Latest Indian Share Market Updates & News in Sep 2016

No Fireworks expected before Diwali

NIFTY50 opened the week with a negative bias and tanked down during the week on fears of fireworks arriving before Diwali. Indian market had not witnessed any meaningful correction since last 6 months. The rise of 25% was almost uninterrupted without any significant correction. Often over heated market takes the clue from external events to jumpstart the correction. This time cross border skirmishes seem to be the reason for the bulls to release some pressure off the markets. Such a deep correction has shaken the hopes of the bulls and therefore rollover in the derivative segment too was lower than the previous three months average. Overheated signals were visible since last few weeks, the number of derivative stocks in the ban list were at near the all time high of 10 to 11 which was the case during 2007 market top. The IPO of ICICI Prudential, biggest since Coal India, came at the crucial time indicating inferences of a top in the intermediate level. Government too indicated its intent to en cash the SUTTI holdings worth Rs.60000/- Crs also emitting a signal that bullishness had reached epitome levels which is when markets can absorb such large cash outflows. The government would have not moved such initiatives at the first place if the Markets were not ready.

Key events of the week:

OPEC pledges to freeze crude oil production in a bid to boost the prices of crude oil which does not augur well for crude importing country like India. US Congress finally passes the bill into law to allow families of 9/11 victims to sue Saudi Arabia potentially having larger geopolitical ramifications across the world. The threat of Saudi Arabia government selling US assets now looks a reality, which can potentially rattle the financial world

Technical Outlook:

Nifty50 continues to remain in a corrective pattern with major support at 8500. This correction seems to be of a larger magnitude as 55 Days EMA has been decisively breached for the first time since the start of this bull market from March lows. The market has also encountered a double top formation of a larger significance indicating that the market will not go up in a hurry, has it will now try to test the nerves of the bulls. Statistically double tops have been valid formation for significant corrections in the market. Medium term positional traders should trail their long positions at 8500 Nifty50 levels and can buy on dips with stop placed at 8500 levels. Investors are advised to stay on the sidelines at the current juncture. Existing long positions should be trailed at 8500 Nifty50 level.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

NIFTY50 has decisively entered into a complex correction pattern. The street is expecting that the correction will get over soon, but the ugly habit of correction is otherwise, it takes longer than what people expect and eventually when the patience dries down, the market resumes its upward march. The valuations are at lofty levels and therefore it looks, market is in no hurry to take the side of bulls. Market did a crash test on all the stocks on Thursday. All those stocks which were down by 10% to 12% can be assumed in general to have lower fundamentals than the stocks which fell by 1% to 2% which can be considered to be resilient. Top losers on that day were Jet Airways, Reliance Communications which were down by 12% each, they had Samco Stock rating of CCC indicating poor financials while stocks like HDFC and Asian Paints having Samco Stock rating of AAA were down by just 2%. Higher the stock ratings better are the prospects of wealth creation in the long term. The new MPC (Monetary Policy Committee) of the RBI is expected to meet for the first time on October 4th to discuss monetary policy. The street is waiting in the near term for policy directives which will probably be the trigger for short term moves in the market. Investors should remain on the sidelines and wait for the market to correct before allocating fresh funds in the market. Nifty50 closed the week down by 2.50 % at 8611.15


Market to light up after a bout of correction

NIFTY50 opened the week with a narrow range but opened gap up mid week as US FED kept the interest rate unchanged. Though the indices are inching ahead slowly, there seems to be lot of vibrancy in the mid and small caps space. The market indeed reacted maturely to the Kashmir issue signalling the underlying strength and faith of the investors in the Indian Stock market. With markets nearing the high, government seems will be completing its target of divestments either through cash rich companies' buying back program or through sale of SUTTI stakes in the listed companies. The buyback in NMDC and MOIL shares are in progress. GST rates are being nudged around 16% to 18% eluding a consensus for now. Media headlines are once again turning super bullish'...India sole bright spot, India in expensive club..' etc all point to bullish consensus which should lead to some caution to the traders in the short term. The 10x response to ICICI Life Insurance IPO also points to huge liquidity sitting on the side lines. The success of the ICICI Life IPO will throw open the flood gates of IPOs leading to larger participation of the retail investors in the capital markets thereby increasing the depth and liquidity in the markets.

Key events of the week:

Vodafone to bring in Rs 47000/- Crs as FDI, the second largest in the history to restructure it's debts and prepared a war chest to bid for the spectrum auction beginning from 1st October. Entire telecom is on the shakeout post the Jio launch. Government appoints nominees for the Monetary Policy Committee (MPC) under the revised system for fixing the interest rate in the economy. The nominees are truly independent and persons of great calibre to steer the monetary policies in the best interest of the country & under no political influences. MPC will instil lot of faith in the banking and financial system of the country.

