therefore to that extent the bad numbers will now be ignored and markets will march ahead with a renewed zeal to look forward for the new opportunities arising from digital revolution that India is undergoing currently. Investors should take this opportunity to aggressively accumulate quality stocks and invest a substantial part of their capital in a well diversified equity portfolio for the long term and sit tight. Traders should trade long only and abstain from shorting. Nifty50 closed the week up by 2.50% at 8185.80
We wish all our esteemed readers Happy and a Prosperous New Year

23rd December, 2016

Market in Holiday Moods

Market began the week with lacklustre mood on absence of any triggers and hence the momentum downward just got accentuated by the close of the week. Media headline is being brushed with all round gloomy picture due to demonetization, "microfin companies worries.." , "consumption stocks has eroded 1.2 Lac Crs in mkt cap..", "dollar index a pain for emerging markets..", all these has shattered the confidence of the market participants and hence the volume and open interest are at yearly lows. FPIs and DIIs have almost balanced the outflows and inflows for the month of December. Volatility has cooled down combined with the negative sentiments offers a convincing proposition for investors to invest who believe in the adage "buy when others are fearful".

Key events of the week:

Central Electricity Authority predicts a gloomy picture for thermal power generation in the country, it is estimating that by 2022 plant utilization will reduce by 50% which will not only threaten the viability of many coal based plants, but at the same time slowly destruct the coal and ancillary demand permanently. The demand gap will be replenished by renewable sector which will act as disruptor of the decade. Government brings under price control stents that are used for human body thus sending out a clear message to pharma companies that profiteering will not be tolerated.

Technical Outlook:

Market is likely to test the strength of key support area at 7900. The formation of doji on Friday gives an indication that the bottom may be near although doji in itself is not sufficient for trend reversal. The confirmation comes only when next day strong bullish candle follows the doji pattern formation which confirms the trend reversal, however if the follow up next day buying does not turn up then market can test the support area of 7700. The market has entered into a period of low volatility, low volumes and low open interest which is a symptom of ongoing correction nearing an end. For traders these correcting periods are a nightmare and the best approach would be to avoid trading and go for Christmas holidays.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

Market has entered a state of inertia which is just drifting lower in line with the continuing momentum. This week being the last week to deposit demonetized notes, there will be lot of drama for the viewers but once and for all this will end the 50 days of ordeal for the people of India. Markets will at last come out of this spell and move ahead with New Year setting in with new opportunities to be looked ahead. GST is also moving as per schedule and hopefully should be implemented by mid of next year. Market will now look at the budget for important policy directions for the economy.  Last week we had mentioned that "the market may again have to re visits the old support levels to check whether there are still weak players left and only then the new rally can begin." Mr Market did exactly the same thing by testing 7940 which is a multiple support area for Nifty. The real action should begin after the first week of January wherein the quarterly results season will begin. Investors should take this opportunity to aggressively accumulate quality stocks for the long term as valuations have turned attractive. It is also a time for yearend review of the portfolio before the New Year begins. Nifty50 closed the week down by 1.88% at 7985.75

We wish all our esteemed readers Merry Christmas.

16th December, 2016

Market in Resting Period after year long Roller Coaster

Market began the week with negative mood on GST flip flop and then recovered mildly. However when US FED increased interest rate with a more hawkish stance, the market opened deep in the red but recovered swiftly within an hour of trading indicating clearly that "no amount of bad news can now push Mr Indian Stock Market lower". The FED’s guidance of three possible hikes in 2017 and 2018 each depicts the conviction in growth possibilities in US which is extremely positive for emerging markets. Now India will have more opportunities to export from IT to Textiles. Further the utter optimism in US economic growth makes a likely hood of bull market nearing its maturity creating huge possibilities of new funds deployment in emerging markets for higher returns. Thus US interest rate hike foretells well for Indian markets.

Key events of the week:

Power Minster has decided that NTPC will invest fresh Rs 50000 Crs in creating new power generating capacities and weeding out old ones, which will give massive boost to wind and solar power generating capacities in times to come. This is the only way India can slowly shift from thermal to renewable power generation. Cabinet has cleared bill proposing more autonomy to major ports which will in turn help in developing inland water ways and water transport systems in the country. This is a sunrise sector for investors to create sustained wealth.

Technical Outlook:

Market seems to have entered into a period of low volatility and a narrow range which is a typical symptom of ongoing correction. The market is likely to oscillate in a narrow trading range oscillating between Nifty 8300 on the upper side and 8000 on the lower side. In these sideways, corrective times, the best strategy to approach individual stocks would be to trade breakouts. Traders can take smaller breakouts of say 55 days for momentum trading and investors can watch out for breakouts above 200 days for creating a portfolio of growth stocks. For conservative traders and investors buy on dips should be the strategy.    
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

Market has entered a state of fatigue as the year is nearing an end. Neither the bad news - US Interest rate hike or GST flip flop is taking the market lower nor is the good news of two year low inflation numbers cheering the market. However now the support looks firmly in place for the market awaiting positive triggers to kick start the rally. But based on statistical evidence it is observed that for the market to restart the rally, the market may again have to re visit the old support levels to check whether there are still weak players left and only then the new rally can begin. Hopefully this time also the market will do the same. The real action should begin after the first week of January wherein the quarterly results season will begin and by that time global fund managers too will be back on the driver’s seat. Investors should take this opportunity to do their home work and reassess all their holdings as a yearend exercise to reshuffle the portfolio by restructuring it in line with the new emerging opportunities by investing in those stocks and exiting slow moving businesses.  Investors should keep on accumulating quality stocks as valuation has turned attractive. Nifty50 closed the week down by 1.48% at 8139.45.

9th December, 2016

RBI and Mr Market Both Surprised Everyone

Market began the week with positive undertone on hopes of an interest rate cut from RBI, but fell mid-week when policy rates remained unchanged and then later bounced back with vengeance by the close of the week baffling even the smartest bear on the street. This also means that Mr Market is enveloped in a strong bull market. When symptoms such as utter negative news are disregarded and market moves up defying all logic, a clear signal is sent that structurally markets are in secular bull market when such important macroeconomic indicators like interest rates rhetoric's are ignored. FPI's selling have reduced drastically this month, with low market wide open interests indicates that all the weak hands are out from the market and deliveries of past two months of heavy FPI selling have been consumed by domestic investors making the market ripe for bulls to again take control. Market is just awaiting the right kind of trigger.

Events of the Week

Cairn India commits to raise output to 300000 bpd by investing 30K Crs while Russia pledges to cut crude oil output by 300000 bpd to support prices, a perfect analogy to befit the business axiom 'one man's loss is other man's gain' the same is true in stock market and in real businesses too. RBI truly displayed the independence, ignoring the political and popular demand, refrained to cut interest rates in order to protect Rupee rout due to impending US interest hikes, a smart move belittling all the experts and economists.

Technical Outlook:

Market seems to be in a broad trading range oscillating between Nifty 8400 on the upper side and 7900 on the lower side. In these sideways, corrective times, over bought/over sold indicators are best suited to analyse the market. RSI is approaching from deep oversold zones to neutral levels indicating some more potential to go up. However the velocity of ascent is slow indicating profit booking should be expected at higher levels. As the market rises higher, resistance is expected at 8400 levels. Buy on dips should be the strategy for the traders. Nifty50 is expected to trade with positive bias with intermittent profit booking at higher levels.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

Market has firmly made a base awaiting positive triggers to kick start the rally. However December being the year end month historically closes with no fresh commitments from large institutional investors. Next week the whole world will watch the events unfolding in Washington DC, when USFED meeting is expected to raise interest rates and more importantly the ensuing commentary would give a major direction for further course of action. However it is given that the interest rate will be raised by 0.25% and therefore that will just have sentimental effects on the market. The main trigger for Indian markets would be the future road map post demonetization and the major policy pronouncement through budget, till that time the market is expected to remain range bound with bullish bias. Investors should take this opportunity to invest and build long term portfolios. Nifty50 closed the week up by 2.16% at 8261.75.

2nd December, 2016

Market awaiting Monetary Injections

Market remained positive throughout the week defying the cash crunch in the system and closed the week with some amount of profit booking. DIIs have purchased record Rs 18200/- Crs worth of shares a record in itself on the back of domestic liquidity, where as FIIs have sold equities worth Rs 17800/- Crs on fears of Dollar appreciation and demonetization. The fight of might will now be matched post demonetization era for the first time in the history capital market. Retail investors and Indian institutions will now act has a solid counter force to foreign capital, a positive fallout of demonetization. Headlines have again started to surface "Dollar shortage world over..." "Dollar to reach 70 by..." "Importers rush for cover..." all these indicate that there is too much optimism for dollar and therefore it is time to be cautious and stay away from the crowded consensus.

Key events of the week:

Reliance Jio's acquisition of 52 million customers and extension of free offer till March 2017 has caused lot of tremors in the telecom space, impacting the stock prices of the incumbents, but the biggest hurdle for Jio would be to make consumers pay when the freebies expire that eventually will decide, who will win the crown of the telecom industry, Jio, is just 10% of the combined three top private telecom players, and therefore their (BhartiArtl and Idea)  stock price fall on the stock exchanges looks overdone and too early in the short term.

Technical Outlook:

Market seems to be heading for some volatile sessions next week due to major event. However in the short term prices are expected to oscillate between Nifty 7900 on the lower side and 8300 on the higher side, with expected weakness on the higher side. Short term traders may stay on the side lines till RBI’s policy pronouncement. If rates are reduced more than market expectations a brief rally could be expected otherwise Nifty50 is expected to remain under pressure. Breach of 7900 levels in NIFTY 50 could lead to panic selling up to 7600 levels.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

Market has turned into profit taking mode, awaiting triggers for meaningful direction. The bounce back and the subsequent fall by the close of the week should take the market into a broad spell of sideways trading activity till major policy announcements via budget are pronounced. OPEC cartel has become active after 8 years and Russia pledging to cut crude oil production is not a good sign for an economy which imports 70% of the requirements such as the case with India. Last year’s low crude oil prices and the resultant benefits will be erased impacting consumption growth in the economy. Auto numbers for the month of November suggests that demonetization impact is not fully captured at least in the passenger car segment, but in two wheelers segment HeroMoto reported 13% YoY fall in monthly numbers, but inspite of this, stock price stood resilient indicating that markets have responded maturely and discounted the demonetization effect. However December month may come up with some negative surprises for the market which may create a panic bottom but if that happens, Investors should take that opportunity to aggressively invest and build long term portfolios.  Nifty50 closed the week down by 0.34% at 8086.80.

Stock Market Updates for November, 2016

25th November, 2016

Pain of Demonetization Moderating

Market opened the week with negative bias but in the middle of utter pessimism bounced back sharply by the close of the week an indication that the worst is actually behind us. When the market had fallen on the first day, adversely reacting to demonetization, total stocks hitting 52 weeks low were 157 when Nifty had made a low of 8002, but later when Nifty made a fresh low of 7916 just 92 stocks made 52 weeks low on the NSE, a loud and clear indication that the breath is slowly turning positive and that the worst is quickly being discounted. These are some of the times when pessimism in the real economy is creating a compelling case for lapping up good quality businesses at reasonable prices. Soon the market will digest the event and move on.

War on Black Money and World Wars an analogy:

Much has been said about demonetization, that it is a war to flush out counterfeit and black money out of the system, akin to world wars, to win over the countries by waging war against them. During World War I which began on August 1, 1914 the US govt had ordered the shutdown of the stock market, but when the trading resumed some four months later, Dow Jones Industrial Average Index opened 30% down and from there on, it was, one way up, it doubled in the midst of the continuing war, inspite of all the war talks and pessimism. World War II which began in September 1939 in which US finally jumped in, when the Pearl harbour was attacked in December 1941 the Dow Jones Index had fallen by 16% after the Pearl harbour attack, but even considering the day when the World war II first started, wherein US was nowhere involved, the Dow Jones was down by 33% even from that top. Post the war panics, in both the instances US market doubled in a matter of just one year. The current demonetization in a way is a war on black money and has made some stocks correct by 30-40% from the tops which make a super compelling case for investors to be in the market to take the advantage of once a lifetime opportunity to buy shares in India's great businesses.

Technical Outlook:

Market seems to be bottoming out at least in the short term, the velocity of the fall is receding, and the breath is turning positive. The correction of 50% from the top seems to be holding up the market and mostly likely it can act as a turning point for renewed up move in the market. Strong basing pattern has been made at 7900 and on the upper side market could face minor resistance at 8300, but eventually market will break upwards and move beyond. Short term traders should initiate long positions keeping stops below 7900 while investors can aggressively build their long term portfolio at current levels.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

Market is changing its gear from fear towards hopes and optimisms. The peak in fear is behind us and so is the bottom. The other side effects of fear are also visible in dollars which is just kissing distance away from 70. The panic of importers suggests that the top for USINR is also near coinciding with a turn in the stock market. Companies such IBRealEst has announced share buyback program proposing to buyback huge 11% equity capital, such move suggests that the promoters the intelligent insiders are finding intrinsic value in their companies which is a good sign for the bulls betting on the beaten down sector. The open interest in Nifty futures are at yearly low indicating that fewer participants are interested in the market right now due to uncertainty but sooner they too will jump once the clarity emerges propelling markets still higher. Investors should take this opportunity to aggressively invest and build long term portfolios while Traders can initiate long with stops below 7900. Nifty50 closed the week up by 0.5% at 8114.30

18th November, 2016

Bulls are slowly Queuing up before Market

Market reacted negatively and opened lower after digesting intense social media heat both, for and against demonetization. Markets however later gained sanity and reacted calmly by the close of the week. Much has been commented on demonetization but no one denies the pragmatic outcome of the same. Banks have started to reduce interest rates. Private sector banks have reduced interest rates by 15 to 20 bps. In stock markets open interests have reduced dramatically in Index futures and are running on the lower side of the yearly averages. Volatility too is cooling down slowly which is good for the health of the market. Stocks that are banned in derivative segment stands at negligible level indicating a moderation in leveraged positions. Normalcy is creeping back into both the stock market and economy.

Past Demonetizations and effects on the Stock market:

It would be intriguing to know how the stock markets had responded during the 1946 and 1978 demonetizations. Culling from the RBI data of the stock prices which they maintain, post 1946 demonetization there was a massive fall in the stock market for the next 2 years but post 1978 demonetization stock market rallied massively for next 3 to 5 years. Thus stock market is altogether an independent animal with scant regards to demonetization if any. However such move should bring a positive shift towards cashless economy and combined with GST, corruption would most likely take a back seat and a new era of meritorious society should emerge.
Nifty Today

Technical Outlook:

Market is continuing it's long spell of corrective phase wherein it has already corrected 50% by price and 38% by time of the entire move. Market is currently at the most critical juncture taking support at 8000 Nifty levels. The resistance and support line passing through 8000 levels has acted as strong resistance last year and now therefore as per the law of alternation it should now act as a powerful support this time. Short term traders should initiate aggressive long positions keeping stops below 8000 for a quick rally while investors can selectively build their long term portfolio at current levels.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

Market is limping towards normalcy. The emotional epitome of greed and fear seems to have abated and all the external macro factors have almost been discounted. The massive fall in the stock prices on fears of slowdown seems to be overblown from stock market's perspective. It is well know that markets are a six monthly forward discounting machine. Any negative events whose effects are to be felt within one or two quarters are almost always discounted. Thus there is nothing that investors have to worry regarding the effects of demonetizing high value notes, as it is already discounted in the market. The recent swift fall therefore creates a compelling opportunity for buying great businesses. Recall Warren Buffet's purchase of Coca Cola shares during the 1987 stock market crash which eventually turned out to be the highest return generator in his entire portfolio. Investors should take this opportunity and start purchasing shares for their long term portfolio while Traders can initiate long with proper stops for low risk high reward trade proposition. Nifty50 closed the week down by 2.68% at 8074.10.

11th November, 2016

Extreme volatility to recede but slide will continue

Market witnessed its biggest roller coaster of the year throwing opinions and statistical projections haywire. Short term traders betting on the direction of the market widely went wrong when the victory of Trump made the markets to rise after dismal opening. "Always Follow Mr Market" is the moral of the story from the entire Trump episode. Volatility across asset classes had increased world over on the outcome of US election results. It seems like Indian market is likely to decouple at least in the short term with the rest of the global peers in the light of demonetization of higher value currency notes. Dow Jones has raced ahead to make a new high but Nifty is struggling. In the mean while results season is nearing an end, Lupin and Sun Pharma reported stellar performances by posting 58% & 117% rise in their respective Q2 profits. The effects of demonetization of the currency will be felt in the third quarter spoiling the growth party but at the same time creating opportunities for the long term buyers.

Key events of the week:

With the impending GST implementation on hand, government is trying to ring fence the entire system by cleaning up the mess of the parallel economy by demonetizing high value currency notes. It is estimated that some 7 Lac Crs are expected to come in the main stream financial system which will not only create multiplier effect lubricating the economy but will also boost earnings of BFSI sector. Demonetization of currency will further push down inflation which will create a compelling proposition for the RBI to reduce interest rates rapidly.

Technical Outlook:

Market has entered a long phase of corrective pattern trying to correct the entire rise from the March bottoms. Market hit the 50% retracement mark at 8000 Nifty level intraday mid week but closed substantially higher. 8000 levels in Nifty, now, therefore will act as a solid support for the market on the lower side. However a 38% retracement level which comes to 8200 could also act as a minor support. Traders should refrain from creating long positions and Investors should stay on the side lines till a capitulation in the correction is reached.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

Market is headed for uncertain times, no one will know until January what policies the new President of the US will pursue towards IT, Pharma, heavy Industries and export oriented units in which India has a meaningful stake and at the same time back home the shortage of money in the system will impact the spending pattern of the consumers in the short term plus the overhang of harvest season, any shortage of money in the system will seriously dent the purchasing power of the common men in the economy causing significant impact in the corporate earnings. However the expectation of interest rate reduction from the RBI and fear of US interest rate hikes should counter balance each other, but the air of uncertainty will keep the market under pressure. Traders and Investors should abstain from creating long positions at the current juncture. Nifty50 closed the week down by 1.63% at 8296.30.

4th November, 2016

Market to witness biggest volatility of the Year

Market started the week with lacklustre moods but nosedived mid week on reported lead of Donald Trump in the US Presidential election. Quarterly results of corporates were encouraging, manufacturing PMI hit a robust 22 months high but still our stock market did not cheer. It seems our market has caught the cold of US elections. US accounts for 23% of the world GDP and 37% of the global financial stocks. Any adverse policy initiative by the new President in the financial power house of the world is the real worry perceived by the markets across the globe. US stock markets too are trading at their 100 day lows. FPIs have sold shares of around Rs 5000Crs in October while DIIs bought shares worth Rs 8000Crs. Passenger vehicle sales have moderated -Maruti reported just 2% increase in sales in the month of October a trend that needs to be now closely watched for early signs slowdown.

