Latest Indian Share Market Updates & News in May 2016

Nifty breakout confirms resumption of long term bull market

Market cheered at ITC’s Aashirvaad of positive results coming after a long time by opening higher, which later mid-week got a big boost from engineering conglomerate L&T which surprised the street with excellent results, sending out loud signals to believe that infra spending is gaining momentum as promised by the government. The results of major companies are out, at an aggregate level the frontlines have posted 5.5% growth in top lines and 9% growth in bottom lines after long time thus clearly indicating that growth has started to trickle in. Corporate results are the most objective way to judge two years of the new government in power and the result speaks for itself. L&T reported 19% growth in Q4 PAT, ITC reported 5.6% growth, GAIL reported 50.7% growth, ONGC 12% growth, Shree Cement 86.5% growth, GSPL 49% growth, Torrent pharma 174% growth, Bajaj Auto 29% growth, Bajaj Finance 36% growth while Bajaj Finserve reported 27% reduction in Q4 profits. Overall the results vindicate the resumption of the bull market.

Key events of the week:

SEBI mandates promoters of suspended companies to acquire shares of minority shareholders after independent valuation which will benefit shareholders of approximately 1200 companies or else if the promoters fail they will be exiled for 10 years from the capital market, this is a laudable step in the interest of minority shareholders. Options in commodities would be introduced soon, paving the way for complete bouquet of commodity derivative products on the bourses.

Technical Outlook:

Breakout above Nifty 8000 level indicates that the lower top and lower bottom sequence has been broken on the larger time frame, indicating the resumption of long term bull market. The double bottom and subsequent higher tops and higher bottoms in the shorter time frame has given the launching pad to the bulls to reverse the down trend of last year. According to Dow Theory, this breakout is the confirmation signal that market has reversed its bias from bear to bull market. A seven month old Reverse Head and Shoulder pattern also indicates that the reversal is for real. Traders should focus on long only trades or can consider writing puts.
Indian Stock Market Updates
Nifty 50 Daily Chart

Expectations for the week:

Sharp rally breaking the key barrier of NIFTY 8000 has most likely re-started the long term bull market in the Indian stock market. The rally this week was across sectors and stocks - power sector, cement stocks, PSU banks and infrastructure in particular which confirms the bull market vibrancy. The Dollar too has softened on hopes of delay by US FED on likely interest rate hikes. The short, medium and long term trend are all pointing higher levels for the market, although the market will not go up one way, but hence forth all corrections will be higher than the previous levels indicating that bulls are in complete control of the market. One should go with the flow - trade and invest long only. Investors should be overweight on equities and accumulate good quality shares while aggressive traders can go long at current prices but conservative traders can buy on dips. Nifty 50 ended the week up by 4.37% and closed at 8157.

Crude Oil Observation:

Crude Oil had roller coaster from fear of death of oil demand to situation of oil shortages in a matter of just 3 months. The fear and greed cycle quickly turns and this time around too, the reverse will happen, that is when every one is expecting the prices to go up, it will do the exact opposite & fall. The momentum in the prices indiacte that the upward journey is loosing strenght and is therefore ripe for sharp correction.
Indian Stock Market Updates

Mercury rising but Market Barometer falling

Market opened the week lower, discounting record losses reported by PSU banks but bounced a little mid week on bargaining hunting and again succumbed to profit booking by the close of the week. Rising dollar also unnerved equities and commodities markets globally. Dollar has given a powerful breakout above 67/- on fears of USFED can raise the interest rate as early as June however such repercussions could be serious for the equities market. The results were a mixed bag of positive and negative surprises. PNB reported Rs 5370 Crs Q4 loss,the biggest in the banking history, purportedly cleaning all the past messes. Syndicate Bank reported Q4 Loss of Rs 2160Crs, Bharat Forge Q4 PAT was down by 19%, on the other side Piramal Enterprises Q4 PAT increased by 88%, Motherson Sumi PAT up 18%, Edelweiss Q4 PAT up by 26%, Lupin Q4 PAT up 48%. PSU banks had worst numbers, but stock prices surprisingly stood resilient indicating that the worst is more or less discounted. These are ideal times of contra investing wherein Bankruptcy Code and Professionalization of the Bank Board would act as positive triggers for growth and return of profitability in the Banks in next few quarters. Tweaking of Mauritius treaty and now SEBI tightening P-Notes will usher in an era of higher integrity in the capital markets.

