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.

Moody's upgrade has changed the Market Mood but it will be short lived
 
Global rating agency Moody's has changed the mood of the Indian market by upgrading after 14 long years. Market successfully overcame negative sentiments after touching a low 10,100 mark in Nifty. But this pull back will prove to be short lived as no fundamentals has changed overnight.
 
However, going forward, inflation could prove to be a show stopper if October WPI data are of any indication. WPI based inflation was at six month high at 3.59% for the month of October. The continuous rise in inflation since last three four months will dash the hopes of rate cut and will be a cause of concern ahead of MPC meet in December.
 
Primary market continues to show sign of fatigue as the IPOs listed during the week continues to trade below the issue price. Khadim India and New India Assurance were down 7 to 15% from their issue price respectively while HDFC Life managed to have a strong listing based on its strong management pedigree.
 
Events of the Week:
 
Up gradation of India's rating by Moody's certainly brought cheers to investors but we are still in the middle of the pyramid. While upgrade does not necessarily mean an invitation to make fresh equity investments but is an indication that the policies are in the right direction. China's substantial reduction of rating from Aa3 to A1 did not lead to fall in the markets, but on the contrary the stock market rose by 20% since the downgrade. Therefore the current upgrade should not be read into too much, but is merely a short term sentiment booster.
 
Technical Outlook:
 
After a sharp fall the market bounced backed this week on the back of news event of Moody's upgrade. Such bounces are often sold into and market resumes it corrective stance. We believe the market will continue to correct albeit with some bounces. The weekly chart still signals weakness ahead. Sell on rise for the trader and positional long trades should be avoided unless the stock has already corrected sharply. But in general traders should be cautious on trading on the long side.
 
Nifty Today
 
Nifty 50 Weekly Chart
Expectations for the Week
 
With results season coming to an end, Indian markets will keenly look towards global events for further triggers. Whether the rising prices of crude oil has paused or the bigger uptick is coming. The metals have entered into a correction zone, they can still move higher, all these will impact the headline inflation not only in India but across the world which will lead to increase in interest rates. How much of these and how quickly it happens is anybody's guess but it will happen given the loose monetary policies followed by the central bankers, money has now started to flow into commodities creating bigger risks for financial markets. The Fed's December meet would most likely increase the interest rate by 0.25%. Given the macro headwinds investors should currently not pump in fresh funds in the market and selectively book profits. Market closed the week at 10283.6 down by 0.37%.

Market Mood slowly turning from greed to fear
 
The Week opened with some good results by Godrej Properties, Indian Bank and Titan. Titan Stock rocketed by 16% post declaration of 67% rise in Q2 profits. However mid week warning letter by USFDA to Lupin for its two plant not only affected Lupin Stock price which went into a free fall decline of 20% but this affected the entire pharma sector as well- 'One Bad Apple Spoils the whole Bunch', wherein Nifty Pharma saw a decline of 6%, even the positive Q2 numbers of Aurobindo Pharma whose Net Profit Increased by 29% saw a decline in its share price by 6.75 % from the start of the week.
 
5% block in Bharti Airtel was sold by Qater Foundation Endowment Fund valued at Rs 9600/- Crs, however surprisingly the demand was three times, which indicates the willingness to invest in the telecom sector even at high price though it is still mired in intense competition. The investors were insurance and long only funds. Individual investors should consider investing in the sector once it corrects.
 
Events of the Week:
 
Crude oil is boiling at 57$ a barrel. Power consolidation in Saudi Arabia and internal family issues has come in the forefront which has the potential to disrupt the peace in the Middle East. If something like Mahabharata is repeated, then it will have far reaching consequences for the global peace. Indian Rupee weakened this week further; it declined 0.8%, its biggest weekly drop since 22 September. It could be the beginning of a larger trend.
 
Technical Outlook:
 
Market has witnessed cracks in its uptrend. On Weekly chart, engulfing bear pattern is formed which is very reliable and powerful. All previous engulfing bear patterns in the weekly charts have resulted in decent time and price correction. This time looks no different. Sell on rise should be strategy for the trader. For positional long trades, profits can be booked or in the alternate trailing stop loss below 10250 in Nifty50 should be placed. Traders should be cautious on trading on the long side.
 