Key events of the week:

Govt has quickly arrived at consensus for the GST rates which are progressive in nature and will tax the rich more and leave more purchasing power in the hands of the lower income group which will be positive for rapid economic expansion. SUUTI has sold Rs 4000Crs worth of L&T shares announcing the beginning of the larger stake sales coming in the market to suck the liquidity. US Fed has kept the rates unchanged for now but strongly indicated that the hike is coming in December.

Technical Outlook:

Nifty50 has entered a long phase of corrective pattern potentially trying to correct the entire rise from March bottoms. Ideally a price correction of 50% which corresponds to 8000 Nifty50 level can be expected but a 38% correction at 8200 Nifty will also offer a good entry point. Support of 8500 has been breached which signals that the correction will be prolonged and will take time for the new impulse move upwards to restart. The series of higher tops and bottoms has been breached thus breaking the uptrend which was in place since last eight months. Traders should exercise restraint and wait for the clear opportunity to emerge for long trades.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

Decent corporate results, lowering of the interest for housing loans by 15bps from HDFC, ICICI, SBI etc, increased PMI index all but failed to lift the market sentiments. This is an indication of deeper corrective forces operating in the market. The outcome of an important event in the US has global repercussions and therefore the market will wait and watch before moving substantially in either direction. Pharma sector seems to be mired in long drawn battle with the US authorities either for USFDA issues or from Department of Justice (DOJ) for allegedly cartelization in the generics. Traders should sit on the fence and watch the US election melodrama. If Trump wins the market will spook down which will offer a good buying opportunity. On the other side if Clinton wins the market will trade positive but will still face resistance at the higher levels. Investors can selectively buy a set of diversified domestic and consumption related stocks for long term. Nifty50 closed the week down by 2.36% at 8433.75

4th November, 2016

Market to witness biggest volatility of the Year

Market started the week with lacklustre moods but nosedived mid week on reported lead of Donald Trump in the US Presidential election. Quarterly results of corporates were encouraging, manufacturing PMI hit a robust 22 months high but still our stock market did not cheer. It seems our market has caught the cold of US elections. US accounts for 23% of the world GDP and 37% of the global financial stocks. Any adverse policy initiative by the new President in the financial power house of the world is the real worry perceived by the markets across the globe. US stock markets too are trading at their 100 day lows. FPIs have sold shares of around Rs 5000Crs in October while DIIs bought shares worth Rs 8000Crs. Passenger vehicle sales have moderated -Maruti reported just 2% increase in sales in the month of October a trend that needs to be now closely watched for early signs slowdown.

Key events of the week:

Govt has quickly arrived at consensus for the GST rates which are progressive in nature and will tax the rich more and leave more purchasing power in the hands of the lower income group which will be positive for rapid economic expansion. SUUTI has sold Rs 4000Crs worth of L&T shares announcing the beginning of the larger stake sales coming in the market to suck the liquidity. US Fed has kept the rates unchanged for now but strongly indicated that the hike is coming in December.

Technical Outlook:

Nifty50 has entered a long phase of corrective pattern potentially trying to correct the entire rise from March bottoms. Ideally a price correction of 50% which corresponds to 8000 Nifty50 level can be expected but a 38% correction at 8200 Nifty will also offer a good entry point. Support of 8500 has been breached which signals that the correction will be prolonged and will take time for the new impulse move upwards to restart. The series of higher tops and bottoms has been breached thus breaking the uptrend which was in place since last eight months. Traders should exercise restraint and wait for the clear opportunity to emerge for long trades.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

Decent corporate results, lowering of the interest for housing loans by 15bps from HDFC, ICICI, SBI etc, increased PMI index all but failed to lift the market sentiments. This is an indication of deeper corrective forces operating in the market. The outcome of an important event in the US has global repercussions and therefore the market will wait and watch before moving substantially in either direction. Pharma sector seems to be mired in long drawn battle with the US authorities either for USFDA issues or from Department of Justice (DOJ) for allegedly cartelization in the generics. Traders should sit on the fence and watch the US election melodrama. If Trump wins the market will spook down which will offer a good buying opportunity. On the other side if Clinton wins the market will trade positive but will still face resistance at the higher levels. Investors can selectively buy a set of diversified domestic and consumption related stocks for long term. Nifty50 closed the week down by 2.36% at 8433.75

Stock Market Updates for October, 2016

28th October, 2016

All eyes on the US Election

The week started with positive bias but turned negative mid week reacting to Axis Bank’s dismal numbers but recovered slightly by the close of the week. FPIs have sold shares of around Rs 1500Crs, making October the first month of negative outflow in the last two quarters. DIIs counter balanced by buying shares worth Rs 6000Crs in the same period. Corporate results have been encouraging but were largely discounted in the market. Maruti registered strong growth of 60% in its Q2 PAT numbers, while ITC 10%, Bajaj Finance 45%, Bajaj Finserve 31%, Dabur 5%, Cairn 117%, Hero Moto 28%, Bajaj Auto 7%, MCX 23% reported rise in their respective Q2 profits numbers whereas companies that have reported decline in their respective Q2 numbers were Axis Bank 83%, Dr Reddy 60%, Syndicate Bank 75%, Idea 88%, Tech Mahindra 18%, Bharti Airtel 5%, all recorded negative Q2 Y-o-Y. Mr Market has strangely behaved in many of the stocks like Maruti, Hero Moto, Bajaj Finance, Biocon etc. which had reported good numbers by pushing down their stock prices post the results giving an indication that market is in no hurry to make a new high quickly. Stocks are rapidly adjusting to actual results vis-a-vis expectations.

Key events of the week:

Govt has finally formulated the policy to grant extension to Pre NELP blocks giving strong revenue visibility to companies like Cairn India and Essar Oil a big policy boost for exploitation of hydro carbons in the country. TATA episode should keep the stocks of the group under pressure till the time clarity emerges for the new successor and how the minority stake of the Sharpoorji Pallonji group is dealt with.

Technical Outlook:

Nifty50 has found a strong support at 8500 but the breaching of which will start a long spell of sideways movement with downward bias. However market is also likely to face strong resistance at 8800 and 8900 on the upper side. Apart from NIFTY 50 other indices are pointing to far more resilience and strength in the general market. The velocity indicators project that the market is just gliding without any strong momentum in either direction. The broad trading range looks the possibility in the immediate term with 8500 and 8800 being the range for the market in the short term. The long term strength of the market is intact. Buy on dips and fresh longs can be entered at current levels with stop below 8500 in the NIFTY 50.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

Corporate results, shorter week and the impending results of US Presidential election will keep the market in a trading range for some time. The downside seems to be capped as the super negative numbers of Axis bank and the melodrama in India’s biggest industrial house TATAs, did not shake the confidence of the bulls but at the same time excellent results have met with profit booking at the higher levels indicating that there seems to be a cap on the upside in the near term.  The government seems to scoop up the liquidity of the capital market by proposing to divest loss making PSUs which looks sound but in a way will take away the necessary fuel from the bulls. Traders should remain on the side lines till US Presidential election results are out as the risks to the market seems real this time similar to the Brexit episode. Investors can selectively buy a set of diversified domestic and consumption related stocks for long term. Nifty50 closed the week down by 0.63% at 8638.

21st October, 2016

Fireworks have began for the journey to New High

The week started with bearish undertone in continuation of corrective phase of the market but NIFTY50 smartly turned around midweek and closed in positive territory by the close of the week. The first round of numbers was out. Financials have done well but cement and IT have reported muted numbers. Yes Bank reported 31% rise in Q2 PAT numbers, DHFL 29% rise, LICHFL 20% rise, CANFIN Homes 53% rise, Infosys 6% rise, HCL Tech 14% rise, UltraTech 25% rise, Quess Corp 27% rise and Kajaria Ceramics 8.5% rise in their respective Q2 PAT numbers. Reliance reported a fall of 24% in its Q2 PAT numbers. The cement giant UltraTech has reported only 1% rise in volume indicating that the pickup has not gained traction at least in the infra and real estate sector giving an indication that markets have run up ahead of its fundamentals in the brick and motor segment. Infosys has guided for growth in single digit between 7 to 9% which is the lowest in many years. However valuations have adjusted for the same and any positive surprise going forward in the numbers will rerate the stock and the entire sector.

Key events of the week:

Govt has stipulated GST rates progressively at 6%, 12%, 18%, 26% considering the depth of the consumer pockets to pay. Luxury is taxed at highest rates where as necessities in many cases are keep out of the tax net. The most viewed US Presidential debates have polarised the candidates strongly and therefore this time outcome will be watched keenly across the world as both candidates have diametrically opposite views on many of the development issues.

Technical Outlook:

Nifty50 has completed its corrective pattern and has started the upward ascent. Correction of 5 weeks seems to be very healthy, which has now set the base for the market to touch new high before the end of this calendar year. The long term sequence of higher tops and higher bottoms are intact. The level of 8500 in the NIFTY50 indeed is the Laxman Rekha for the bulls to operate. On weekly chart NIFTY 50 has made a real body strong hammer indicating that the momentum rally has started. All short positions if any should be exited. Fresh longs can be entered with stop below 8550 in the NIFTY 50. Investors can start accumulating quality stocks to build long term portfolio.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

The ongoing result season and the festivities will keep the mood of the market buyout in expectation of cash from the Kharif crops and 7th Pay Commission payouts will kick start the consumer spending cycle. Generally Q2 results season do not cause much of price action volatility as majority of the expectations are priced in, only surprises are reacted favourably or unfavourably as the case may be. IPO of PNB HSG Finance seems to have been priced reasonably compared to the peers and can be subscribed for short and medium term gains. The government will continue to suck liquidity from the market by intermittently selling minority stakes in the market in the form of OFS. Richly valued PSU stocks should be avoided. Aggressive Traders can enter long positions now. Investors can aggressively buy a set of diversified domestic and consumption theme stocks for long term. Nifty50 closed the week up by 1.27% at 8693.05.

14th October, 2016

Market Standing at Inflection Point

NIFTY50 opened the week with a bearish undertone but fell violently in response to global events. US unemployment claims reached at a record low of 46 years, in addition, the US FED meeting notes pointed to imminent rate hike in December led to some profit booking across asset classes. Not too encouraging Chinese trade data also renewed the concerns of looming Yuan devaluation. Set of domestic data releases pointed to some surprises, inflation scored a low of 3.88% from a high of 5.95% registered in the month of August of this year, arousing hopes of faster rate cuts in the economy. Indirect tax collections rose by a staggering 25% for six months indicating solid robustness at the ground level. The macroeconomic numbers are extremely exciting from long term secular bull market's perspective, though in short term markets may keep on responding to global and local issues.

Key events of the week:

Ruia Brothers the promoter's of the Essar group finally are left with less than 5% in Essar Oil after months of protracted deal making. The debts of Essar group will finally reduce by half from Rs 88000/-Crs which is one of the biggest debts in the private sector. The deal has larger repercussions on the PSU bank's balance sheet in the coming quarters once the deal is consummated. Laws of Bankruptcy code and sweeping changes in the ease of doing business can be indirectly credited to such gigantic deal.

Technical Outlook:

Nifty50 continues to test key support area at 8550. The correction of last three weeks has reached at the tipping point which will either make or break the market in the near term. The decisive breach of 8500 levels in Nifty50 will break the sequence of higher tops and higher bottoms which may give an indication of major change in the market trajectory to either a long correction or a beginning of a bear market. However longer corrective pattern seems a more reasonable scenario if the levels are breached. Still the sequence of higher top higher bottom is intact. Medium term positional traders should trail their long positions at 8500 Nifty50 levels and can buy on dips with stop placed at 8500 levels. Investors are advised to again start accumulating quality stocks to build long term portfolio. Existing long positions should be trailed at 8500 Nifty50 level.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

The Q2 results season has just begun with IndusInd Bank posting a startling 26% growth in profits an indication of vibrancy in the lending activities. TCS posted its slowest growth since many years. Profits rose by 8% y-o-y leading to muted full year performance ahead. However its stock price seems to suggest that the worst is priced in and there is limited downside. Cera Ceramics posted a handsome growth of 40% in profits an indication of housing ancillaries are having its best time due to affordable housing mission announced by the government and subsidised loans from the government for purchase and renovation. Jammu & Kashmir Bank reported disappointing results due larger quantum of stressed assets in the region, barring a few exceptions, overall the results are expected in to be in line with the market estimates going forward. Aggressive Traders can enter long positions with proper stop losses in place. Nifty50 closed the week down by 1.3 % at 8583.4.

7th October, 2016

Market forming a strong Base for Next Rally

NIFTY50 opened strongly on hopes of interest rate cut but later succumbed to profit booking by the close of the week. The MPC of RBI began their innings with a 0.25% rate cut in repo rate thus reducing the cost of capital to six year lows. The near term expectations for the inflation are muted and therefore one more rate cut can be expected before the financial year ends. BP Plc has received nod to set up 3500 petrol pumps in India potentially challenging the monopoly of PSU's. Events from across the border can create short term knee jerk reactions which the market is capable of handling maturely going forward.

Key events of the week:

Govt successfully closed Income Disclosure scheme wherein approx Rs 71000/-Crs have been disclosed thus boosting the liquidity in the main stream financial system, some of which will find its way into the stock market. Government garnered Rs 66000/- Crs in the Spectrum Auction, the lowest since the last two auctions which augurs well for the industry and consumers. The auction heralds the end of mad rush for spectrum as the industry has become mature and positive cash flows should start emerging soon which will rejoice investors after long time.

Technical Outlook:

Nifty50 continues to remain in the last phase of a corrective pattern in the near term. Bull market corrections lasts on an average for 21 days as per Dow Theory. With the close of this week, 21 days will be over which makes a high probability case for the bull market to resume its upward accent. The correction had lost its momentum on the down which earlier was feared to be intense. The sequence of higher top higher bottom is intact. There is a major support at 8550. Medium term positional traders should trail their long positions at 8550 Nifty50 levels and can buy on dips with stop placed at 8550 levels. Investors are advised to again start accumulating quality stocks to build long term portfolio. Existing long positions should be trailed at 8500 Nifty50 level.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

NIFTY50 correction pattern is losing momentum which is turning out to be sideways and shallow correction. The results season will begin next week which can coincide with the restart of new rally. Maruti Ltd. reported monthly sales growth of 30% compared to previous year which shows the underlying robustness in the economy. Auto spending is one of the most reliable indicators of the health of the economy. Both private and public sector banks are selling bad and stressed assets to ARCs to clean up their balance sheets in a run up to declare second quarterly results. Crude oil is nearing 50 USD per barrel which is likely to spoil the bull party for aviation and plastics sector. GRM's have increased by 50% in the month of September coming as boon for downstream refinery sector which will post excellent results in coming quarters. Investors should start selective buying in good quality shares. Aggressive Traders can enter long positions with proper stop losses in place. Nifty50 closed the week up by 1 % at 8697.6

Stock Market Updates for September, 2016

30th September, 2016

No Fireworks expected before Diwali

NIFTY50 opened the week with a negative bias and tanked down during the week on fears of fireworks arriving before Diwali. Indian market had not witnessed any meaningful correction since last 6 months. The rise of 25% was almost uninterrupted without any significant correction. Often over heated market takes the clue from external events to jumpstart the correction. This time cross border skirmishes seem to be the reason for the bulls to release some pressure off the markets. Such a deep correction has shaken the hopes of the bulls and therefore rollover in the derivative segment too was lower than the previous three months average. Overheated signals were visible since last few weeks, the number of derivative stocks in the ban list were at near the all time high of 10 to 11 which was the case during 2007 market top. The IPO of ICICI Prudential, biggest since Coal India, came at the crucial time indicating inferences of a top in the intermediate level. Government too indicated its intent to en cash the SUTTI holdings worth Rs.60000/- Crs also emitting a signal that bullishness had reached epitome levels which is when markets can absorb such large cash outflows. The government would have not moved such initiatives at the first place if the Markets were not ready.

Key events of the week:

OPEC pledges to freeze crude oil production in a bid to boost the prices of crude oil which does not augur well for crude importing country like India. US Congress finally passes the bill into law to allow families of 9/11 victims to sue Saudi Arabia potentially having larger geopolitical ramifications across the world. The threat of Saudi Arabia government selling US assets now looks a reality, which can potentially rattle the financial world

Technical Outlook:

Nifty50 continues to remain in a corrective pattern with major support at 8500. This correction seems to be of a larger magnitude as 55 Days EMA has been decisively breached for the first time since the start of this bull market from March lows. The market has also encountered a double top formation of a larger significance indicating that the market will not go up in a hurry, has it will now try to test the nerves of the bulls. Statistically double tops have been valid formation for significant corrections in the market. Medium term positional traders should trail their long positions at 8500 Nifty50 levels and can buy on dips with stop placed at 8500 levels. Investors are advised to stay on the sidelines at the current juncture. Existing long positions should be trailed at 8500 Nifty50 level.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

NIFTY50 has decisively entered into a complex correction pattern. The street is expecting that the correction will get over soon, but the ugly habit of correction is otherwise, it takes longer than what people expect and eventually when the patience dries down, the market resumes its upward march. The valuations are at lofty levels and therefore it looks, market is in no hurry to take the side of bulls. Market did a crash test on all the stocks on Thursday. All those stocks which were down by 10% to 12% can be assumed in general to have lower fundamentals than the stocks which fell by 1% to 2% which can be considered to be resilient. Top losers on that day were Jet Airways, Reliance Communications which were down by 12% each, they had Samco Stock rating of CCC indicating poor financials while stocks like HDFC and Asian Paints having Samco Stock rating of AAA were down by just 2%. Higher the stock ratings better are the prospects of wealth creation in the long term. The new MPC (Monetary Policy Committee) of the RBI is expected to meet for the first time on October 4th to discuss monetary policy. The street is waiting in the near term for policy directives which will probably be the trigger for short term moves in the market. Investors should remain on the sidelines and wait for the market to correct before allocating fresh funds in the market. Nifty50 closed the week down by 2.50 % at 8611.15


23rd September, 2016

Market to light up after a bout of correction

NIFTY50 opened the week with a narrow range but opened gap up mid week as US FED kept the interest rate unchanged. Though the indices are inching ahead slowly, there seems to be lot of vibrancy in the mid and small caps space. The market indeed reacted maturely to the Kashmir issue signalling the underlying strength and faith of the investors in the Indian Stock market. With markets nearing the high, government seems will be completing its target of divestments either through cash rich companies' buying back program or through sale of SUTTI stakes in the listed companies. The buyback in NMDC and MOIL shares are in progress. GST rates are being nudged around 16% to 18% eluding a consensus for now. Media headlines are once again turning super bullish'...India sole bright spot, India in expensive club..' etc all point to bullish consensus which should lead to some caution to the traders in the short term. The 10x response to ICICI Life Insurance IPO also points to huge liquidity sitting on the side lines. The success of the ICICI Life IPO will throw open the flood gates of IPOs leading to larger participation of the retail investors in the capital markets thereby increasing the depth and liquidity in the markets.