Key events of the week:

State Bank of India has finally initiated the merger process of six of its Associate Banks to consolidate/restructure the capital and reduce the cost of duplication. This will mark the beginning of restructuring of PSU Banks is India something similar to Nationalization process undertaken few decades ago. Idea Ltd has joined the tariff war by reducing the data tariff by 50% potentially straining the profitability further in the sector. State election result indicates that the Modi magic is still on and the government will wrestle the support of regional powers to sail through the key bills in the parliament.

Technical Outlook:

The market to continue its downward drift. During the week market had formed shooting star and Bearish Engulfing patterns both indicating short term bearish. Series of extremely short term lower tops are formed indicating continuation of the corrective pattern. Nifty50 needs time to correct the entire rise from 6825 to 7991 which unfolded itself in 36 trading days. The current correction has just lasted for 16 days. Counting 38% retracement of the entire rise the market is expected to find strong support at 7500 Nifty50levels wherein traders can initiate long positional trades.
Indian Stock Market Updates
Nifty 50 Daily Chart
Indian Stock Market Updates
13 th April Weekly Report

Expectations for the week:

Previous week we had mentioned "the undercurrent is expected to be weak for some more time" Indeed the weakness can now further accentuate in metals and commodity centric stocks as the Dollar rise will cause fall in the prices of primary commodities. Dollar has begun its upward march which can potentially cap the upward journey of the stocks. Parag Milk IPO debuted at 15% premium to the issue price which was quite handsome considering the fact that company had received only 1.8times oversubscription. Such kind of valuation if sustained for some more time can rerate the entire dairy industry wherein other listed peers will also catch up with the valuation. Investors shouldcontinue to accumulate good quality shares while traders wanting to go long may wait on the sidelines for some more time. Nifty 50 ended the week downby 0.84% and closed at7749.70.

Market jittery on rising Inflation

Market opened the week with an upbeat mood on passing of the Bankruptcy Bill in the Rajya Sabha but later succumb to nervousness on rising Inflation and lower IIP numbers. IIP for the month of March was abysmally low at 0.1% while inflation in April rose to 5.39% from 4.83% in March. However these are short term fluctuations but the economy’s secular trend is poised upwards on account of key legislations and policy initiatives taken by the government. The corporate scorecard kept the market on tender hooks. HUL disappointed by registering just 7% Q4 PAT rise, while P&G Q4 PAT rose by 12%. Grasim Ind reported 37% rise in Q4 PAT, Kotak Bank reported 32% rise, while Nestle India registered 19% fall in Q4 PAT numbers. In Mid cap space Aarti Industries reported 25% rise in PAT, while JK Papers, KEC International respectively reported 51% and 27% rise in Q4 PAT numbers. Indirect tax collection, independent of petroleum hikes, rose by 17% in April compared to last year, injecting the much needed confidence that growth is transpiring through higher production and consumption in the economy. Key legislations once implemented will further accelerate the growth in the economy.

Key events of the week:

The government tweaked the Mauritius treaty to stop abuse of tax treaty by create a level playing field amongst domestic and global players, effective from FY17, thus giving enough notice in advance which is so much fair from the government. The Insolvency and Bankruptcy Code 2015 has become the law and will re-establish the sanctity in the lending and borrowing mechanism in India a pre requisite for sustained growth. Supreme Court struck down TRAI order for call drop penalties on the telecom companies thus giving a necessary reprieve to the beleaguered sector.