Nifty Today
 
Nifty 50 Weekly Chart
Expectations for the Week
 
Yet another IPO which didn't impress the Stock Market was Mahindra Logistics which made a debut with virtually no listing gains. The stock was issued at 67 times earning which is high compared to any standards given that the company management expects to grow turnover by 20%. Such high valuation empirically coincides with the bull market tops. New India Assurance ltd will list in the coming week, which too is expected to list below issue price. This can cause major negative sentiment in the market leading to further correction of the market. The way IPOs are valued in the recent times, it is a sign of bull market top at least in the intermediate term.
 
GST Council which met for its 23rd Meeting has unanimously decided that only sin goods (approx. 50 Items which earlier were 227) be taxed at highest bracket of 28%, most of the goods will see a decline in GST rates, this will definitely boost near term sentiments in the market. But in the medium term the market will remain under pressure due to high valuation. Long term investors should not allocate fresh funds but can selectively book profits. Market closed the week at 10321.75 down by 1.25%.

IPO market has turned red hot, Stock market may cool down
Market has kept up the momentum rapidly discounting the earnings seasons. Strangely market responded to the results of Bharti Airtel, stock price rose to decade high inspite of profits declining by 77% for the quarter, capex of Rs 25000/- Crs was also announced which will further add to the debt of the otherwise debt heavy company consisting of Rs 1,00,000/- Lakh Crs. Telecom was the only laggard sector which was languishing but suddenly sprang up into action, the other laggards were the PSU banks, which in the previous week too rocketed by 40%. Are these hidden signals for a top? Coal India received notice from Odisha Govt to pay Rs 20000/- Crs for violation of mining rules in pursuant to Supreme Court decision, however such an event was ignored by the market, which otherwise in normal circumstances would have led to massive fall in the stock prices. The anatomy of such market movements now resembles a euphoric state of market.
Automobile numbers were mixed but disappointing. Two wheeler giants HeroMoto and Bajaj Auto reported flat numbers but TVS reported 20% growth rate. Maruti numbers were more or less flat, this is a sign of big worry, whether the economy at ground level is slowing down? however one more quarterly result will give enough clarity. But sadly the October passenger vehicle sales growth were very discouraging at 4%. Whether a larger slow down is creeping in the auto sector, one has to be very careful because this is one direct barometer working at the ground level to measure the health of the economy. Apollo Tyres have reported decline in profits by 45% suggesting that all is not well with the sector as Govt. had earlier imposed anti dumping duty on large tyres inspite of all that the profits have declined. Entire auto industry now requires a wait and watch and investors should not commit fresh funds at these levels.
Events of the Week:
India's ranking jumped from 130 to 100 on ease of doing business parameters which is a big vindication for the present government that reforms are in the right direction. The journey of economic progress of India will get bigger and better. Intas Pharmaceutical an India company is nearing to buy a US based generic company Mallinckrodt for appro value at $1.5 billion. This reaffirms that US market is still lucrative and valuation seems to be bottoming, which makes a primary case for investment in the Indian listed companies
Technical Outlook:
Wider market is showing signs of fatigue. Small cap and Mid Cap indexes are forming doji stars and shooting stars on daily chart. Although Nifty50 and Bank Nifty does not show that kind of fatigueness but are trading near the risky zone as described in the chart below. The best strategy would be to keep the trailing stop loss below 10300 in Nifty50 and ride the up move unless a long shooting star emerges which would be an indication to book profits and go for winter vacation. Traders should ride the wave with tight trailing stops.
Nifty Today
Nifty 50 Weekly Chart
Expectations for the Week
The results season is in the middle of completion. Mixed numbers have come out. No clear trend is emerging to state forcefully that all is well with the economy. Some pockets are impacted but some are still unclear what would be the impact of GST/Demonetization. Micro Finance companies are still reporting no growth and reporting losses, how the future will shape up for them only time will make it clear. IPOs are being lined up as if there is no tomorrow. Such massive army of IPOs lined up to suck the liquidity from the secondary market does not portend well for the bulls. Aggressive purchases should be done only if the market falls heavily to sudden knee jerk reactions otherwise stay away. NIFTY50 closed the week at 10452.50 up by 1.25%.