Key events of the week:

Vodafone to bring in Rs 47000/- Crs as FDI, the second largest in the history to restructure it's debts and prepared a war chest to bid for the spectrum auction beginning from 1st October. Entire telecom is on the shakeout post the Jio launch. Government appoints nominees for the Monetary Policy Committee (MPC) under the revised system for fixing the interest rate in the economy. The nominees are truly independent and persons of great calibre to steer the monetary policies in the best interest of the country & under no political influences. MPC will instil lot of faith in the banking and financial system of the country.

Technical Outlook:

Nifty50 continues to remain in a sideways consolidation zone with immediate resistance at 8950 on the upper side and support at 8650 on the lower side. Market had made a Doji pattern while rejoicing the US FED move however at the same time displaying lack of strength in going up further. This signalled a beginning of a correction in the medium term. On a larger time frame NIFTY50 has also made a double top suggesting that the market will not run away upwards in a hurry. The upper trend channel is acting as a very strong resistance where as lower channel is acting as a strong support for the Stock market. Market is likely to face resistance around 8950 levels on the upper side. Medium term positional traders should trail their long positions at 8500 Nifty50 levels and should do not commit fresh unless the highs are taken away decisively, but buy on dips, whereas Investors are advised to stay on the sidelines at the current juncture. Existing long positions should be trailed at 8500 Nifty50 level.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

NIFTY50 has entered into a state where corrections are just sideway moves of few days and then the upward move starts again. But the street is use to deep price corrections which however are elusive during mature bull markets. The volatility will reduce as there is no big event that the market is factoring into. The market will remain range bound awaiting the Kharif crops and the second quarterly results. However some of the sectors are being rerated which is what the bull market does and identifying those trends can lead to decent capital appreciation in those stocks. India is the largest producer of Milk and 80% of which is unorganised, this throws open lot of potential for the large listed players in the dairy segment having strong brand appeal. They may be re rated near to the category of consumer staples which are commanding double the valuation compared with the dairy segment. Investors should allocate a basket of five stocks in dairy segment for above average returns in the medium to long term. Nifty50 closed the week up by 0.59 % at 8831.55


16th September, 2016

Market to Dance in Rhyme with US FED

NIFTY50 opened the week sharply lower on fears of US Interest rate hikes being real this time around. The Indices again moved up when the fear faded away. The onset of high volatility is an indication that market is confused on the direction and is seeking external guidance for the next move. Inflation figures have started to cool down. The August numbers are at five month lows, at 5.05% raising the hopes for interest rate cuts during the RBI's meet under the new Chairman. The mouth watering rally since the beginning of this financial year has enticed even the government to offload the entire stake in SUUTI worth USD 10 billion which can potentially unsettle the liquidity in the market. Such liquidity sucking events eventually lead to onset of the bear markets. However compared to the liquidity that is flowing into the system currently, hopefully this should not worry the market in the medium.

Key events of the week:

First ever IPO from the Insurance company ICICI Prudential Life Insurance is set to raise Rs 6000/- Crs valuing the entire company at Rs 48000/- Crs. The valuation seems slightly on the higher side compared to other listed peers. Reliance Capital to allot one share of Reliance Home Finance Ltd. free of cost for every share held in Reliance Capital. The gesture should add value in the long term for the shareholders.

Technical Outlook:

Nifty50 has entered into a correction mode considering the high volatility and low volumes. The upper trend channel is acting as a very powerful resistance where as lower channel is equally acting as a strong support for the market. These simple tools are more than sufficient for proper understanding of the price action. Market likely to face resistance around 9100 level on the upper side. Positional traders should trail their long positions at 8500 Nifty50 levels and buy on dips with stops. Investors are advised to stay on the sidelines at the current levels. Existing long positions should be trailed at 8500 Nifty50 level.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

NIFTY50 has entered into a corrective sequence considering the high volatility, rising optimism and vibrant IPO's market. The extent of success of ICICI Life Insurance issue would show the extent of liquidity in the system and the willingness of the investors to invest in equities. All eyes are set next week on the outcome of US FED meeting. Ironically contrasting views are emanating from two of the world's highly liquid markets i.e. Gold and US Bond markets. The Gold prices are suggesting that US interest rate will not rise and therefore prices are consolidating for eventual rise. On the other hand US Treasury Bond Prices are falling sharply suggesting that interest rates are heading upwards. Such opposite views in the world's non-manipulated markets gives a trader a chance to profit from both buying calls and puts simultaneously in Nifty as Implied volatility is less, because this time, Stock market participants are tired of expecting a concrete outcome. It is only when the street doesn't expect does the unexpected happen. Nifty50 closed the week lower by 0.97 % at 8779.85


9th September, 2016

Nifty at Critical Levels

Nifty50 opened the week higher reacting to diminishing hopes of US interest rate hikes in the September meet on release of weaker employment data. ECB left the key rates unchanged giving further boost to liquidity driven rally. The sentiments are bullish everywhere although high valuation concerns are voiced across the street. FPIs have invested Rs 2121 Crs in the month of September while DIIs have had net redemptions to the extent of Rs 110 Crs, an indication that domestic investors are still not convinced about the India story. Surprisingly only 48 lakh active clients had traded last week on any single day which is too microscopic when seen from country's perspective. No wonder the depth in the Indian Stock market is so shallow that any concerted selling by FPIs results into massive price erosion of the stocks. The ongoing bull market hopefully should bring in more and more participants to make the markets more resilient to external shocks.

Key events of the week:

Yes Bank surprisingly deferred the USD 1 Billion QIP placement on grounds of volatility. Incidentally the stock price had gained by 111% in last 6 months its highest ever run rate in past 5 years while Nifty moved up by only 28%. There could be something more that is currently not visible. TCS issued mid review guidance stating that discretionary spending in IT globally is seeing a setback which will impact its revenues, potentially sending shivers in the entire IT space. Going forward investors will have to tone down growth expectations which will make the sector underperform for next two quarters. GST has become the Law of the land as President has given his assent.

Technical Outlook:

Nifty50 kept the momentum rolling throughout the week but met with some selling pressure by the close of the week. Open Interest in Nifty Futures is at yearly high and has increased by 32% in just two weeks. On the weekly time frames the index has made a double top and therefore some amount of profit booking is expected. A break below 8800 in Nifty50 levels would confirm the beginning of correction. Market to face resistance at 9100 Nifty50 level. Short term traders should trail their long positions at 8800 Nifty50 levels and buy on dips with stop at 8550 Nifty50 levels. Investors are advised to stay on the sidelines at the current levels. Existing long positions should be trailed at 8550 Nifty50 level.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

NIFTY50 has kept the upward momentum with just kissing distance away from the old high prices. Generally market takes a breather at or around the old highs in the form double top. The risk to rewards is not in favour of the bulls currently unless Nifty50 validly pierces its old highs of 9119. One of the most powerful macroeconomic indicators depicting the strength of the economy is the recruitments from top business school. This year top 10 companies have increased hiring by 50% from that of the last year, a CEO’s indicator of good times is ahead in the economy. Prime Minister’s Office has cleared a whopping 10 lakhs Crs of stalled projects in the roads, coal and power sector principally designed on the PPP model. These will usher in new era of all round spending and capital formation in the economy necessary to take the economic growth to 8% and above levels. Nifty50 closed the week higher by 0.65% at 8866.70

2nd September, 2016

Market Resumes Its Upward Journey

NIFTY50 opened the week higher and continued its upward journey throughout the week. Inspite of US FED chairman’s commentary on likelihood of interest rate hike in its 21st September meeting, market shrugged off such fears and leaped ahead throughout the week in a sign of robust underlying bullish mood. Surprisingly VIX a measure of volatility index is at its lowest since December 2014 which suggests a very high bullish consensus amongst traders and investors. This is a slightly worrying factor. FIIs have cumulatively invested Rs 9800 Crs in the month of August. Passenger vehicle sales registered a scorching growth of 16% for the month of August which is the loudest signal on the health of the economy. This is one macroeconomic signal which is infallible in estimating the vibrancy in the economy. The bull case scenario based on passenger vehicle sales is the most reliable indicator of the Indian stock market since the last three decades and this time also the same looks true.

Key events of the week:

Government has initiated policy decision to release Infra companies’ 70% of the funds stuck in arbitration awards wherein the companies have won but the matters are in appeal. Such a business friendly move is unprecedented in the history of modern India. Reliance Jio’s attempt to disrupt the telecom industry by announcing drastic reduction in all category tariffs puts a question mark on viability of the telecom sector as a whole and Reliance in particular wherein they have already invested Rs 1.5 lakhs Crs. Govt has released the arrears as an early Diwali bonus for central government employees.

Technical Outlook:

Nifty50 broke out from a sideways consolidation range and started the upward journey. The next significant resistance is at 9000 Levels which creates scope for further upside in the medium term. The indicators after turning neutral have again started to rise, confirming that this rally will sustain till it faces upside resistance at 9000. Traders can enter long and buy on dips with stop at 8550 Nifty50 levels. Investors are advised to invest selectively at the current levels. Existing long positions should be trailed at 8550 Nifty50 levels.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

NIFTY50 has pierced the 8700 levels with renewed velocity. The breakout from the sideways pattern signal further upside in the indices. However traders and investors will have to focus on stock specific movement rather than simply focusing on the Nifty. To substantiate the point, although Nifty50 index is 35% higher than 2008 levels but the stocks like Reliance Ind, ONGC, Bharti Airtel, Vedanta, Tata Steel, Bhel, Idea etc which all have a Samco Stock rating below BB are all still below their 2008 highs which points out the fact that each stock has to be analysed independently of Nifty50. However there are stocks like Eicher Motors, Bajaj Finance and Yes bank etc which are way beyond their respective 2008 highs and they all have Samco Stock Ratings above AA and AAA signifying the real excellence in their business models. Samco Stock Rating is proprietary research of Samco Securities ltd on almost all NSE listed stocks assigning ratings to stocks from AAA - AA to BBB - BB - CC and Penny depending on their greatness of the underlying business model. To watch Samco Stock Ratings login to http://star.samco.in/ The concluding message is very simple - investors and traders should focus on individual stocks and not get carried away by Index.  Nifty50 closed the week higher by 2.76% at 8809.65

Stock Market Updates for August, 2016

26th August, 2016

Profit booking to Continue

NIFTY50 opened the week with negative bias and profit booking continued throughout the week.  Low volatility and F&O expiry kept the market on tender hooks. The parting gift from Rajan came, in the form of creation of vibrant and deeper bond markets; these will give an impetus to Companies to borrow funds from the Bond market albeit at a lower rates compared to banks, this reform has created an alternate route to raise debt for the companies vis-à-vis Banks earlier. This will have far reaching consequences on the NIMs of the banks both private and PSUs. The recent IPO of RBL Bank saw applications worth Rs 84000 Crs v/s Rs 1200 Crs sought in the IPO, an oversubscription of 70 Times! This indicates the huge liquidity in the system which is keeping markets buoyant.

Key events of the week:

Cabinet cleared the revised Double Taxation Avoidance Agreement with Cyprus a signal that India will hence forth not tolerate taxation slippages due to treaties. These types’ reforms will in a way curb generation of black money too. The Cabinet Committee on Economic Affairs also cleared Railway projects worth Rs 24000 Crs across 9 states to lay 2000 Kms of rail infrastructure keeping the promise of the Rs 1.2 lakhs Crs government spending target during the current fiscal. Rail related stocks will benefit due to this outcome.

Technical Outlook:

Nifty50 continues in a sideways narrow trading range with slightly lower bias in the short term. The indicators are turning into neutral territory and cooling off from the overbought levels.  The trading volumes are falling and volatility is also at its low confirming ongoing corrective pattern in the market.  Traders should enter long only above 8750 Nifty50 levels for short term momentum gains. Investors are advised to stay away and traders should exit long if Nifty50 penetrates validly 8500 levels.  Existing long positions should be trailed at 8500 Nifty 50 levels.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

Market is awaiting comments from US Fed Chairman this week end for likely course of action at its September 21st scheduled meeting. Till such time market will bounce up and down speculating the interest rate expectations. Welspun India ltd saw its stock tank by 60% on account of allegations of usage of Sub-Standard material by one its large customer. Such events often happen in the corporate world, but how an investor can play safe in such a situation? The Golden rule of effective diversification is the only way for investor which otherwise these kinds of events can happen to any company. A proper diversification is the only way to manage such risk at the investor’s end. Samco Securities ltd has developed Risk Advisor for the utmost safety of the investors which guides them pictorially the extent of diversification both sectorally and individual stock wise. Investors must properly diversify their equity portfolio so that such incidences like Welspun India ltd don’t impact much, both psychologically and financially.  NIFTY50 today closed the week lower by 1.08% at 8572.55

19th August, 2016

Sideways consolidation in the Market

NIFTY50 went into hibernation this week assimilating the corporate scorecards. Narrow range during the week combined with lacklustre volume made the week boring for the market participants. Last year around the same time the pessimism in the global markets had begun; there was tremendous pressure on various commodity prices. Coal and Crude were hovering at decade low prices, Steel suffered relentless Chinese dumping, base metal prices too falling due to lack of industrial demand. However there has been now a 360% change in the market outlook. Currently coal is running at its yearly high, rising 35% from the bottom, Crude oil has risen by whopping 74% from the nadir lows and steel and metals are buoyant. The results of the companies indeed did reflect the same factum. Metal companies like Hindalco doubled their quarterly profits whereas companies in the Airline sector were impacted by rise in crude oil prices. There were other contrasting reactions in the market. Cipla reported 44% decline in its quarterly PAT but the stock price rose 8% the next day, whereas Lupin reported rise in its quarterly PAT by 55% and stock price tanked by 5.4%. Stock market is a function of expectations. Knowing such expectations is the key for successful traders.

Key events of the week:

WPI came at 3.55% and CPI came at 6.07% scorching ahead of the expectations by rising to levels not seen in the past 24 months. The onset of Kharif crop will soon cool down the inflationary pressure principally caused by food items, opening the doors for interest rate reductions in the Indian economy. SBI has announced the merger ratio with its associate banks clearing the way forward for creating a behemoth in the banking space. SingTel to raise stake in Bharti Airtel by increasing stake in parent company by investing Rs 4400/- Crs a sign of long term faith in the sector when others are deserting it. This is an ideal case study of contra investing.

Technical Outlook:

Nifty50 continues in a sideways narrow trading band. The correction during a strong bull market often takes place with shallow price correction. The indicators in the mean time are cooling down from overbought levels to more sensible levels for creating further room for up moves. The trading volumes are falling confirming the continuation of correction. Traders should enter long above 8750 Nifty50 levels for short term momentum gains. Investors can selectively accumulative quality shares albeit in a staggered manner to avail the benefits of rupee cost averaging. Existing long positions should be trailed at 8500 Nifty 50 levels.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

Market is injected with lot of global liquidity. FPI’s have for the 26th consecutive day invested positively in the Indian market totally to Rs 37600 Crs year till date, whereas DII’s have net invested Rs 7900Crs year till date leading to buoyancy across all categories of the shares. Commodities too have gained due to side effects of liquidity caused due to near zero interest rates across many developed economies. However the ill effects of liquidity in the form of inflation have started to raise the ugly head. The FED too seems to be cognizant of the fact and have hinted to nudge the interest rates in the September meet. Market will slowly start reacting to global events, as news flows from domestic market would be shallow as Parliament is not functioning and result season is likely nearing its end. IPO of RBL Bank may be subscribed for short term listing gains, the pricing at 2.9 times book value with a good track record of 30% plus growth rate since last 3 to 4 years makes a case for listing gains in the hands of the investors. NIFTY50 today closed the week slightly lower by 0.06% at 8666.9
Nifty Today
Note: GBPINR looks poised for a short term rally after forming classic double bottom in the midst of pessimism. Contrastingly UK’s FTSE is hovering nearing its life time high creating a solid divergence in the currency market. Traders can buy GBPINR keeping double bottom as stops.

12th August, 2016

Bullish Hangover Continues

NIFTY this week opened on a high note but during the week profit booking dragged the indices lower but later bounced back to close in the positive territory. There is some amount of consolidation happening at the current juncture. Results of major companies are almost out indicating acceleration in the general performance and going forward the monsoon too would favourably impact the results for coming quarters too justifying the market’s alleviated levels. M&M reported 16% growth in Q1 PAT, Motherson Sumi 13% PAT growth, Lupin 55% PAT growth, Dhanuka Agritech 16% PAT growth, Manappuram Finance 23% growth, Hero Moto 18% rise in PAT, Aarti Industries 35% growth in Q1 PAT respectively, at the same time Bank of Baroda reported it’s PAT down by 60%, Idea Cellular reported it’s PAT down by 74%. Markets have been quick in discounting the numbers and at the same time monsoon session of the Parliament coming to an end, the market will watch out global factors in the near term.

Key events of the week:

Yes Bank to raise growth capital in excess of 1 billion USD to capture a larger pie in the fast growing borrowing needs of India Inc. Considering the plans, it would be profitable to invest in banks like Yes Bank and other private sector banks as part of investors portfolio for the long term. After a long wait AB Nuvo and Grasim to undergo corporate restructuring, intending to unlock value for the minority shareholders but the street is expecting the other way. HDFC and Max Life merger cleared by the respective boards for creating Insurance be mouth worth Rs 67000/- Crs the largest listed entity.

Technical Outlook:

Nifty50 continues to show resilience inspite of overextended rallies. The higher top and higher bottom sequence is propelling markets to newer orbits. The underlying trend is strong enough that any corrections are of sideways and shallow in nature. Friday’s strong close indicates a strong bullish candle indicating further upside in the coming weeks. The markets can remain at over bought levels for extended periods of time during strong liquidity periods. Traders should trail their stops on their long positions below 8500 levels.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

Market is intoxicated with huge amount of liquidity due to loose monetary policies across the globe which has ushered in unprecedented liquidity in the financial systems putting aside sensible valuation benchmarks. Good quality shares seldom correct meaningfully during the continuation of the bull market, but the wishful hope of buying such quality shares on corrections deprives the fence sitter to participate in the bull market. Although markets are mesmerised by bullish consensus, however ground level macro economic factors too are shaping up the foundation. Passenger vehicles sales grew by whopping 16% in July and two wheelers grew by 13%. However commercial vehicles growth just remained flat at 0.11% causing some concerns whether there is slowdown in the industrial activities, it will however be too early to draw any inferences, but investors should be cautious on CV manufacturing companies and at the same time remain overweight on two wheelers and four wheelers. Investors can stagger their inventible surpluses over next six months for getting the rupee averaging costs benefits. Any correction should be utilized for building long term portfolios. Traders should play the momentum stocks and trail the profits. NIFTY today closed higher by 0.52% at 8672.