Technical Outlook:

The market to continue its downward spiral with lower volumes. Stocks will continue to adjust towards their quarterly numbers. Series of extremely short term lower tops and lower bottoms are formed indicating continuation of the corrective pattern. At 38% retracement levels market is expected to find strong support at 7500 Nifty50 levels wherein traders can enter for long positional trades at those levels with stops below 7500 levels.
Indian Stock Market Updates
Nifty 50 Daily Chart

Expectations for the week:

The market is expected to continue in its corrective mode with intermittent rallies however the undercurrent is expected to be weak for some more time. The market is still adjusting to the corporate numbers. Thyrocare Ltd listed at 48% premium over its issue price. Such levels of listing premium indicate that primary market is gaining vibrancy which will lead to more number of IPO’s in the foreseeable future. Industrial commodities like copper, iron ore etc have started to fall again on worries of lack of demand, leading to corresponding fall in the stock prices on the domestic exchanges also. The market is in correction mode awaiting some definite triggers. Investors in the mean time should accumulate good quality shares while traders wanting to go long may wait on the sidelines for some more time or should enter long once the market breaks above 8000 levels. Nifty 50 ended the week up by 1.06% and closed at 7815.

Market dragging along without any strong clues from Corporate numbers

Market opened the week in a state of confusion and later succumbed to selling pressure by the close of the week. Negative clues from the global markets led bulls into profit taking mode resulting into loss of upward momentum. The corporate scorecard kept the market and analysts guessing the numbers while those companies which exceeded the expectations were welcomed by the bulls and those which disappointed, were threshed by the bears. HDFC reported 40% rise in Q4 PAT numbers, while Eicher Motors and Heromoto both surprisingly reported 71% increase in Q4 PAT. MCX reported fall in Q4 PAT by 45%, Godrej Property Q4 PAT decreased by 65%. Overall the results were mixed. Ujjivan IPO was subscribed 41times while Parag Milk IPO got muted response due to high valuation. IMF has forecasted that India will be the fasted growing large economy in the world and projected a growth of 7.5% for FY 17, but back home political slugfest in the Parliament may lead to delay in reforms and passing of the key growth oriented bills in the Rajya Sabha thus derailing growth for the country.

Key events of the week:

RBI is about to make an epoch making history by throwing open Universal Banking Licenses to Professionals and Finance companies for setting up Banks. This will potentially throw open the lucrative private sector banking space to more intense competition which hadn’t seen new entrants since a decade. JSW Energy has agreed to acquire 1000 MW of power plant from JSPL for an enterprise value of Rs 6500 Crs valuing capacity at Rs 6.5Crs per MW whereas Tata Power agreed to acquire renewable energy portfolio from Welspun for an enterprise value of Rs 9500Crs for acquiring 1152MW of wind and solar power plants valuing business at Rs 8.33 Crs per MW.

Technical Outlook:

The market to continue its downward slide with lower intensity and stocks will continue to adjust towards their quarterly numbers. The corrections of bull markets are lousy and often interrupted by rallies however the eventual culmination of bottoms generally coincides with bad news which creates a panic bottom. Market is expected to find strong support at 7500 Nifty50 levels wherein traders can enter for long positional trades at those levels with stops below 7500 levels.
Indian Stock Market Updates
Nifty 50 Daily Chart

Expectations for the week:

The market is expected to continue its corrective phase with intermittent rallies however the undercurrent will be weak for some more time. The market is in a state of flux adjusting to the corporate numbers which are in aggregate muted and below expectations. Steel imports have fallen by 15% in the month of April which will help domestic producers from Chinese dumping. Auto sales had rebounded for the April month an indication of ground level vibrancy still intact in the economy. After the corrective phase is over the market will resume its upward march vigorously but till that time investors need to keep patience and accumulate good quality shares while traders wanting to go long wait on the sidelines for some more time. Nifty 50 ended the week down by 1.49% and closed at 7733.