Latest Indian Share Market Updates & News in Jan 2017

Quarterly Results give a big surprise to the Street

Market began the week with a gap down reacting to Trump's 'Make in USA and hire in USA' rhetoric after the Inauguration, but the inherent strength of the market was so strong that such noise was shrugged off immediately and market bounced back quickly thus setting tone of bullish outlook for the whole week ahead. Unsurprisingly, in such bullish undertones the negative quarterly results were disregarded and stock prices defied all logic to inch higher. Ashok Leyland reported 13% decline in profits, HUL reported 10% decline, M&M Fin reported losses and Wipro reported muted growth of just 2% in quarterly numbers. Yet shrugging off all negatives, stock prices continued their upward march. This in itself is the biggest indicator of the bullish undercurrent in the market, and nothing is louder than this.

Events of the Week

CBI has arrested IDBI Bank's ex CEO and CFO in connection with bad loans to Kingfisher Airlines, potentially sending out clear message, that henceforth no more dishonesty will be tolerated in the banking system. The formulation of laws last year- Bankruptcy code 2016, Amendments in SARFAESI Act and professionalization of banking boards seems in totality a complete solution to the hitherto fragile banking sector. It looks as if it's the start of "Ache Din" in the PSU banking space.

Technical Outlook:

The market has turned wild and volatile with high consensus for bullishness. Short covering coupled with optimism has led to sharp rise in the indices. Indicators have turned into overbought zones calling for caution in the immediate term. The prices have touched the upper channel which will most likely attract profit booking. Traders should be cautious during times of high volatility and take a reactive view once the budget is over. Long positional trades should be trailed with stops below 8300, while short term traders may partially book profits and trail the balance below 8450. Traders should buy on dips while investors should hold on to their portfolios.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

The ongoing rally has gained momentum which is likely to become wild as an important event of budget will unfold next week. Many astute traders stay on the sidelines when volatility coupled with an important event converge at the same time. Almost all housing finance companies have reported double digit growth rates, which has exemplified the benefits of demonetization, and also for the first time given a ray of hope that the measures were in the interest of the economy. Yet FPIs haven't started big time investments in the Indian markets. Hopefully post budget, they will restart with vengeance as they have been left out since the markets are already up by 10% from the December lows. Budget day movements historically have been in line with the underlying current of the market which is buoyant this time around with lot of hopes and expectations. The undercurrent of the market is likely to remain strong irrespective of budget which may cause a single day wild fluctuation. Investors should keep on holding stocks in their portfolio. Nifty50 closed the week up by 3.50% at 8641.25

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

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

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