5th August, 2016

New Laws are Raining in India Like Never Before

NIFTY this week opened with high spirit at the beginning of the week, dipped mid week and again bounced back on the back of liquidity gush in the system. PMI data points to acceleration in the economy. Indicators suggest whopping 5.2% expansion in July as against 2.8% in May and 2.8% in the corresponding previous year. Markets too are continuously discounting the encouraging macroeconomic numbers. July automobiles growth numbers surprised the street, passenger vehicles registered on an average 12% growth signally a loud and clear economic robustness in the system. Path breaking new laws will spearhead the country to become the second largest economy in the world by the turn of this decade.

Key events of the week:

Foundation for the historic path breaking tax reform has been laid down, now the super structure will be build over a period of time through the state approvals etc. GST will truly lead India to accelerated corruption free inclusive growth for the masses in the country. Far reaching amendments were cleared by the law makers for speedy and hassle free debt recovery in a time bound manner further enhancing the Bankruptcy Code for making India Bad Debt free economy. Potentially now, the ecosystem for PSU Banks will change permanently and they too will emerge as profitable as their private sector peers.

Technical Outlook:

Nifty50 has renewed the upward momentum amid over extended rally. However the rally is not supported by the momentum indicators. But markets can remain at over bought levels for extended periods of time during liquidity driven rallies. Greed is keeping the markets at alleviated levels. However the sentiments can change from greed towards fear, overnight on occurrence of some negative news, causing corrections to begin. Traders should trail their stops on their long positions and investors should stay on the sidelines till the market comes to touch the lower level of the regression channel which comes at around 8300-8400 levels in Nifty50. Long term trend is firmly intact but short term is ripe for correction.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

Stock Market is mesmerised in hopes of macro factors being in favour for further economic growth and expansion. Market will show lot of activity in the mid cap space and therefore the front line Index may not show the underlying volatility in the mid cap space. Companies operating in the industry where in lot of unorganized player operate will see lot of activities on hopes of GST benefits. Favourable monsoon and coming festive season will keep the market at alleviated levels. Any correction should be utilized for building long term portfolios. Traders should play the momentum stocks and trail the profits. NIFTY today closed higher by 0.52% at 8683.

Stock Market Updates for July, 2016

29th July, 2016

Too Much Optimism Rings an Alarm Bell

NIFTY this week opened higher and continued the upward journey with albeit slower momentum. Stock specific volatility was the highlight of the week. Companies declaring results better than expectations posted solid gains in their stock prices but companies declaring not so great numbers also had a run up in the stock prices. Such a state of market represents nothing but too much optimism in the air for the future prospects. It's time for caution in the short term. Eicher Motors reported 59% growth in Q1 PAT, Asian Paints 19% rise, Bajaj Auto 2% rise, Bajaj Finance 53% rise, Yes Bank 33% rise, HDFC 38% rise in respective Q1 PAT numbers. Dr Reddy reported PAT down by 85%, Bharti Airtel 31% fall in PAT and Punjab National Bank PAT down by 85%. The policy actions seem to be percolating down at the ground level.

Key events of the week:

US FED kept the interest rates unchanged without hinting any roadmap for rate increase which will keep markets guessing when the rate hike will come. Cairn to merge with Vedanta in the ratio of 1:1 plus the deal for Cairn shareholders has been sweetened with 4 redeemable preference shares of Rs 10 each redeemable after 18months carrying interest at 7.5% P.A thus paving the way for consensus clearance. Constitutional Amendment for GST seems to be going through the monsoon session while the GST bill seems to be postponed for the winter session of the Parliament.

Technical Outlook:

Nifty50 is kissing the upper channel of regression lines drawn from the March bottoms. The upward momentum is losing the steam as can be observed from the MACD indicator. Greed is keeping the markets at the alleviated levels. However the sentiments can change from greed towards fear, overnight, causing corrections to begin. Traders should trail their stops on their long positions and investors should stay on the sidelines till the market comes to touch the lower level of the regression channel which comes at around 8300-8400 levels in Nifty50. Long term trend is firmly intact but short term is ripe for correction.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

Stock Market is celebrating results of almost all companies arousing a feeling of discomfort, that too much consensus from bulls is an alarm bell for conservative investors and traders. Due to low base effect the results looks spectacular when measured in terms of YoY growth. Mid caps acted as if they were MiG Fighter jets, racing ahead with supersonic speed. Stocks like Bajaj Finance and Bharat Financial Inclusion jumped more than 10% post their quarterly results. The vibrancy seems to be translating in the IPO market. Dilip Buildcon will hit the market next week potentially inviting huge response. The pricing looks reasonable at 11 P/E however investors should invest with a horizon of one year for good returns, short term betting may not be lucrative. In general investors and traders should be cautious. NIFTY today closed up by 1.14 % at 8638.50.

22nd July, 2016

Market in Wait and Watch Mode Awaiting Corporate Scorecards

NIFTY this week danced to the tunes of corporate results. The role of Analyst expectations and actual results were exposed in few of the results this week. Reliance came out with excellent set of numbers, beating analyst expectations by a wide margin but post the results the stock fell down although it opened much higher in early trades. This exposes the limitation of the analyst expectations and the actual performance on the street. Overall the results are in line and well discounted by the markets. Reliance posted rise of 18% in quarterly PAT, HUL posted 10% rise in PAT, HDFC Bank posted 20% rise, Kotak Bank posted 100% rise in quarterly PAT on back of lower base effect, ITC posted 10% rise in PAT, Ultratech posted 29% rise in quarterly PAT respectively. The Government is nearing the process of passing GST in the monsoon session of the Parliament, which will usher in a new era for trade and commerce in the country. Hope we see the GST becoming a reality soon.

Key events of the week:

Sovereign Gold Bonds this time were launched through the stock exchanges for deeper and wider penetration into the Indian Stock market. The scheme is a win-win for the country and the investors as interest at 2.75% p.a. will be earned by the investors plus capital gains tax exemption on redemption after 8 years are the key highlights of the scheme. The more investors subscribe to the bonds the lower will be the imports of actual Gold thus saving the foreign exchange which can be used for other productive investments within the country. Existing telecom companies have reduced the data charges by as much as 60% thus heralding the onset of competition in the sector due to entry of Rel Jio, expected anytime soon.

Technical Outlook:

Nifty50 is in no mood to correct deeply, but a sideways corrective pattern seems unfolding on the weekly and daily chart. On the weekly chart a feeble dark cloud cover seems unfolding but the same will get nullified if the market crosses above 8600 levels in Nifty50 after which the uptrend will resume again. However market is still facing resistance at higher levels. Market is balancing out between profit booking and entry of new players at lower levels. The undercurrent is strong and the long term trend is intact. Traders should buy on dip and investors can accumulate at these levels.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

Stock Market is cheering mid cap stocks for posting good set of numbers but at the same time showing muted response to large cap stock results. Cases like Reliance Industries, ITC, HDFC Bank, Kotak Bank all posted good results but stock prices were muted. Suddenly the IPO market seems fizzling out, the first day listing premium of L&T Infotech surprising came down to negative 2% of the issue price which showcases nothing but the shallowness of the Indian Stock market. L&T Infotech IPO trades at 30% discount to its peers, we believe market will reward patient investors. Rainfalls are progressing well across the country bringing cheers to the farmers which will play an important role in reviving the growth for the country. Important bills lined up before the parliament, should they be cleared will further drive our markets into higher territory otherwise it may languish with positive upward bias in the short term. NIFTY today closed flat at 8541 same as previous week.

15th July, 2016

Market Flying High On All Round Optimism

NIFTY this week opened with a gap up of nearly 90 points in sync with bullish global market sentiments, and raced ahead to reach 11 months high. The inflation has started to rise mildly which is a positive sign that economy is leapfrogging towards growth. IPO market is buzzing once again, Quess Crop listed at premium of 57% indicating a massive wave of optimism running in the market. Such events attract more and more participants in the capital market which channelizes savings into productive assets for faster economic growth of the country. The Government is confident of passing GST in the monsoon session of the Parliament, which will give further impetus to the bull market in the long term. All eyes will now shift to the floor of the parliament as the Monsoon session will start from Monday.

Key events of the week:

India’s Newest Bank IDFC Bank bought the Tamil Nadu based Micro Lender Grama Vidiyal Micro Finance Ltd in an effort to jumpstart the growth in the parent bank. Indiabulls Group was raided by the Income Tax department, under suspicions of tax evasion when the promoters split their businesses, the respective stocks had a knee jerk reaction intraday but later recovered by the close. One of India’s Biggest Private sector Insurance company - ICICI Prudential filed DHRP a first mega Insurance IPO. Bank of England surprised investors by keeping Interest rates at 0.5%, catching many investors unaware, making it the best performing week for the Pound.

Technical Outlook:

Nifty50 is marching ahead fearlessly towards higher orbits of optimism. The same can be visible when parallel trend lines are drawn from the Feb-March low levels. Market is facing resistance at upper levels. Profit booking may emerge at these levels and market can enter into sideways zone of consolidation. The upward momentum has slowed down which calls for caution in the short term. The sequence of higher tops and bottoms indicates that the longer term trend is unequivocally up but in short term the market can enter into profit taking zone.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

Good numbers posted by TCS did not cheer the markets, while the bad numbers from Infosys led to a sharp fall in the share prices, indicating that the market is poised for a corrective phase in the coming weeks. The corporate results in general are expected to post 8% top line growth and 6% bottom-line growth which probably has been discounted in the markets at current valuation. When good news is ignored & bad news is acted upon, a medium term top is likely being formed. While the long term trend of the market is still upwards, markets will rest & may even test 8350 levels, before continuing their upward journey, with the next big trigger being the passage of the GST Bill. NIFTY Today closed up by 2.62% at 8541.4

8th July, 2016

Monsoon Grace to Race India Ahead

Market opened the week with a gap up but could not hold on due to profit booking at higher levels. The focus has now shifted back to domestic factors with result season on the horizon and government readying for the monsoon session of the parliament. Indian bond yields are plunging dramatically indicating that interest rate reductions are on the cards. The fallout of Brexit is at least visible on the Real Estate Funds wherein UK based funds have suspended redemption requests on the grounds of liquidity constrains which though may be contained in a while, but if the redemption request spill over to the bond funds then that will rattle global financial markets for sure, as large part of the assets have junk bonds in their asset compositions which are by nature illiquid. Indian economy although not immune to global economic events, is far more resilient due to internal demographic strengths and political leadership of the new government.

Key events of the week:

Ultratech finally grabs the crown assets of JP Associates for Rs 16,000/- Crs creating a win-win for both the companies. Ultratech is set to become the No 1 cement producer in country and JP Associates will reduce its debt flab, creating room for growth in the company. Cabinet clears massive redevelopment of three colonies in Delhi which will create immense opportunities for companies like NBCC, Kajaria, Cera, Asian Paints, Berger paints and entire cement and consumer durable companies. Beginning of shakeout in the telecom has began - Tata Tele to close down some of its CDMA bandwidth operations which are coming up for renewal, an indication for early exit of the company from the telecom space.  

Technical Outlook:

NIFTY50 is entering into a sideways correcting pattern after a sprint of 500 points run in a short time span.  Resistance towards the upper end of the parallel channel is strong. Internal strength of the market is intact though it is likely to face profit booking at these levels. The series of higher tops and higher bottoms make a compelling bull case for the long term investors to remain tightly invested and should add on every decline. Traders should also go long after waiting for ‘correction by time’ to be over or else if Nifty50 crosses 8400 levels then longs can be initiated without waiting for correction by time to be over. 
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

Market is expected to rest a while before beginning its upward ascent; however a close above 8400 levels in the Nifty would be a buying opportunity for positional traders. Primary market has started to buzz again after a long time. IPO of L&T Infotech is expected to garner record breaking over subscriptions. FY 16-17 is expected to close with approximately Rs 15,000/- of new money raised from the capital markets which is nowhere near the whopping fund raising done during the peak of bull markets in the year 2007-08 wherein record amount of Rs 40,000/- Crs were raised. Going by this standard the current bull market has a long way to go before culminating into a final bull market top. There would be all round frenzy, ecommerce and online businesses would line up for IPO’s and that would probably be the ultimate bull market top which is years ahead. Investors should aggressively allocate towards equity components in their savings portfolio and sit tight. Nifty ended the week down marginally by 0.06%. Nifty today closed at 8323.

1st July, 2016

Market on Its Course To Newer Highs

Market opened the week in positive territory on hopes of Bremain but to everyone’s surprise Brexit happened. Market opened with a big gap down, but recovered smartly intraday and later by the close of the week ended with net positive gains. The underlying bullish forces are so severe that all such fears of global turmoil were brushed aside by our market. First day listing premium another indicator of bullishness was visible in the listing of Mahanagar Gas Ltd which listed at 25% premium over its issue price. This is an unequivocal indicator of bullish underlying strength. Even the UK market to everyone’s surprise touched 52 weeks high within days of Brexit a signal loud and clear to the entire world that ‘All is Well’. Indian economy is turning out to be one of the most resilient economies in the world.

Key events of the week:

Government finally rolled out 7th Pay Commission recommendations amounting to a whopping 1 Lac Crore which will further lubricate the economy in the spending- investing cycle. Two wheelers, real estates, consumer durables and consumer staples should do well in the medium term. Cabinet creates a level playing for online and offline retailers by amending Shops and Establishment Act to allow shops to remain open 24 X 7 subject to certain rules. National Mineral Exploration Policy cleared by Cabinet will open up huge untapped potential of up to 90% hitherto not explored, to the private sector for exploration and mining, a big milestone in itself.

Technical Outlook:

NIFTY50 is poised to march higher in the coming weeks as key resistances are breached by the strong underlying bullish forces. During the panic of Brexit Nifty took the support right at the lower end of the channel, which has reinforced the significance of the validity of such channel going forward. The internal strength of the market is intact though it is likely face profit booking at higher levels. The series of higher tops and higher bottoms make a compelling case for every correction a buying opportunity. Traders should buy on dips and investors should invest regularly in quality front line and mid cap stocks.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

Market had a hectic week with lot of volatility and therefore some amount of sideways to profit booking is expected in the coming week. The Monsoon session of the Parliament will start from July 18, the quarterly results season will start in a week’s time all these events will the set the tone of the market going forward. IPO of Quess has been overwhelmingly subscribed upwards of 144 times. Market is awaiting IPO of L&T Infotech which is offered at reasonable valuation and which should be subscribed by the investors for handsome listing gains. There is tremendous vibrancy in the market. Investors should be overweight on equities and accumulate good quality shares while traders should wait for dips to buy. Nifty ended the week up by 2.95%. Nifty today closed at 8328.

Stock Market Updates for June, 2016

24th June, 2016

The Brit's want to exit, it has created opportunity for Indian investors

The NIFTY opened the week with news of the RBI Governor exiting, which led to some quarters of the media expecting a correction. The market however rose sharply, showing it’s strength. With Britain wanting to leave the EU, the existence of the EU is now in question. Leaving will not be so easy, though there will be prolonged negotiations in Brussels. Remote chances are that Britain just negotiates better terms & continues to remain a EU member. High volatility is expected, especially in Currencies.  The dollar strength will continue as it will now emerge as the most powerful currency since the strength of the Euro will start to diminish, this will have cascading effects on all the markets wherein there will be tendencies toward flight to the safety in the short term.

Key events of the week:

The government has liberalised FDI rules in Defence, Airlines, Broadcasting Carriage, Processed food items and single brand retail something akin to the liberalization era of 1991. Such liberal policies will surely bring in lot of capital and employment opportunities for the people of India. The pace of reforms has accelerated and these will have cascading effects on the stock market in the coming quarters.

Technical Outlook:

Nifty 50 is in the correction mode and has had a decent correction by the close of the week.  Nifty 50 has taken support on the lower trend line of the channel which indicates a good support area for buying opportunities. The sequence of higher tops and bottoms is intact.  The Friday closing candle represents a classic hammer taking support at lower levels with good volumes, such hammer with long shadow indicates a buying opportunity. Traders can take long positional trades with appropriate stops.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

The market will stabilise and discount the Brexit completely before resuming its up move. Although much of it has already been discounted and therefore no significant price erosion is expected but resumption of upward journey will take some time.  Such kind of overnight negative reaction to news events has always in the recorded history created buying opportunities whether it were assassinations of political heads, wars or poll results or any other news events. As a rule “Panic always creates a buying opportunity”. All those investors who were waiting on the sidelines can now aggressively allocate to the front line equity shares. Traders should maintain buy on dips strategy. Nifty today closed at 8088.60 down by 1% from the previous week close.

17th June, 2016

World awaiting British Referendum and so will Markets

Market opened the week with a gap down and danced with the rhymes of international events. The FED meeting left the rates unchanged as usual, but kept the hope alive that hikes are coming soon. Commodities, especially gold, rose sharply, but then later cooled down by the close of the week. The real worry for the FED was that growth and employment generation had slowed down, which in fact is a real cause of concern for not only for the US but for the entire world. Back home, government took off with the Aviation policy, which was liberalized and pushed for expansion in regional connectivity nodes at the same time, capping the fare at Rs.2500/- per hr.

Key events of the week:

March quarter CAD (current a/c deficit) narrowed to lowest in 7 years, lowering the gap between imports and exports, a sign of robustness of the Indian economy. India may turn up with surpluses in the coming quarters if the Make in India drive races ahead to make India the manufacturing hub, similar to where Indian automobile industry stands today. In a swift move government imposed 20% export duty on the sugar to calm down domestic price spiral, this will adversely affect the stock prices of listed sugar companies. Model GST law is finally out for public comments.

Technical Outlook:

NIFTY50 is undergoing a correction and is facing resistance at 8300 levels. The parallel channel drawn from March bottom indicates a overhead resistance at 8300 level and has support at 8000 level which can be the safe starting levels for the bulls to take off. The internal strength of the market is intact. The series of higher tops and higher bottoms make a compelling case for every correction being a buying opportunity. Traders should exercise restraint in trading in correcting markets as the chances of stop losses being hit are very high.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

Market is expecting a major event, the outcome of which has made the entire world into wait and watch mode. The British Referendum is once a century type of event which could have a systemic bearing on some of the industries and companies. Traders can play it safe by buying some puts in their portfolios. Stocks like Tata Steel, Tata Motor, Bharat Forge etc could be adversely impacted if the Brexit does actually happen. The market is expected to decisively move only after 23rd June once the event is out and discounted. RBI has come out with the guidelines for debt recast which will bring in some life into highly indebted infra and real estate companies. Investors should be overweight on equities and accumulate good quality shares while traders should stay on the side lines and wait for Brexit results before initiating any fresh positions. Nifty today ended the week at same levels as that of previous week a history in itself. Nifty today closed at 8170.20.

