Latest Indian Share Market Updates & News in Dec 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

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.

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.

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.

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.