Latest Indian Share Market Updates & News in Mar 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.

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.

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.

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.