10th June, 2016


Market entering correction mode

Market opened the week in profit taking mood to encash the sharp rally of 6% in Nifty during the previous week. RBI maintained the status quo on interest rates but the accommodative tone gave rise to strong possibility that post the normal monsoon, interest rates will be lowered. Aviation sector got a reprieve of ‘no cap on fare’ from the government however crude oil ruling at 8 months high was a bigger cause of worry for the entire sector. Renewable energy is racing ahead in capacity creation from just 25,503 MW in 2012 to 42,800 MW potentially changing the entire landscape and at the same time silently disrupting the entire thermal power sector. Wind and solar energy stocks could turn out to be potential multi baggers. Out of 800 odd companies covering 90% of the market cap, 300 companies have reported 30% plus y-o-y growth in PAT while 500 companies have reported 25% plus decline in PAT excluding the state owned banks and refiners. Such contrasting results highlight the fact that stock picking or the bottoms up approach would handsomely rewards investors rather than just following top down approach.

Key events of the week:

US Jobs report surprisingly reported lowest growth of 38000 new jobs, slowest since last 5 years which will now certainly delay the process of interest rate hikes by the FED Reserve which lead the commodities to rally across the globe. In the land mark judgment in the Sheths V/s Lodha Developers the buyers are entitled to refund of the entire amount plus 18% interest for delayed or cancellation of the allotment thus shifting the power in favor of the buyers ending the arm twisting era of the builders.

Technical Outlook:

NIFTY50 after a smart rally of 550 odd points in the previous two weeks is now undergoing through resting period. Nifty50 is also facing a stiff resistance at 8300 which incidentally also coincides with the upward resistance channel. The rhythm of higher tops and higher bottoms is intact which makes every correction a buying opportunity. The market is moving in a tight channel which should take the correction safely to 8000 levels. Traders should exercise restraint in trading correcting markets as the chances of stop losses being hit are very high. Renewed bull market with restart again when 8300 levels are decisively breached.
Indian Stock Market Updates
Nifty 50 Daily Chart

Expectations for the week:

With correction time setting in, and market awaiting important events like US FED meeting in the coming week and the Brexit referendum results, the outcome of all these will have effect in the short term. The market is expected to decisively move only after these important events are discounted. The recent media headlines Commodities stand on the brink of bull market.." crude oil and coal prices are up 50% in about three months time starkly contrasts the mood swing in such short time span. The news about "death of crude demand" and "rising era of solar and wind energy" crushed the commodity prices to 12 years low which precisely hit the bottom then in January, similarly the bullish news now in the commodities universe should make at least a short term top for the time being. Market will await Fed Reserve commentary for immediate clues in the next week. Investors should be overweight on equities and accumulate good quality shares while traders should book profits and wait on the sidelines Nifty 50 ended the week down by 0.55% and closed at 8170.05 today.

3rd June, 2016

Modi Premium Returns - Economy Accelerates

Market opened the week with positive sentiments, rested a while and then again resumed its upward accent. Nifty50 gained strength rejoicing the accelerated growth of the economy in the last quarter in particular at 7.9% while full year growth registered was at 7.6%. Previous year growth was 7.2%, clearly indicating that the economy is racing ahead to take the crown of the fastest growing large economy in the world. The growth was lead by consumption and not by private sector investments. Electricity consumption, personal loans and cement consumption grew by 10-12%. Investors should thus invest in consumption, power utilities, micro financiers, NBFC’s and cement related stocks aggressively. For the month of May automobiles also posted encouraging numbers, four wheelers grew by 10% and two wheelers by 3%. Overall there is traction in the economy, and going forward it is going to get better and better, investors should not wait but aggressively allocate funds in equities or ETF’s to generate superior inflation adjusted returns.

Key events of the week:

Coal India hikes prices by 6% and increased its incremental output targets by 14% making the stock a value pick for long term investors. HUL to split food and refreshment businesses in order to capitalize on the growth prospects better. OPEC finally did not commit on output limits giving relief to the consuming countries that prices may not rise significantly from the current levels in the near term.

Technical Outlook:

NIFTY50 is redrawing its bull market trajectory by challenging the bears from all sides, nothing is stopping the bulls for now, off course it will correct every now and then but it will not completely reverse the trend. The sequence of higher tops and higher bottoms is crystal clear leaving no doubts in the mind that bull market has resumed. The railway track of bears has been decisively breached by the bulls.  Wide ranging days of the previous week indicate that the momentum is very strong. Traders should focus on long only trades or can consider writing puts.
Indian Stock Market Updates
Nifty 50 Daily Chart

Expectations for the week:

Correction seldom comes when people wait for it, but comes suddenly when no one is prepared to receive it. Sharp surge in the indices across the board along with rise in the commodity prices point to huge inflationary rallies across asset classes. However increase in US FED rate if any in June may disrupt the rally for the short term. The fiscal deficit is on the target at 3.9% and hence will give enough freedom to RBI to reduce the interest rates, but realistically, the rate cut is expected post monsoon rains. Market will await RBI action to take short term clues next week. Investors should be overweight on equities and accumulate good quality shares while traders should go long at all levels, however conservative traders can buy on dips.  Nifty 50 ended the week up by 0.71% and closed at 8,220.80.

Stock Market Updates for May, 2016

27th May, 2016

Nifty breakout confirms resumption of long term bull market

Market cheered at ITC’s Aashirvaad of positive results coming after a long time by opening higher, which later mid-week got a big boost from engineering conglomerate L&T which surprised the street with excellent results, sending out loud signals to believe that infra spending is gaining momentum as promised by the government. The results of major companies are out, at an aggregate level the frontlines have posted 5.5% growth in top lines and 9% growth in bottom lines after long time thus clearly indicating that growth has started to trickle in. Corporate results are the most objective way to judge two years of the new government in power and the result speaks for itself. L&T reported 19% growth in Q4 PAT, ITC reported 5.6% growth, GAIL reported 50.7% growth, ONGC 12% growth, Shree Cement 86.5% growth, GSPL 49% growth, Torrent pharma 174% growth, Bajaj Auto 29% growth, Bajaj Finance 36% growth while Bajaj Finserve reported 27% reduction in Q4 profits. Overall the results vindicate the resumption of the bull market.

Key events of the week:

SEBI mandates promoters of suspended companies to acquire shares of minority shareholders after independent valuation which will benefit shareholders of approximately 1200 companies or else if the promoters fail they will be exiled for 10 years from the capital market, this is a laudable step in the interest of minority shareholders. Options in commodities would be introduced soon, paving the way for complete bouquet of commodity derivative products on the bourses.

Technical Outlook:

Breakout above Nifty 8000 level indicates that the lower top and lower bottom sequence has been broken on the larger time frame, indicating the resumption of long term bull market. The double bottom and subsequent higher tops and higher bottoms in the shorter time frame has given the launching pad to the bulls to reverse the down trend of last year. According to Dow Theory, this breakout is the confirmation signal that market has reversed its bias from bear to bull market. A seven month old Reverse Head and Shoulder pattern also indicates that the reversal is for real. Traders should focus on long only trades or can consider writing puts.
Indian Stock Market Updates
Nifty 50 Daily Chart

Expectations for the week:

Sharp rally breaking the key barrier of NIFTY 8000 has most likely re-started the long term bull market in the Indian stock market. The rally this week was across sectors and stocks - power sector, cement stocks, PSU banks and infrastructure in particular which confirms the bull market vibrancy. The Dollar too has softened on hopes of delay by US FED on likely interest rate hikes. The short, medium and long term trend are all pointing higher levels for the market, although the market will not go up one way, but hence forth all corrections will be higher than the previous levels indicating that bulls are in complete control of the market. One should go with the flow - trade and invest long only. Investors should be overweight on equities and accumulate good quality shares while aggressive traders can go long at current prices but conservative traders can buy on dips. Nifty 50 ended the week up by 4.37% and closed at 8157.

Crude Oil Observation:

Crude Oil had roller coaster from fear of death of oil demand to situation of oil shortages in a matter of just 3 months. The fear and greed cycle quickly turns and this time around too, the reverse will happen, that is when every one is expecting the prices to go up, it will do the exact opposite & fall. The momentum in the prices indiacte that the upward journey is loosing strenght and is therefore ripe for sharp correction.
Indian Stock Market Updates

20th May, 2016

Mercury rising but Market Barometer falling

Market opened the week lower, discounting record losses reported by PSU banks but bounced a little mid week on bargaining hunting and again succumbed to profit booking by the close of the week. Rising dollar also unnerved equities and commodities markets globally. Dollar has given a powerful breakout above 67/- on fears of USFED can raise the interest rate as early as June however such repercussions could be serious for the equities market. The results were a mixed bag of positive and negative surprises. PNB reported Rs 5370 Crs Q4 loss,the biggest in the banking history, purportedly cleaning all the past messes. Syndicate Bank reported Q4 Loss of Rs 2160Crs, Bharat Forge Q4 PAT was down by 19%, on the other side Piramal Enterprises Q4 PAT increased by 88%, Motherson Sumi PAT up 18%, Edelweiss Q4 PAT up by 26%, Lupin Q4 PAT up 48%. PSU banks had worst numbers, but stock prices surprisingly stood resilient indicating that the worst is more or less discounted. These are ideal times of contra investing wherein Bankruptcy Code and Professionalization of the Bank Board would act as positive triggers for growth and return of profitability in the Banks in next few quarters. Tweaking of Mauritius treaty and now SEBI tightening P-Notes will usher in an era of higher integrity in the capital markets.

Key events of the week:

State Bank of India has finally initiated the merger process of six of its Associate Banks to consolidate/restructure the capital and reduce the cost of duplication. This will mark the beginning of restructuring of PSU Banks is India something similar to Nationalization process undertaken few decades ago. Idea Ltd has joined the tariff war by reducing the data tariff by 50% potentially straining the profitability further in the sector. State election result indicates that the Modi magic is still on and the government will wrestle the support of regional powers to sail through the key bills in the parliament.

Technical Outlook:

The market to continue its downward drift. During the week market had formed shooting star and Bearish Engulfing patterns both indicating short term bearish. Series of extremely short term lower tops are formed indicating continuation of the corrective pattern. Nifty50 needs time to correct the entire rise from 6825 to 7991 which unfolded itself in 36 trading days. The current correction has just lasted for 16 days. Counting 38% retracement of the entire rise the market is expected to find strong support at 7500 Nifty50levels wherein traders can initiate long positional trades.
Indian Stock Market Updates
Nifty 50 Daily Chart
Indian Stock Market Updates
13 th April Weekly Report

Expectations for the week:

Previous week we had mentioned "the undercurrent is expected to be weak for some more time" Indeed the weakness can now further accentuate in metals and commodity centric stocks as the Dollar rise will cause fall in the prices of primary commodities. Dollar has begun its upward march which can potentially cap the upward journey of the stocks. Parag Milk IPO debuted at 15% premium to the issue price which was quite handsome considering the fact that company had received only 1.8times oversubscription. Such kind of valuation if sustained for some more time can rerate the entire dairy industry wherein other listed peers will also catch up with the valuation. Investors shouldcontinue to accumulate good quality shares while traders wanting to go long may wait on the sidelines for some more time. Nifty 50 ended the week downby 0.84% and closed at7749.70.

13th May, 2016

Market jittery on rising Inflation

Market opened the week with an upbeat mood on passing of the Bankruptcy Bill in the Rajya Sabha but later succumb to nervousness on rising Inflation and lower IIP numbers. IIP for the month of March was abysmally low at 0.1% while inflation in April rose to 5.39% from 4.83% in March. However these are short term fluctuations but the economy’s secular trend is poised upwards on account of key legislations and policy initiatives taken by the government. The corporate scorecard kept the market on tender hooks. HUL disappointed by registering just 7% Q4 PAT rise, while P&G Q4 PAT rose by 12%. Grasim Ind reported 37% rise in Q4 PAT, Kotak Bank reported 32% rise, while Nestle India registered 19% fall in Q4 PAT numbers. In Mid cap space Aarti Industries reported 25% rise in PAT, while JK Papers, KEC International respectively reported 51% and 27% rise in Q4 PAT numbers. Indirect tax collection, independent of petroleum hikes, rose by 17% in April compared to last year, injecting the much needed confidence that growth is transpiring through higher production and consumption in the economy. Key legislations once implemented will further accelerate the growth in the economy.

Key events of the week:

The government tweaked the Mauritius treaty to stop abuse of tax treaty by create a level playing field amongst domestic and global players, effective from FY17, thus giving enough notice in advance which is so much fair from the government. The Insolvency and Bankruptcy Code 2015 has become the law and will re-establish the sanctity in the lending and borrowing mechanism in India a pre requisite for sustained growth. Supreme Court struck down TRAI order for call drop penalties on the telecom companies thus giving a necessary reprieve to the beleaguered sector.

Technical Outlook:

The market to continue its downward spiral with lower volumes. Stocks will continue to adjust towards their quarterly numbers. Series of extremely short term lower tops and lower bottoms are formed indicating continuation of the corrective pattern. At 38% retracement levels market is expected to find strong support at 7500 Nifty50 levels wherein traders can enter for long positional trades at those levels with stops below 7500 levels.
Indian Stock Market Updates
Nifty 50 Daily Chart

Expectations for the week:

The market is expected to continue in its corrective mode with intermittent rallies however the undercurrent is expected to be weak for some more time. The market is still adjusting to the corporate numbers. Thyrocare Ltd listed at 48% premium over its issue price. Such levels of listing premium indicate that primary market is gaining vibrancy which will lead to more number of IPO’s in the foreseeable future. Industrial commodities like copper, iron ore etc have started to fall again on worries of lack of demand, leading to corresponding fall in the stock prices on the domestic exchanges also. The market is in correction mode awaiting some definite triggers. Investors in the mean time should accumulate good quality shares while traders wanting to go long may wait on the sidelines for some more time or should enter long once the market breaks above 8000 levels. Nifty 50 ended the week up by 1.06% and closed at 7815.

6th May, 2016

Market dragging along without any strong clues from Corporate numbers

Market opened the week in a state of confusion and later succumbed to selling pressure by the close of the week. Negative clues from the global markets led bulls into profit taking mode resulting into loss of upward momentum. The corporate scorecard kept the market and analysts guessing the numbers while those companies which exceeded the expectations were welcomed by the bulls and those which disappointed, were threshed by the bears. HDFC reported 40% rise in Q4 PAT numbers, while Eicher Motors and Heromoto both surprisingly reported 71% increase in Q4 PAT. MCX reported fall in Q4 PAT by 45%, Godrej Property Q4 PAT decreased by 65%. Overall the results were mixed. Ujjivan IPO was subscribed 41times while Parag Milk IPO got muted response due to high valuation. IMF has forecasted that India will be the fasted growing large economy in the world and projected a growth of 7.5% for FY 17, but back home political slugfest in the Parliament may lead to delay in reforms and passing of the key growth oriented bills in the Rajya Sabha thus derailing growth for the country.

Key events of the week:

RBI is about to make an epoch making history by throwing open Universal Banking Licenses to Professionals and Finance companies for setting up Banks. This will potentially throw open the lucrative private sector banking space to more intense competition which hadn’t seen new entrants since a decade. JSW Energy has agreed to acquire 1000 MW of power plant from JSPL for an enterprise value of Rs 6500 Crs valuing capacity at Rs 6.5Crs per MW whereas Tata Power agreed to acquire renewable energy portfolio from Welspun for an enterprise value of Rs 9500Crs for acquiring 1152MW of wind and solar power plants valuing business at Rs 8.33 Crs per MW.

Technical Outlook:

The market to continue its downward slide with lower intensity and stocks will continue to adjust towards their quarterly numbers. The corrections of bull markets are lousy and often interrupted by rallies however the eventual culmination of bottoms generally coincides with bad news which creates a panic bottom. Market is expected to find strong support at 7500 Nifty50 levels wherein traders can enter for long positional trades at those levels with stops below 7500 levels.
Indian Stock Market Updates
Nifty 50 Daily Chart

Expectations for the week:

The market is expected to continue its corrective phase with intermittent rallies however the undercurrent will be weak for some more time. The market is in a state of flux adjusting to the corporate numbers which are in aggregate muted and below expectations. Steel imports have fallen by 15% in the month of April which will help domestic producers from Chinese dumping. Auto sales had rebounded for the April month an indication of ground level vibrancy still intact in the economy. After the corrective phase is over the market will resume its upward march vigorously but till that time investors need to keep patience and accumulate good quality shares while traders wanting to go long wait on the sidelines for some more time. Nifty 50 ended the week down by 1.49% and closed at 7733.

Stock Market Updates for April, 2016

29th April, 2016

Yellen Whistle Cools Down the Bull Party

Market opened the week with negative bias but rose by 150 points mid week, but later succumbed to selling pressure at higher levels. The upward momentum got interrupted by FED commentary of weak global growth prospects for the world economies. The markets were trading at overbought levels and the FED commentary gave the reason to begin the inevitable correction . The result scorecard were a mixed bag of positive and negative surprises. Yes Bank reported 27% Q4 PAT growth, while Axis Bank and ICICI Bank reported 1% fall 76% fall in Q4 PAT numbers respectively. Bharti Airtel reported 2.8% rise in Q4 PAT while IDEA reported 39% fall in Q4 PAT numbers. Dabur delivered 16% growth in Q4 profits while Ultratech and Indiabulls Housing Finance reported 10% and 23% rise in PAT respectively. Maruti reported a fall of 11.7% in Q4 PAT. The banking sector seems to be in the clean up mode and hopefully this quarter would be the last for disappointments, the recovery and incremental growth should start trickling in from the new financial year. The revival in the economy will make banks both PSU and Private sector the star performers of the year .

Key events of the week:

Government has circulated a cabinet note to ban FDI in the tobacco sector a potential step to systematically kill the industry as no new funds would be allowed or the promoters of listed cigarette companies may not be allowed to buy the shares. In a report this week World Bank has rated SEBI higher than even the US and German regulators in the Ease of Doing Business matrix, a matter of great pride for the citizens of India.

Technical Outlook:

We are reiterating our previous week's comment "In the short term, rising spree in the market looks stalling as the market has formed a Doji on a weekly chart indicating either a pause or reversal to the lower levels" The market indeed witnessed some serious amount of profit taking. The strong resistance at 8000 NIFTY50 levels would be an important hurdle for the bulls to cross before restarting their upward journey. However in the near term correction can lead the markets back to 7500 levels. Traders intending to take long position should go out for May vacation or should be cautious before initiating long positions .
Indian Stock Market Updates
Nifty 50 Daily Chart

Expectations for the week:

The market is in the correction mode and should continue for some more time. Corporate results are not up to the expectations and have already been discounted thus leaving little room for a near term upside. Ujjivan IPO should be subscribed as it is reasonably priced leaving some room for the retail investors to make listing gains. Gross NPAs stood at 0.15%, the IPO is priced at 1.66x times the book with superior ROE of 19% and high visibility of sustained growth. Some of the heavy weights that are expected to announce the results next week are HDFC, Adani Ports, Adani Power, Century Textiles, Godrej Cons, MRF, HeroMoto, Eicher Motors, MCX, Titan etc. Bulls should exercise restraint and stay on the sidelines until the correction is over which may take some more time . Nifty 50 ended the week down by 0.62% and closed at 7850.