Technical Outlook:

Nifty50 continues to remain in a sideways consolidation zone with immediate resistance at 8950 on the upper side and support at 8650 on the lower side. Market had made a Doji pattern while rejoicing the US FED move however at the same time displaying lack of strength in going up further. This signalled a beginning of a correction in the medium term. On a larger time frame NIFTY50 has also made a double top suggesting that the market will not run away upwards in a hurry. The upper trend channel is acting as a very strong resistance where as lower channel is acting as a strong support for the Stock market. Market is likely to face resistance around 8950 levels on the upper side. Medium term positional traders should trail their long positions at 8500 Nifty50 levels and should do not commit fresh unless the highs are taken away decisively, but buy on dips, whereas Investors are advised to stay on the sidelines at the current juncture. Existing long positions should be trailed at 8500 Nifty50 level.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

NIFTY50 has entered into a state where corrections are just sideway moves of few days and then the upward move starts again. But the street is use to deep price corrections which however are elusive during mature bull markets. The volatility will reduce as there is no big event that the market is factoring into. The market will remain range bound awaiting the Kharif crops and the second quarterly results. However some of the sectors are being rerated which is what the bull market does and identifying those trends can lead to decent capital appreciation in those stocks. India is the largest producer of Milk and 80% of which is unorganised, this throws open lot of potential for the large listed players in the dairy segment having strong brand appeal. They may be re rated near to the category of consumer staples which are commanding double the valuation compared with the dairy segment. Investors should allocate a basket of five stocks in dairy segment for above average returns in the medium to long term. Nifty50 closed the week up by 0.59 % at 8831.55


Market to Dance in Rhyme with US FED

NIFTY50 opened the week sharply lower on fears of US Interest rate hikes being real this time around. The Indices again moved up when the fear faded away. The onset of high volatility is an indication that market is confused on the direction and is seeking external guidance for the next move. Inflation figures have started to cool down. The August numbers are at five month lows, at 5.05% raising the hopes for interest rate cuts during the RBI's meet under the new Chairman. The mouth watering rally since the beginning of this financial year has enticed even the government to offload the entire stake in SUUTI worth USD 10 billion which can potentially unsettle the liquidity in the market. Such liquidity sucking events eventually lead to onset of the bear markets. However compared to the liquidity that is flowing into the system currently, hopefully this should not worry the market in the medium.

Key events of the week:

First ever IPO from the Insurance company ICICI Prudential Life Insurance is set to raise Rs 6000/- Crs valuing the entire company at Rs 48000/- Crs. The valuation seems slightly on the higher side compared to other listed peers. Reliance Capital to allot one share of Reliance Home Finance Ltd. free of cost for every share held in Reliance Capital. The gesture should add value in the long term for the shareholders.

Technical Outlook:

Nifty50 has entered into a correction mode considering the high volatility and low volumes. The upper trend channel is acting as a very powerful resistance where as lower channel is equally acting as a strong support for the market. These simple tools are more than sufficient for proper understanding of the price action. Market likely to face resistance around 9100 level on the upper side. Positional traders should trail their long positions at 8500 Nifty50 levels and buy on dips with stops. Investors are advised to stay on the sidelines at the current levels. Existing long positions should be trailed at 8500 Nifty50 level.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

NIFTY50 has entered into a corrective sequence considering the high volatility, rising optimism and vibrant IPO's market. The extent of success of ICICI Life Insurance issue would show the extent of liquidity in the system and the willingness of the investors to invest in equities. All eyes are set next week on the outcome of US FED meeting. Ironically contrasting views are emanating from two of the world's highly liquid markets i.e. Gold and US Bond markets. The Gold prices are suggesting that US interest rate will not rise and therefore prices are consolidating for eventual rise. On the other hand US Treasury Bond Prices are falling sharply suggesting that interest rates are heading upwards. Such opposite views in the world's non-manipulated markets gives a trader a chance to profit from both buying calls and puts simultaneously in Nifty as Implied volatility is less, because this time, Stock market participants are tired of expecting a concrete outcome. It is only when the street doesn't expect does the unexpected happen. Nifty50 closed the week lower by 0.97 % at 8779.85


Nifty at Critical Levels

Nifty50 opened the week higher reacting to diminishing hopes of US interest rate hikes in the September meet on release of weaker employment data. ECB left the key rates unchanged giving further boost to liquidity driven rally. The sentiments are bullish everywhere although high valuation concerns are voiced across the street. FPIs have invested Rs 2121 Crs in the month of September while DIIs have had net redemptions to the extent of Rs 110 Crs, an indication that domestic investors are still not convinced about the India story. Surprisingly only 48 lakh active clients had traded last week on any single day which is too microscopic when seen from country's perspective. No wonder the depth in the Indian Stock market is so shallow that any concerted selling by FPIs results into massive price erosion of the stocks. The ongoing bull market hopefully should bring in more and more participants to make the markets more resilient to external shocks.

