Latest Indian Share Market Updates & News in Jun 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.

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.



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.

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.