Special Observation:

The chart below shows the historical time cycles of bull, bear and corrective phases. Interesting facts throw a hypothesis that markets has strong probability that correction has already started and will take some more time before it is over.
Indian Stock Market Updates

22nd April, 2016

Market to Pause after a Sprint Run

Market opened the week with an upside gap on hopes of rainy season but later fizzled out on the onset of result season.  The results have started to pour in with mixed numbers. The IT heavy weights Infosys, TCS and Wipro came out with average numbers, while Infosys delivered above street expectations but TCS and Wipro disappointed. On an average IT companies are expected to grow in the range of 10%-13% for the next year which justifies their current valuation and leaves little room for further rerating barring Infosys which may outperform the pack. IndusInd Bank reported a healthy rise of 25% in Q4 PAT with NPA’s at 0.36%. Hindustan Zinc reported 8% rise in Q4 PAT. Equitas ltd listed at 33% premium to its issue price gaining handsomely on the back of rising bullish sentiments and reasonable valuation at which the shares were offered, the stock still holds promising future for the long term investors even at the current rate.  The FIIs have slightly reduced their buying velocity they have infused some Rs 1600Crs in the month of April, while DIIs have sold shares worth Rs 1000Crs correspondingly. The fundamentals of the economy are strong enough to propel the growth upwards of 8% to 9% but that will require some time, however market discount’s too fast and therefore in the short term market have run up too fast and needs rest before starting the next move up.

Key events of the week:

PSU banks got a reprieve from RBI this week when some of the truant defaulters started performing due to the pickup in the economy thus reliving the banks from providing against those stressed assets as bad or doubtful which cheered the PSU banks stocks on the street. Tata Steel unexpectedly got the support from the British government to facilitate the sale of its UK Steel assets paving the way for early disposal of the stressed assets thus lightning Tata Steel’s burden of managing loss making business and at the same time brightening domestic stock price.

Technical Outlook:

In the short term, rising spree in the market looks stalling as the market has formed a Doji on a weekly chart indicating either a pause or reversal to the lower levels. The ultra high short term bullish sentiments also point to some contra selling coming in the markets. NIFTY 50 will face stiff resistance at 8000 levels where in some meaning full profit booking is expected.  Traders should be cautious before initiating long position at current juncture as the risk reward ratio looks unfavorable for positional trader.
Indian Stock Market Updates
Nifty 50 Daily Chart

Expectations for the week:

The market had run up too quickly in the short term and therefore it is very likely that the correction has set in for the immediate short term. Corporate results are mixed and seems are already discounted thus leaving little room for near term upside. An international brokerage house turned bullish on the steel sector this week, ironically the stock prices have already risen by 25% to 50%, however we did turn positive when the government first introduced the safe guard duty some two months back. Thyrocare IPO is richly priced, has little room on the upside for the short term investors, hence investors looking for quick listing gains can skip the same. Some of the heavy weights that are expected to announce the results next week are Ultratech, ACC, Ambuja Cements, Ibrealest, Ibulhsgfin, Yes Bank, Axix Bank, Maruti etc which will set the trend for the coming week. There seems to be near term caution for the bulls. Nifty 50 ended the week up by 0.62% and closed at 7899.

13th April, 2016

Market blossoms on hopes of Rain drops

Market opened the week in positive territory on hopes of a good monsoon. The big trigger came when Indian Meteorological Department (IMD) officially declared the Monsoon to be above normal at 106% which gave the reason to rejoice. Bulls fearlessly pushed the markets higher by 3.9% at the close of week. Further good news rained this week, IIP for the month of February bounced back to 2% reversing the deceleration since last three months, CPI for the month of March declined to 4.83% reversing the 6 monthly rising trend. Banks have started the spree of lowering the interest rates albeit with too little reduction. Axis Bank has taken the lead, & it is expected by 1st May many more banks will follow suit in reducing the lending rates. The economy is ready to leapfrog to new levels of growth with the advent of normal monsoon. We hope the economy is ready to take off with Rain Gods too now contributing their blessings on the Indian economy.

Key events of the week:

Sun Pharma gets USFDA approval for eye care drug, a significant boost to the company’s brand image, it will increase pipeline sales growth numbers which will certainly cheer shareholders. Ricoh India came under regulatory eye when the company board asked their CEO, CFO and COO to go for leave, thus arousing suspicion on the conduct of the company especially when the company was reporting growth of 80% and above quarter after quarter. Liquor stocks have started to fizzle out as one state after another are planning to ban the consumption of liquor.

Technical Outlook:

Short term higher tops higher bottoms spree in the NIFTY 50 will take the market to higher levels. However at 8000 levels Nifty 50 shall face stiff resistance and major profit booking is expected. Traders should be cautious before initiating long position at current juncture as the risk reward ratio looks unfavorable for positional trader. Buy on dips should be the strategy.  

Special Observation:

Indian Stock Market Updates

Expectations for the week:

The market rebounded on hopes of normal monsoon; however the quick rally was based on hopes and expectations. The rain showers are still weeks ahead but the market discounts them too early too quickly. The media headline of ‘bounty showers soon' leaves little hope for further short term upside in monsoon related stocks. However the real tone of the market will set in, once the corporate results are out. Infy, TCS, Wipro, LICHSG, MindTree, Crisil, Hindalco etc will set the pace for the coming weeks. The results in general are expected to be muted with sales growth of 2% and profit growth of 8% are estimated at an aggregate level. However USDINR could spoil the bullish stock market party if it starts moving above 67 levels. In the past a leading international brokerage house had predicted depreciation of emerging market currencies including that of Rupee by 7% to 10%. The undercurrent in the short term is cautiously bullish. Nifty 50 ended the week up by 3.9% and closed at 7850. Wishing all our esteemed customers HAPPY festivals.

8th April, 2016

RBI disappoints market but praises government efforts

Market opened the week with positive mood but later sold off on account of lower than expected interest rate cut of 0.25%. However, Monetary Policy Statement was encouraging which gave lot of hopes for further rate cuts in the coming months. Services sector activities have steadily expanded in second half of the year, star performers being hotels, transport, defense and defense related services. Cement production too gained in H2 while steel consumption, air passenger traffic the lead indicators of the economy all marched ahead in the second half of the current year. Meanwhile Consumer Price Index (CPI) gave a major relief by falling for the first time in six months on account of lower food and vegetable prices. All these above domestic factors coupled with reduced risk to global downside gave an impetus for rate cut. We believe macro-economic dynamics in India are far more favorable presently than at any time in the past two years.  We hope the economy is ready to take off with RBI too now contributing its weight behind to the prudent reform agendas of government pronounced in the budget. 

Key events of the week:

Adani Enterprises finally wins the coveted Queensland coal mines having potential of 11 billion tons of coal which will probably change the fortunes of the company.  Blackstone has agreed to buy majority stake in Mphasis giving an open offer to public at 457/- making the M&A transaction one of the biggest in recent times in the IT sector. Preliminary forecasts have started to pour in for normal rains, the success of which will go a long way in reviving the growth for the country. "Stand up India" was launched by the government to revive and imbibe the entrepreneurial culture in the country.

Technical Outlook:

The market was witnessing loss of momentum in the previous week which eventually set the ball rolling for the correction to begin. The MACD indicator was in divergence with the price action. There will be strong support at 50% retracement levels of the entire rise which comes to 7300 Nifty50. Markets have entered into a short term corrective mode which will take some time to correct the entire post budget rally from 6850 to 7750. Traders should wait for entering into fresh long positions. Aggressive traders can go short keeping stops at previous week high.
Indian Stock Market Updates
Nifty 50 Daily Chart

Expectations for the week:

The market has started its natural course of correction after a strong rally of 900 points in Nifty50. RBI’s lower than expected rate cut has been blamed for the fall, but actually the correction was long overdue. Many of the best monthly performer stocks which had risen by 20% To 25% will fall sharply in this corrective phase. Sugar prices in the international markets have started to come off their recent highs which will potentially have negative impacts on the Indian stocks too. A leading international brokerage house has predicted depreciation of emerging market currencies between 10% to 15%, including those of India, China and Japan, which will cause negative impact on the stocks. The undercurrent in the short term as turned weak, there is loss of momentum, indicating correction has set in.  Nifty 50 ended the week down by 2.04% and closed at 7555.

Stock Market Updates for March, 2016

23rd March, 2016

Bulls still have long way to go

The market opened the week with a strong undertone belying profit booking expectations. Such strength in the market is a sign of reversal from bearish to bullish undertone. The swift rise from utter pessimism to complete optimism in a matter of just few weeks has taken majority investors by surprise. The feeling of being left out and not being able to participate in the rally is the single most concern in everyone's mind. The emotion of fear keeps away from buying at the bottom and the emotion of greed keeps away from selling at the tops, however we had guided our readers to buy quality stocks and keep patience for existing holding in the stocks when the street was howling 'bears have arrived'. FIIs have been buying aggressively since the beginning of the month as the valuations are at reasonable levels. India has risen in line with other emerging market peers but has attracted a larger in flow of money compared to others as it offers far more sustainable growth than any other small emerging market economies.

Key events of the week:

8 to 9 stranded power plants of Ratnagiri Power, GMR, GVK and others will start getting Natural Gas for their plants as government has successfully completed auction of gas in a transparent manner, thereby boosting the generation capacity in a big way. China too is now making in India! As seen with Oppo, a Chinese mobile manufacturing company is setting up plant in the India to manufacture one million 4G mobile phones - in line with the Make in India initiative. Last week government announced reduction in the small savings rates in various schemes ranging from 0.5% to 1% clearing the hurdle for the RBI to reduce the interest rates in its April meeting. The reduction in the small savings rate will now pave the way for banks to reduce the lending and deposit rate quickly as and when RBI announces the rate cut.

Technical Outlook:

The market has decisively pierced the stiff resistance faced at 7600 Nifty50 levels reversing for the first time the series lower tops and lower bottom to higher tops sequence which is prerequisite for a valid up trend.  Bulls are in full control of the market but regular corrections are inevitale. Currently the markets are hovering near over bought zones, but as such the continued strength can lead to just intraday corrections.  The market can face resistance at its 200 day moving average at 7800 levels. Buy and hold, and buy on dips should be the strategy for the traders.
Indian Stock Market Updates
Nifty 50 Daily Chart

Expectations for the week:

The upward journey of the market is firmly in place, off course it will be followed by regular bouts of profit booking but the undercurrent of the market will remain distinctly strong. There will be sectoral rotation on the way up which the traders have to play correctly in order to generate hefty returns. Government announced the long awaited policy on defense procurement which will be positive for the stocks like Reliance Defense, Astra Microwave, BEML, Solar Industries etc. Tea prices internationally and locally are trending higher due to shortage in Kenya crop, which can probably rerate tea stocks. Commodities like Iron Ore, Zinc, copper and crude oil are inching higher which will have positive effect on the stocks producing and selling these commodities. Infibeam IPO has evinced lukewarm response in view of high valuation in the ecommerce start up space however the level of retail participation indicate that still investors are currently nervous which suggests that the markets have a long way to go up, before such 'nervousness' will be converted to 'excitement' which will finally culminate into bull market tops. Investors should aggressively allocate towards good quality stocks for the long term. Nifty 50 ended the week up by 1.48% and closed at 7716.50. We wish our esteemed readers happy Holi.

18th March, 2016

Bulls resting before the next rise

The market opened the week in positive territory but later succumbed to mild profit booking mid week. Nifty50 has entered into a brief resting time after a strong rally post budget. The hefty dividend pay outs from the large companies having significant weight in the index has kept the market on a strong wicket. CPI eased to 5.18% in Feb compared to 5.37% year ago and the 16 months of consecutive fall in the WPI to -0.91% makes the case stronger now for larger than expected rate cut of 0.5% in the interest rate in the month of April by RBI. With Inflation under control and fiscal discipline in place the market is readying itself for a powerful rally. FIIs have been net buyers in the Indian market since the start of the month. They have mopped up a record Rs 12000/-Crs worth of equity shares since the beginning of the month. Political slugfest continued for vital bills like Aadhaar which is delaying the larger good of stopping the pilferage in the subsidy, potentially delaying the rural prosperity. Rupee has precipitously risen against the dollar to everyone’s surprise indicating the strength & depth in the Indian economy.

Key events of the week:

US FED kept the key interest rates unchanged sighting global fragilities to growth as key reason but at the same time indicated that, during the year rates can rise based on the economic expansion especially in an environment of low inflation and low commodity prices. Similarly other Central banks have too maintained the same stance of loose monetary policy to encourage risk taking. Commodities market responded positively by registering net gains for week. Lupin Ltd got a USFDA warning for its manufacturing facility at Goa spoiling the entire party for the Pharma sector but at the same time making all of them trade at reasonable levels.

Technical Outlook:

The market is facing resistance at 7600, which is a key level of supply for the Nifty50.  Valid breach of 7600 level would begin the start of new bull market as the series of lower tops and lower bottoms would be broken indicating the change of trend from bearish to bullish. Penetrating these levels significantly will lead to bulls taking charge of the market. Markets can rise swiftly to test 7800 on the up side which also converges with its 200 days moving average. Buy and hold should be the strategy for the traders. 
Indian Stock Market Updates
Nifty 50 Daily Chart

Expectations for the week:

The correction that had set in last week seems to be most likely over and market is expected to continue its upward march.  The stocks in pharma sector are witnessing continuous fear from the USFDA division for violation in the best manufacturing practices. This has resulted into reasonable valuations in the entire sector throwing value based buying opportunities for the long term investors. Drawing analogies from the past when ITC's manufacturing plants were raided by Excise officers for possible violations and penalties, the then depressed stock prices offered tremendous value buying opportunities for the stock. Purchases made during those times have yielded returns far in excess of the benchmark Index yield of 18%. The pharma pack today stands at the same dynamics wherein the negative regulatory over hang have depressed the valuations of the entire sector creating value buying opportunities. The undercurrent is strong in the market. Market can consolidate for some more time in between before the next powerful move begins. Investors should aggressively allocate towards good quality stocks for the long term. Nifty 50 ended the week up by 1.25% and closed at 7604.

11th March, 2016

Markets awaiting interest rate cut

The market opened the week with an optimistic note assimilating the bullish dose of budget. Markets have maturely responded to the pragmatic initiatives of the government. The reform spree is on the fast track mode wherein the executive decisions are taken at break neck speed. FIIs have made a big plunge again after a long time by making heavy purchases. Since the budget they have purchased stocks upwards of Rs 8500/- Crs. The Rupee too appreciated to everyone’s surprise however the strength vindicates the robust fundamentals of the Indian economy. Even RBI is expected to through its weight behind accelerating the growth of the country by reducing the cost of funds in the economy. The steroids in the form of policy initiatives, lower commodity prices, currency appreciation and the expected reduction in interest rates combined would be a formidable force to race ahead, inspite of not so rosy business dynamics across the globe.

Key events of the week:

Rajya Sabha has passed the Real Estate (Regulation and Development) bill potentially the game changer in one of the biggest growth drivers of the economy, the real estate and construction sector. Regulation takes industry to the next level in terms of growth and reach in the economy. The overhaul of hydro carbon policy will soon open the floodgates to billions of dollars of investments in oil and gas sector thus increasing domestic production substantially thereby savings the precious foreign exchange for the country. The shift from profit share to revenue share will hence forth remove the decade old hurdle impeding the growth in the sector. EU Central Bank reduced the deposit rates to record -0.4% as a measure of monetary stimulus to encourage risk taking in the economy.

Technical Outlook:

The market is inching towards 7600 key levels of resistance for the Nifty50, thereby consolidating the gains made over the last week. 7600 level is the tipping point for change in bias from hitherto bearish to bullish undertone from long term perspective. Piercing these levels significantly will lead to bulls taking charge of the market. The markets are currently overbought and need the necessary time to correct the same before the next move begins. The correction may not be in terms of price erosion but can be in terms of time decay. Buy on dips should be the strategy for the traders.
Indian Stock Market Updates
Nifty 50 Daily Chart

Expectations for the week:

The velocity of the up move has slowed down indicating the corrective phase of the market can begin soon. The stocks in realty, metals and infrastructure are having traction and will continue to remain volatile for some more time. The announcement of threshold import price for steel for 6 months is attracting bulls in the metals counter. The threat of cheap Chinese imports is taken care of at least for a while. The ease of doing business in oil and gas sector by giving companies pricing freedom will go a long way in exploitation of the domestic reserves. Many oil exploration and extraction ancillaries too will benefit from the move as lot of incremental demand from the marginal fields will also emerge. The mood of the markets has clearly changed from utter despair to the state of expectancy. The shift in sentiments is visible across the industries in the market. The extreme bullish sentiment currently in the short term will lead to some amount of correction in the market. However the undercurrent is strong in the market. Market can consolidate for some time before the next move to begin. Investors should aggressively allocate towards good quality stocks for the long term. Nifty 50 ended the week up by 0.33% and closed at 7510.

4th March, 2016

Budget indeed sparked a Ray of Hope

The market opened the week with a lot of skepticism on the budget. However the actual outcome of the budget was extremely positive for the country and for the markets. Mr. Market gave a thumps up to the budget by rallying a whopping 6.33% by the close of the week. Budget not only ignited a ray of hope but was backed with concrete policies to kick start the stalled economic engine of the country. The Rupee too appreciated handsomely, a green signal given by global investors that indeed the budget can propel the country into renewed growth trajectory. FIIs have started to aggressively buy Indian equities after a long time. We had mentioned in our previous week’s note "These kinds of setups are opportunity to be bullish when even absence of negative in the budget can cause stock market rallies." Indeed the market rocketed. We hope the budget will be implemented in its true spirit for the larger good of the country.

Key highlight of the Budget:

The budget seeks to empower some 45% of the population in the low income category by giving them social security in the form of health insurance and insure the risk of agriculture for the farmers thus giving them freedom to venture into extensive farming without the fear of loss capital deployed. This will bring a kind of revolution in the rural economy which will restart the consumption cycle at the grass root level. Various measures were introduced to benefit the middle class and tax the super rich so that income inequalities can be reduced. Govt has earmarked upon an ambitious Capex plan of Rs 2lakh Crores inclusive of the railways to kick start the investment cum consumption cycle. Disinvestment target of Rs 56,500 Crs and voluntary disclosure of income to target the black money were introduced to keep the fiscal target at 3.5% of the GDP, creating the ground for the RBI to reduce the interest rates in the economy, a win-win situation.