Key events of the week:

Yes Bank surprisingly deferred the USD 1 Billion QIP placement on grounds of volatility. Incidentally the stock price had gained by 111% in last 6 months its highest ever run rate in past 5 years while Nifty moved up by only 28%. There could be something more that is currently not visible. TCS issued mid review guidance stating that discretionary spending in IT globally is seeing a setback which will impact its revenues, potentially sending shivers in the entire IT space. Going forward investors will have to tone down growth expectations which will make the sector underperform for next two quarters. GST has become the Law of the land as President has given his assent.

Technical Outlook:

Nifty50 kept the momentum rolling throughout the week but met with some selling pressure by the close of the week. Open Interest in Nifty Futures is at yearly high and has increased by 32% in just two weeks. On the weekly time frames the index has made a double top and therefore some amount of profit booking is expected. A break below 8800 in Nifty50 levels would confirm the beginning of correction. Market to face resistance at 9100 Nifty50 level. Short term traders should trail their long positions at 8800 Nifty50 levels and buy on dips with stop at 8550 Nifty50 levels. Investors are advised to stay on the sidelines at the current levels. Existing long positions should be trailed at 8550 Nifty50 level.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

NIFTY50 has kept the upward momentum with just kissing distance away from the old high prices. Generally market takes a breather at or around the old highs in the form double top. The risk to rewards is not in favour of the bulls currently unless Nifty50 validly pierces its old highs of 9119. One of the most powerful macroeconomic indicators depicting the strength of the economy is the recruitments from top business school. This year top 10 companies have increased hiring by 50% from that of the last year, a CEO’s indicator of good times is ahead in the economy. Prime Minister’s Office has cleared a whopping 10 lakhs Crs of stalled projects in the roads, coal and power sector principally designed on the PPP model. These will usher in new era of all round spending and capital formation in the economy necessary to take the economic growth to 8% and above levels. Nifty50 closed the week higher by 0.65% at 8866.70

Market Resumes Its Upward Journey

NIFTY50 opened the week higher and continued its upward journey throughout the week. Inspite of US FED chairman’s commentary on likelihood of interest rate hike in its 21st September meeting, market shrugged off such fears and leaped ahead throughout the week in a sign of robust underlying bullish mood. Surprisingly VIX a measure of volatility index is at its lowest since December 2014 which suggests a very high bullish consensus amongst traders and investors. This is a slightly worrying factor. FIIs have cumulatively invested Rs 9800 Crs in the month of August. Passenger vehicle sales registered a scorching growth of 16% for the month of August which is the loudest signal on the health of the economy. This is one macroeconomic signal which is infallible in estimating the vibrancy in the economy. The bull case scenario based on passenger vehicle sales is the most reliable indicator of the Indian stock market since the last three decades and this time also the same looks true.

Key events of the week:

Government has initiated policy decision to release Infra companies’ 70% of the funds stuck in arbitration awards wherein the companies have won but the matters are in appeal. Such a business friendly move is unprecedented in the history of modern India. Reliance Jio’s attempt to disrupt the telecom industry by announcing drastic reduction in all category tariffs puts a question mark on viability of the telecom sector as a whole and Reliance in particular wherein they have already invested Rs 1.5 lakhs Crs. Govt has released the arrears as an early Diwali bonus for central government employees.

Technical Outlook:

Nifty50 broke out from a sideways consolidation range and started the upward journey. The next significant resistance is at 9000 Levels which creates scope for further upside in the medium term. The indicators after turning neutral have again started to rise, confirming that this rally will sustain till it faces upside resistance at 9000. Traders can enter long and buy on dips with stop at 8550 Nifty50 levels. Investors are advised to invest selectively at the current levels. Existing long positions should be trailed at 8550 Nifty50 levels.
Nifty Today
Nifty 50 Daily Chart

Expectations for the week:

NIFTY50 has pierced the 8700 levels with renewed velocity. The breakout from the sideways pattern signal further upside in the indices. However traders and investors will have to focus on stock specific movement rather than simply focusing on the Nifty. To substantiate the point, although Nifty50 index is 35% higher than 2008 levels but the stocks like Reliance Ind, ONGC, Bharti Airtel, Vedanta, Tata Steel, Bhel, Idea etc which all have a Samco Stock rating below BB are all still below their 2008 highs which points out the fact that each stock has to be analysed independently of Nifty50. However there are stocks like Eicher Motors, Bajaj Finance and Yes bank etc which are way beyond their respective 2008 highs and they all have Samco Stock Ratings above AA and AAA signifying the real excellence in their business models. Samco Stock Rating is proprietary research of Samco Securities ltd on almost all NSE listed stocks assigning ratings to stocks from AAA - AA to BBB - BB - CC and Penny depending on their greatness of the underlying business model. To watch Samco Stock Ratings login to http://star.samco.in/ The concluding message is very simple - investors and traders should focus on individual stocks and not get carried away by Index.  Nifty50 closed the week higher by 2.76% at 8809.65