Technical Outlook:

The market is continuing to make lower tops and lower bottoms in the medium term; however the short term trend has reversed on the upside. The strong momentum of the upside after a long time suggests that the markets have most likely changed from bear to bull market but the confirmation will only be available once NIFTY50 decisively trades above 7600. In the short term market has reached to extreme overbought readings on the oscillators and is therefore poised for some correction or sideways movement. Buy on dips should be the strategy for the traders.
Indian Stock Market Updates
Nifty 50 Daily Chart

Expectations for the week:

The markets have swiftly risen reacting to the budget. Assessing the impacts on the industry and stock specific analysis will shift the market into sideways for some times. The sectors that had fallen hard will be the first to rebound in the ensuing weeks. PSU banks which bore the maximum brunt of the downfall will move up just to catch with the retracement levels, they will still have lackluster performance till the fourth quarterly results are out.  We had mentioned in our previous week's note "however there is only 15% chance that budget can actually change the trajectory of the market, i.e. market reverses its main trend post budget" The market actually did although no one believed on the street that budget will change the main course of the market, but we were extremely positive about the outcome as mentioned last week: "the odds are that market will take the budget as a bullish signal". Market will consolidate for some time before the next up move.  Nifty 50 ended the week up by 6.33% and closed at 7485.

Stock Market Updates for February, 2016

26th February, 2016

Can Budget spark a ray of hope in a no hope Market?

The market opened the week with virtually no strength to inch higher inspite of positive global clues. The US markets were positive throughout the week but Indian markets infested with negative sentiments kept on dragging lower during the week. FIIs are standing on the sidelines, neither buying nor selling substantially. The media headline “Valuations in Emerging markets near 1998 low” justifies the loss in relentless selling momentum by the FIIs. The sentiments are running low, headlines like“Traders carry bearish bets.” point to extreme bearishness prior to the budget. These kinds of setups are an opportunity to be bullish when even absence of negative in the budget can cause stock market rallies. Rupee seems to be at a tipping point which will either go above 70 levels or below 68 in the medium term depending on the policy initiatives in the budget. We hope the budget will be growth oriented and forward looking in the best interest of the country.

Events of the Week:

The second rail budget of the NDA Government kept the fares and freight rates unchanged but ushered a new digitized chapter in world’s third largest rail network corporation. The focus to increase efficiencies with the help of technology seems achievable. If the initiatives are implemented in a time bound manner, Indian railways can leapfrog to be one of the most efficient service providers yet affordable to the common man. Cement companies have hiked prices by 2-4% in the month of February in conjunction with increase in volumes by 2-3 %, a positive step for the entire industry. Solar Industries Ltd to became the first company to secure government licensing under the Make In India initiative to manufacture locally critical parts for artillery ammunition. Results of policy initiatives are visible on the ground level.

Technical Outlook:

The market is continuing to make lower tops and lower bottoms in the medium term, however in the short term there is a visible loss of momentum to the downside. The velocity and breath are showing signs of divergences, a good short term indicator for a bounce back.After the steep fall of the current week, a bounce can be expected coinciding with the budget day.  Put Call Ratio stood at 0.93, up from previous week reading of 0.85 indicating bearishness is waning and bulls are gaining strength.The market is likely to gain strength only if it crosses above 7300 levels in any case stops should be kept below 6900 levels for Nifty50 for long trading positions.
Indian Stock Market Updates
Nifty 50 Daily Chart

Expectations for the week:

The market is waiting for a trigger, budget being an annual exercise plays an important role in setting expectation levels for the markets. However based on historical evidence, budgets do not change the trajectory of the markets, meaning a bullish market will take the budget in bullish spirit and vice versa for bearish markets however there is only 15% chance that budget can actually change the trajectory of the market, i.e. market reverses its main trend post budget. It is also a wise principle in financial markets not to predict, hence at this juncture, it would be prudent to wait and watch the policy framework before taking a trading call, although this time the odds are that market will take the budget as a bullish signal. As far as valuations are concerned, they are at multi year low, which makes a compelling case for the investors to load up quality stocks and keep holding the rest. Nifty 50 ended the week down by 2% and closed at 7029.75.

19th February, 2016

Market to languish till Big Budget day

The market opened the week with positive sentiments after nightmarish previous week’s fall. Metals and PSU Banks which were hammered due to poor performance were the major gainers for the week. Bank of Baroda announced that all the bad assets have been provided for in the 3rd quarterly results which reignited confidence in the stock. NIFTY made single biggest gain of the year on Monday by rising 2.60% from the previous day’s close. Record bad provisioning of the banks aroused voices, with even the Supreme Court raising concerns, whereby RBI was directed to disclose details of bad loans. However the market seems to have thoroughly discounted the NPA issues leading to stabilization in the PSU Bank stocks. Third quarter result season is almost over, at the aggregate levels, sales declined by 4.4% and net profits fell by 1.7% for 2500 database of companies. FIIs continued their selling spree albeit at much slower pace on worries of slowdown in the economy. Rupee seems to have lost momentum on the upside. The market is awaiting positive triggers from the domestic front. Hopefully the citizens of India would see the Parliament functioning during the budget session.

Events of the Week:

People’s Bank of China, PBOC set higher reference rate for the Yuan against Greenback after a long time in a sigh of relief for the emerging markets bringing in much needed stability for Rupee vis-à-vis Dollar. The stability on the currency front can bring back foreign portfolio funds back into the country. Make in India initiative kicked off with a grand success, the vibrancy of the event and participation instills lot of hopes going forward for the country to become a global manufacturing hub. Dr Reddy announced buy back of its shares up to a maximum price of Rs 3500/- per share in an indication of show of inherent strength in the company.

Technical Outlook:

After the steep fall in the market, reaching oversold levels it is time for a bounce back or sideways movement. Put Call Ratio stood at 0.85 indicating bearish moods. The market is likely to gain strength only if it crosses above 7300 levels, beyond which all shorts can be covered, and traders can initiate new longs. The series of lower tops and lower bottoms are still intact indicating no confirmation for long term reversals. Market is likely to see lower volatility in the near term. The upward movement will be slow and lethargic facing resistance at higher levels.
Indian Stock Market Updates
Nifty 50 Daily Chart

Expectations for the week:

The market is expected to stabilize at current levels. Major crude oil producing countries have committed to cap the supply at January levels, a step in the right direction to bring stability and equilibrium in the oil prices. The Dollar is facing resistance at higher levels and soon could correct in light of PBOC’s fixing higher reference rate for Yuan. Overall, there seems to be stability returning in the commodity and equity markets. The listing of new IPO of Quick Heal at 9% discount to the issue price indicates utter pessimism, which are in fact great opportunities for the investors to lap up quality stocks at fair valuation for long term investment horizon. When the sentiment peaks towards pessimism, new bull markets shall emerge. Currently the pessimism levels are high and expected to peak soon. Nifty 50 ended the week down by 3.29% and closed at 7210.75.

12th February, 2016

When Headline screams Bear, It’s too late to sell

The market opened the week with utter despair, reacting to the gloomy mood of other world indices. The intensity of the despair peeked mid week, culminating into a vertical collapse of prices. Such kind of utter pessimism throws an indication that bear markets are nearing an end and not the beginning. The events that shook the faith of Indian capital market were the declaration of results of the PSU Banks. Reported Gross NPAs to the extent of 9% to 10% was a total shock to the investors, leading to profits being wiped out for the quarter, and Banks have indicated that more can be expected to for the next quarter. This lead to complete loss of confidence and along with PSU Banks, all other companies having huge debt was beaten down. The sooner PSU banks come out clean, the sooner the confidence will be restored as markets don’t like uncertainty. PNB reported a 93% fall in Q3 PAT, SBI reported a 62% fall in Q3 PAT, Tata Motors Q3 PAT was down by 2%, Coal India Q3 PAT was down by 14%, ONGC Q3 PAT down by 64%, Hindalco Q3 PAT down by 89%, Hero Moto Q3 PAT up 36%. FIIs continued their selling spree however the intensity was not severe. Nikkei, Nasdaq touched their 52 week lows, HangSeng touched a three year low and European markets touched their low points for the year. Gold touched 52 Week high. The current equity sell off is largely a synchronous global event which will not last for long time, the markets will soon respond to the inherent domestic economic strengths, bringing in much needed stability in the financial ecosystem.

Events of the Week:

Supreme Court this week ruled that debt recovery to take precedence over efforts to revive the sick units when 75% of the secured creditors so desire. This is a far reaching judgment clearing the hurdle for the banks to quickly recover the funds in a time bound manner. Government finally imposes restriction on cheap steel imports by raising the minimum import prices for various grades of steel from 30% to 70% to protect the domestic industry. This will ease pressure not only on steel industry but also on the banks as the certainty for recovery of interest and principal increases.

Technical Outlook:

The steep fall in the market has taken off all the important supports levels. The market is in no mood to reverse till it gains strength to cross above 7300 levels, beyond which all shorts can be covered, and new longs can be initiated from a traders’ perspective. The series of lower tops and lower bottoms are still intact indicating no confirming signs of long term reversals. Market is likely to see higher volatility in the near term. The upward movement will face resistance at higher levels. Traders should remain on the sidelines as the increase in volatility can lead to huge whipsaw loses. The market is expected to remain volatile, with equal probability of 2 to 4 % move on either side.
Indian Stock Market Updates
Nifty 50 Daily Chart

Expectations for the week:

The current state of hyper pessimism can’t last forever. When fear grips markets, rationality is by passed and people take decisions based on emotional behavior. Such emotional decisions are more often wrong, based on empirical learnings. Every time such heightened pessimism occurs the human behavior becomes automatic and investors sell off their investment holdings only later to repent. The distilled wisdom- “When others are fearful be greedy and when others are greedy be fearful” in other words ‘buy low, sell high’ should be the strategy for the investors, but majority reverse the rule. It’s time to keep patience in good quality stocks and sit tight. Nifty 50 ended the week down by 6.78% and closed at 6980.95.

5th February, 2016

Markets entering into sideways zone

The market opened the week with positive sentiments but profit booking and fresh shorts emerged at higher levels on the back of weak corporate results, especially in the PSU banking space. However macro data signals revival in the economy- sales of heavy duty trucks grew 36% in 2015 compared to previous year, an indication that infrastructure and construction are gaining vibrancy. Services PMI stood at 19 month high and manufacturing recorded a four month high reflecting revival is gaining momentum. FIIs selling reduced considerable for the week, while DIIs continued their usual buying spree. Bajaj Auto reported 5% rise in Q3 PAT, DLF reported a rise of 24% in Q3 PAT, Cera Sanitaryware reported 21% rise in Q3 PAT, Ajanta Pharma reported 19% rise in Q3 numbers. Tata Steel reported higher than expected loss at Rs 2127 Crs for Q3. The markets are trying to find a bottom, searching for reasons to stabilize. Valuations are turning attractive, quarterly numbers are slightly below the expectations, going forward markets will rise albeit slowly, testing investors patience.

Events of the Week:

RBI in its Bi-monthly policy statement kept the interest rates unchanged putting the ball in the government’s court to deliver first. RBI came out with a new set of guidelines to get Banking License allowing 74% FDI at the time of application itself rather than waiting for five years, making it easier for the new entrants to aggressively rollout, challenging the existing pie of Private sector Banks. Rel Infra finally agreed to sell its Cement business to Birla Corp for an enterprise value of Rs 4800Crs marking an exit from non -core business. Teamlease IPO got overwhelming response by getting 66 times over subscription, giving a ray of hope to many others waiting in the queue to raise funds.

Technical Outlook:

The anemic rally with equal bouts of buying and selling is an indication that market is likely to see choppiness in the near term. However it will again try to touch 7600 -7700 levels before any substantial movement can restart. 7241 levels on NIFTY50 would still hold as strong support area. Markets however continue to make lower tops and lower bottoms, from the medium term perspective. The upward movement will face resistance at higher levels. Traders should buy on dips and Investors can systematically add to their portfolio of quality stocks and keep patience.   
Indian Stock Market Updates
Nifty 50 Daily Chart

Expectations for the week:

The current indecisiveness in the market will lead to markets entering into sideways and choppy zone. Crude oil rebounded strongly inspite of fears of oversupply, metals like aluminum, copper, zinc rose sharply brushing aside utter pessimism, China claims to have ordered shut down of non viable steel plants leading to positive hopes in the sector. Slowly but steadily the sentiments in the commodities are turning positive a sign of relief for those commodity selling stocks. The market is expected to inch higher with lots of resistance on the upper side at 7600-7700 levels. Traders can buy on dips with tight stops. Nifty 50 ended the week down by 0.98% and closed at 7489.10

Stock Market Updates for January, 2016

29th January, 2016

Signs of Decoupling with international markets are visible after a long time

The market opened the week with positive sentiments in continuation of the relief rally of previous week. Sometime during the middle of the week, Chinese market fell by more than 6% and US market fell by 1.38% but Indian market stood resilient and did not succumb to negative sentiments in the international markets, a positive sign of decoupling. It looks like the market will sail on its own strength going forward and discount the quarterly numbers. HDFC Bank reported 20% rise in Q3, HDFC reported 7% Q3 rise, Maruti at 27% Q3 rise, Glenmark 48% Q3 rise, Godrej Consumers 18% Q3 rise, Colgate 22% Q3 rise, Dabur 13% Q3 rise, but ICICI disappointed with just 4% rise in Q3 on higher bad debt provisioning, Vedanta reported 99% drop in profits on account of lower base metal prices. FIIs sold approximately stocks worth Rs 12000/- Crs in the month of January whereas DIIs made a total purchase of Rs 6000/- Crs. The markets have stabilized, valuations are attractive, quarterly numbers are not significantly bad as expected and therefore going forward markets will rise rewarding those investors who kept patience and sat tight on their investments.

Events of the Week:

TRAI has recommended base price of Rs 11400/- Crs for 700 MHz, the most efficient spectrum band which is nearly 4 times costlier than the 1800 MHz bands which were auctioned last year, potentially threatening the health of Telecom companies which are already over burdened by huge debt. This kind of telecom policy does not augur well for the long term shareholders. New IPO of Precision Camshafts, priced aggressively has received muted response as there was little margin of safety for investors.

Technical Outlook:

The sharp reversal of Nifty50 from 7241 levels indeed was solid for the markets to sustain upward momentum.  The intermediate term bottom is in place. In its upward journey the market is likely to test resistance at 7600 on the upper side from where some profit booking is expected.  However it is expected that these levels will be breached and market is likely to go back to 7900 to 8000 zone.  Shorts must be covered and long positions can be initiated from traders’ perspective. Markets however continue to make lower tops and lower bottoms, from the medium term perspective.  The rally is expected to gain momentum with bouts of profit booking.  Traders should buy on dips and Investors can add on to their portfolio of quality stocks and keep patience and hold on their investments.   
Indian Stock Market Updates
Nifty 50 Daily Chart

Expectations for the week:

The rise in the market will sustain, as the bounce back happened in the middle of pessimism, it quickly shrugged off Chinese stock market mayhem, the commentary of the FED on the fragility of the US economy and strong dollar at 68.50, the market still ended the week with positive gains thereby indicating that the market has left its worst behind and is looking forward on hopes that growth in Indian economy will shift markets to higher orbit. Teamlease IPO is expected to hit the market next week. The IPO looks expensive and can be avoided. The market is expected to gain strength with bouts of profit taking. The intermediate trend looks up. Nifty 50 ended the week up by 1.90% and closed at 7563.55

22nd January, 2016

Bears run for cover, Bulls gaining strength

The market opened the week deep in the red whacking Mid-cap stocks which hitherto were resilient in the downfall. The front page media headline "Bear hug tightens", "Sensex slides to 20 months low", "China, FED and crude oil brew a perfect storm leading to emerging market selloff" caused the eventual capitulation and in turn sowed the seeds for the bounce back. Pessimism was at its peak and therefore the reverse was inevitable in the form of swift bounce back rally. Dollar has appreciated to 68 levels causing lot of anxiety to unhedged importers and borrowers of forex loans and at the same time showering bounties on the exporters. Corporate results were muted but expectations were met. HCL Tech reported 0.2% Q3 PAT rise, Axis Bank reported 15% Q3 PAT rise, Kotak Bank 32% rise in Q3 PAT, RIL with 39% rise in Q3 PAT. FIIs still continued with their selling spree by selling shares upwards of Rs 3000 Crores for the week while DIIs were net positive buyers for the week. The markets are stabilizing and will slowly decouple with international news events and will sail under its own weight of robust fundamentals underlying the Indian economy. 

Events of the Week:

Govt has announced the much needed sops for the Start Ups to turbo charge the entrepreneurial spirit in the country which necessarily is the single largest engine for creating massive employment opportunities in the economy. Ambani brothers signed the pact for telecom businesses for sharing infrastructure and spectrum on mutually beneficial terms for the benefit of both the companies an indication that good times have arrived for them, as their flagship companies had earlier underperformed since last many years. A new record low price of Rs 4.34/- per Kwh was quoted by a Finnish company for 420MV solar power generation for the Rajasthan government potentially heralding a beginning of disruption of thermal power generation where in the unit selling prices are being matched by the solar power generators too.     

Technical Outlook:

Nifty 50 hit a panic bottom at 7241 and rebounded with a vengeance. The down fall of three weeks coincides with the previous time cycles of the downfalls and therefore the bottom formation at 7241 looks solid and is of major significance. Market is likely test resistance at 7550 on the upper side. Breaching of these resistance levels will propel markets to higher orbit, firming bulls grip on the market. Shorts must be covered and long position can be initiated from traders’ perspective for short term horizon. Markets however continue to make lower tops and lower bottoms, from the medium term perspective, the structure of the market is still down. The rally is expected to continue in the short term. Investors should keep patience and hold on to the quality stocks.
Indian Stock Market Updates
Nifty 50 Daily Chart

Expectations for the week:

The bears have had the field day since the last few weeks but the selling climax had gone too far, all the indicators measuring bearishness were at extreme readings. PCR or the put call ratio hovered at 0.8 an indication of utter bearishness. It’s time therefore for a bounce back. Markets will focus on the earnings season as majority of the numbers will come out before the close of the month. The market is expected to trade with an upward bias with intermittent profit booking. Market is likely to crawl higher in the coming week. There will be lot of stock specific movements based on the quarterly scorecard of the company. Nifty ended the week flat with opening and closing more or less at same levels. Nifty50 closed at 7422.45

18th January, 2016

Fear keeps away rational thinking

The market opened the week with fear of a complete collapse in stock prices due to an international downward spiral across all equity markets.  Fundamentals or rational thinking are side stepped when fear grips the market. Epitome of greed lead to bull market tops and fears of panic lead to market bottoms. The market is witnessing fear psychosis of disproportionate intensity now which can be compared to disproportionate greed in 2014 when the landslide victory of a single largest party was celebrated. The pendulum swings from greed to fear and back to greed in a never ending succession. The reasons of fear may be different every time in the history, the PIGS crises and huge default lurking on the economies of Portuguese, Italy, Greece, Spain and break up Euro or for that matter this time around the concerns of Chinese Yuan devaluation and the slowdown in their economy, the underlying result is the same, it is this fear that drives away bulls from the markets when in fact it is the best time for them to be in. India is a much more resilient and robust economy with growth levers in place it just needs time to show the results. India is on a tipping point to deliver accelerated earnings growth through economic expansion which will eventually get reflected in the stock prices in the long run.

Events of the Week:

IIP numbers for the month of November 2015 were negative 3.2% vis-à-vis last year mainly due to different festive months, however increase in CPI to 5.6%, an increasing trend since last five consecutive months is a cause of concern which could delay the interest rate reduction till the numbers get muted. Government is in the final stages of getting Rafale deal done, one of the biggest in defense totaling Rs 60,000 Crs with adequate offset clauses to benefit Indian companies. Unitech ltd key employees  were send to jail for default in delivery of properties, potentially sending a clear message to the real estate sector that times of consumerism have arrived. This incident will go a long way in rebuilding the consumer confidence in the industry.

Technical Outlook:

Nifty 50 hit the key support areas of 7550 and breached it decisively by closing the week at 7438. The market is testing the powers of bulls and bears which can be visible by huge volatility   in the intraday movements. If the market stays below 7500 for some more time, it would then spell trouble for the bulls as the downward spiral will resume again. Shorting opportunities can be explored in sectors like metal, highly indebted and cyclical stocks with proper risk management. The market continued to make lower tops and lower bottoms. The double bottom of previous week has been most likely breached and the market is heading south in the medium term however a bounce may come in the short term. Investors should keep patience and hold on to the quality stocks.   
Indian Stock Market Updates
Nifty 50 Daily Chart

Expectations for the week:

The bears are ruling the market and it is expected to continue for some more time. Market will have increased amount of volatility, an indication that fear has completely gripped the market. In the short term market may have a bout of gap up and gap down openings. However, buying will emerge at lower levels as the valuations are attractive. The IT sector had a mixed draw of results, Infosys reported 8.5% growth while TCS delivered flat revenue growth, while Hindustan Unilever disappointed the street by posting less than 1% growth in top line & Indusind Bank reported 30% profit growth.  Market will be quick to reward the outperformer and whack the under former. Market will be stock specific and focus will shift to quarterly numbers beginning next week. Markets are expected to be highly volatile with downward bias. Nifty ended the week down by 2.15 % to close at 7437.80

8th January, 2016

Made in China, imported by India

The market opened the week deep in the red in response to the Chinese stock market locked at the lower circuit. Financial markets all over the world responded negatively in sync with the Chinese mayhem while Gold rose, due to investors looking for a safe heaven. Base metals and crude oil too had a free fall on fears of a hard landing in China. FIIs continued their negative stance on Indian equities by selling shares upwards of Rs 1000 Crs however after a long time DIIs fumbled for the first time this week by not making aggressive purchases, leading to free fall in the market. Such type of herd reactions are often short lived and the market soon starts on its own trajectory based on its inherent fundamentals. Each economy has its own good and bad phase, India however is on a much a stronger footing considering its scale and size of the economy which eventually will get reflected in the stock prices in the long run.

Events of the Week:

IRB Infra secured a Rs 10,000 Crs order to build a tunnel to connect Leh, the largest order coming from the new government kick starting the investment cycle in road sector. New launch prices of properties in Mumbai are 20% less than the previous year heralding an era of beginning of increased sales which will restart the growth in the sector. HDFC is in the process of raising Rs 5000 Crs for real estate ventures is a loud indicator that the real sector is back on the radar.

Technical Outlook:

Nifty 50 hit the resistance level of 8000 and reversed its up move in the short term. Due to overnight events, the index fell sharply to hit 7550 levels within a span of just 4 days. Such precipitous fall can break important support levels. However till the time market finds its levels, it can be safe to stay on the side lines. The market continued to make lower tops and lower bottoms and on the last count a double bottom. It needs to be seen whether the double bottom is breached decisively or holds good. If 7550 levels are broken the markets can go lower for some more time. Traders are advised to wait and watch where as investors should commit purchases.
Indian Stock Market Updates
Nifty 50 Daily Chart

Expectations for the week:

The sudden fall in the market may have shied away bulls from the market for the time being. The market was getting ready for a rally but the China syndrome suddenly created a roadblock. Market will move in a narrow range till the dust is settled. However, buying will emerge at lower levels as the valuations are attractive. Many of the large cap stocks are trading below their 5 year average P/E multiples. DIIs are flushed with funds as domestic savings are being channelized in the equity markets. Listing premium of 35% for Narayan Hrudayalaya is the testimony of vibrancy in the primary market. The market will start to discount the quarterly results starting the week with companies like Federal Bank, IndusInd Bank, TCS, Infy, Cyient, Mastek. Markets are expected to be range bound with some amount of buying happening at lower levels. Nifty ended the week down 4.08 by % to close at 7601.35

1st January, 2016

New Year will take markets to new highs

The market opened the week in positive territory and remained upbeat inspite of holiday moods. FIIs have started to buy with net positive inflows since last two weeks after many weeks of strong outflows. DIIs have remained aggressive buyers all throughout the year in 2015 having invested record $10.9billion against $3.8billion in the year 2014. FIIs have invested only $2.9billion in 2015 against whopping $16billion in 2014. Companies raised Rs 13,866 Crs through IPOs in 2015 against just Rs 1,468 Crs in 2014. AUM of Mutual funds crossed $63.82billion in 2015 against $51.6billion in 2014. Indian Rupee was the most resilient currency amongst the emerging market pack which yielded 2.57 % p.a. in dollar terms post interest, however other emerging market peers like Brazil and South African Rand have given negative 20% returns. Structurally the India story is still intact but because of global liquidity outflows the markets had delivered muted returns. The resilience of the Indian Rupee will hopefully bring back foreign liquidity in droves driving stock prices to higher orbits as India has the most reliable and stable, diversified economic expansion in the making.

Events of the Week:

EssarOil ltd finally completed the delisting process by accepting minority shareholders bids at Rs 262.80/- a premium of 80% over the floor price. Jaypee group finally puts its’ entire cement portfolio on the block for an estimated enterprise value of Rs 19,000/- Crs in the quest to reduce debt. Government has simplified environment clearance norms for the real estate sector giving them much needed reprieve from red tapism and increase the ease of doing the businesses.

Technical Outlook:

Nifty 50 has been rising continuously after hitting strong support levels of 7550. The bounce of 350 points within a matter of two weeks was swift and therefore it’s time for some corrections. There is strong resistance at 8000 levels and some amount of profit booking is expected at these levels. However breakout above 8000 would be a strong signal of the resumption of the uptrend at least for the medium term. Nifty 50 is expected to cross the key resistance levels soon. Traders are advised to take long positions on dips whereas investors should stay fully invested in quality stocks.
Indian Stock Market Updates
Nifty 50 Daily Chart

Expectations for the week:

The rise in front line stocks and indices continued this week as well. The bounce of the previous week testing important support levels has slowed down albeit indicating profit booking can set in for the coming week. The rollovers of the open positions were below average indicating lackluster movement for the initial part of the next week. The market will await cues from the international markets for its direction once the financial markets reopen from the Christmas holidays. The market will start building hopes on the budget and the reform agenda of the government for the year 2016. We hope this New Year our Parliament functions normally and pass laws on merit after constructive debates in the larger interest of the nation.  Markets are expected to be range bound with some amount of profit booking to happen though the under current is still strong. Nifty ended the week up by 1.27% to close at 7963.20 We wish all our esteemed readers huge financial prosperity in the coming New Year.

Stock Market Updates for December, 2015

24th December, 2015

Bulls are taking control of Market

The market opened the week strongly by shrugging off negative global cues from international markets. The smart comeback of the indices was aided by heavy short covering coupled with FIIs buying interest after a long time. FIIs have been net weekly buyers for the first time after a lag of many weeks is an indication that rally is likely to sustain and propel itself to new highs on the back of renewed foreign funds inflow. The government has taken proactive steps with regards to GST by awarding contract to Infosys to develop a central software platform. It is a loud indication that the policy will be implemented though the timing could be slightly delayed. New IPOs of Alkem and Dr Lal Path listed at a whopping 30% and 50% premium over their issued prices respectively signaling the beginning of vibrancy in the primary market, a pre cursor of an impending bull market.

Events of the Week:

Rcom and Aircel are likely to merge which will create a formidable 4th largest player in the Indian Telecom space marking the beginning of consolidation in the industry. Bankruptcy code which was passed in the Lok Sabha clearing the way for speedy recovery of defaulted loans in a time bound manner will notch India higher on the ranking for ease of doing businesses. Adani Enterprises finally got a conditional nod from the Australian government to set up port and rail links for high potential Carmichael mines thus ensuring shareholder value creation in the long term.

Technical Outlook:

Nifty 50 has made a solid bounce back arresting the down ward momentum. Nifty 50 levels of 7550 have acted as strong buying levels for the market. Double bottoms are high probability trend reversal patterns. There is every indication that the markets have made a bottom of major significance especially in the middle of persistent negative news flow. Breakout above 8000 would be the first confirmation of the resumption of the uptrend at least for the medium term. Nifty 50 is expected to rise with regular corrections. Traders are advised to take long positions on dips whereas investors should stay fully invested in quality stocks.

Indian Stock Market Updates

Nifty 50 Daily Chart

Expectations for the week:

The bounce of the previous week testing Nifty 50 levels of 7550 has further strengthened its momentum. Led by short covering and renewed buying by FIIs the markets have firmly found support at these levels. The negatives of FED increasing the interest rates, postponement of GST and paralysis of the functioning of the government has been priced in and discounted. The market is now looking forward for cues to move ahead, however as the year is heading toward December 31st people are in no moods to commit, markets are thus expected to be range bound for the last week of the calendar year. Nifty ended the week up by 1.49% to close at 7861. We wish all our esteemed readers a Merry Christmas.


18th December, 2015

Major bottom in place, the big rally begins!

The market opened the week with intense negative sentiments reacting to the overnight fall in international markets but quickly shrugged off the fears and started to rise in an indication that it is in no mood to fall any further. Later in week when the US FOMC raised the interest rates by 0.25%, the market bounced back with a vengeance, giving a loud and clear signal that the bulls are back in charge. The commentary of the FED that the US economy is robust in terms of all round progress on all economic parameters gave the added boost to the markets. FIIs are still sellers in the Indian market but selling this week has dramatically reduced though short bets in the derivative segment still remain high creating possibilities of a swift rise in the market in the short term. However on the legislative front the winter session too looks completely wasted in terms of opportunity to pass key bills. The market had however not built in those expectations and therefore any delay in passing of the bills will not cause a set back to the market.

Events of the Week:

US surprisingly doubled the visa cost to $4000 per applicant for H1-B and other categories of visas causing substantive cost hardships to the Indian IT industry. Maruti’s minority shareholders voted in favor of the resolution allowing its parent company to invest in wholly owned subsidiary to set up large manufacturing facilities in Gujarat, potentially creating fears that the parent will skim away all the incremental benefits that may otherwise accrue to Maruti ltd. Supreme Court banned the registration of diesel powered engines above specified levels of the private cars and brought in restrictions for entry of diesel vehicles in the city limits rattling the entire auto industry and in particular companies heavily into diesel powered vehicles. Many companies will now have to rework their strategies.

Technical Outlook:

Nifty 50 has made a smart and quick reversal after testing its previous levels of 7550 and formed a powerful double bottom formation which indicates reversal. The pattern of lower bottom formation has been paused for the first time potentially giving an indication that the market is changing its course from bear to bull. Nifty 50 bounce coming in the middle of negative news is all the more convincing that the bounce is for real and the bottom has been formed. Nifty 50 is expected to rise subject to intermittent pauses. Traders are advised to take long positions on dips whereas investors should stay fully invested in quality stocks for long term.

Indian Stock Market Updates

Expectations for the week:

Market testing previous bottoms and bouncing back inspite of negative global cues is in itself an indication that at least a bottom of major significance is in place. The correction or the so called bear market that started in March of this year could have bottomed and the year 2016 would be a beginning of new stock rally. Huge short interest in Nifty 50 futures would act as a spring board for a rally in the coming week coupled with no major news, market will sail its own path. Market was technically oversold and therefore a bounce is natural. The response to IPO of Narayana Hrudayalaya is expected to be lukewarm in view of expensive valuations but short term gains can be made on listing. The market is expected to be net positive for the week with bouts of profit booking at higher levels. Nifty ended the week up by 2.7% to close at 7761.95


11th December, 2015

Downward momentum still continues

The market opened the week with negative under tone largely due to ongoing pessimistic sentiments on the local and global financial markets. OPEC maintained its stance to abandon the oil output targets leading to a further drag in oil prices by 10% on concerns of oversupply. FIIs have been negative week after week which also weighed heavily on the sentiments of the street. FIIs have sold stocks worth Rs 1000 Crs during the week but DIIs have patiently lapped up the blue chip shares that are being sold by FIIs. IPOs of Dr Lal PathLabs and Alkem Laboratories got an overwhelming response and were oversubscribed by 33 and 44 times respectively, reinvigorating the lethargic new issues market. Vibrant primary IPO markets are an indication that the underlying mood is positive though the secondary market is just dragging its feet in a negative vicious circle waiting for a positive spark to re-start the upward journey. Reminding us the Newton’s law “every object in a state of uniform motion tends to remain in that state of motion unless an external force is applied to it”. The external force could be the GST bill, the FED meeting or the budget. Only time will tell.

Events of the Week:

Cabinet cleared the Real Estate Regulatory Bill 2015 giving far reaching rights and redressals to the consumers thus ending decades of Builders’ dominance thereby creating an equitable platform for orderly growth of the entire real estate sector in the country. Essar Oil came out with a delisting offer with a floor price of Rs.146 giving an opportunity to the minority shareholders to exit at the discovered price which could be in the vicinity of the current market price. GST panel finally suggested the rate of 18% for a more fair and equitable tax incidence rate, clearing an important hurdle for passage of the Bill in the Parliament.

Technical Outlook:

Nifty 50 kept the free fall momentum during the week. The downward pressure in the short term is expected to continue and Nifty 50 is expected to go all the way up to 7550 levels where it may slightly penetrate but will finally find a strong support. Nifty 50 is expected to remain weak with higher amount of volatility before it calms down, a signal that the bottom is being made. It is expected that the NIFTY 50 will trade with negative bias for the week, however the reaction to FED FOMC meeting outcome could change the course of the market mid week. Traders are advised to stay on the side lines prior to the announcement. Sometimes trend reversals happen on important events.

Indian Stock Market Updates

Expectations for the week:

Pessimism is reaching alarming levels; the downward momentum is being accentuated by inaction on the legislation front. Panic selling was visible in many of the blue chip heavy weights, a first sign that the bottom is nearer than before. Signs of capitulation are clearer than any time in the past 9 months. The urge to sell now and buy back later when the prices fall is far more intense than ever before, indicating that the formation of major bottom is in the making. In the short term, the market will go into wait and watch mode prior to the FED meeting which can be a major cause for trend reversal. FIIs which were hitherto in the sell mode can change their stance after the commentary of the FED Meeting, which could kick start the next wave of buying opportunity. The trading axiom “be reactive rather than be proactive” are the most appropriate wisdom words this week for safety of the traders. Let the FED decide what it wants to do, traders have ample time to react. Nifty ended the week down by 2.65% to close at 7609.50.


4th December, 2015

Lack of trigger dragging markets lower

The market opened the week with an anemic bullish undercurrent awaiting some fireworks from RBI but nothing transpired thereby shying away bulls. However the monetary policy at least ensured that the transmission of rate reduction should happen as soon as possible and gave deadline of 2017 to clean up all the books before the next wave of lending begins. Q2 GDP numbers were encouraging at 7.4%, with agriculture giving a positive surprise due to growth of 2.2% brushing aside weak monsoon woes. Agriculture as a sector looks promising as there was lot pessimism built into it. Four wheelers kept the scorching pace of growth while two wheelers fainted in their numbers. FIIs have been negative continuously since last few week and have sold stocks worth Rs 2500 Crs during this week, however DIIs have been net positive for the week. Green shoots have started to appear in the realty sector post the festive discounts where sales have increased by 10-15% in the budget category of housing inventory. The economy is marching ahead slowly but the mood in the stock market is still somber waiting for some positive trigger. 

Events of the Week:

SEBI has proposed in the investors’ interest that if the newly listed company does not utilize its IPO proceeds in the manner stated in the offer document, then investors have a right to exit with no loss on their shoulders. IFC is in the advanced stage to pick up 15% stake in IDBI Bank, paving the way for professional management in the public sector banking space. Bharti Airtel rattled the entire telecom industry by announcing its plan to invest Rs. 60,000/- Crs over a three year time span potentially indicating a tectonic shift in the industry dynamics and at the same time throwing questions in the minds of the investors of how the telecom sector can thrive with so much investment and intense competition, and Reliance Jio just waiting at the door steps.     

Technical Outlook:

Nifty 50 had mildly rebounded until the middle of the week as expected and then later plunged. The downward momentum in the short term and in the medium term will continue and Nifty 50 is expected to go all the way up to 7700 levels first and 7550 levels later wherein it is likely to find a strong support. Nifty 50 is expected to hover around these 250-300 points range for some time before finding any meaningful direction.  It is expected that the NIFTY 50 will test its first support area of 7700 during the week which after a brief pause will again test the lower levels of 7550. The market to remain choppy with a bearish bias for the week ahead.

Indian Stock Market Updates

Nifty 50 Daily Chart

Expectations for the week:

GST expectations are getting louder and louder with each passing day. The difference of opinion between the parties is converging and it is expected that the bill will be cleared in the winter session of the parliament. Market will go into wait and watch mode prior to the FED meeting outcome causing the market to oscillate in a narrow range. The FIIs are still on the bearish side of the market. OPEC’s decision will also have a bearing on the market in the short term. Commodity prices at record lows is a boon for a consumption economy like ours’ wherein lower commodity prices with lower inflation and beginning of interest rate reduction cycle by the RBI are all factors to sustain a massive bull market in the long term. However in the short term the markets are guided by the sentiments which currently don’t favor bulls. Nifty ended the week down by 2.02% to close at 7781.90.


Disclaimer* : The views in these articles are not to be construed as investment advice or recommendations. These reports are purely for information purposes. Investments in markets are subject to risk. SAMCO Securities shall not be held responsible for any liability that may arise with the use of this document. Readers may take professional advice before acting on this information.

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