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Events to watch this week

• US adds 156,000 jobs, wages up most since 2009
• Yuan volatility causes concern amid tight liquidity
• Global growth uptick persisted in December
• 2016 US auto sales set record

The Week ahead:

• The eurozone releases unemployment figures on Monday, 9 January
• The minutes of the December meeting of the ECB Governing Council are released on Thursday, 12 January
• China releases December trade figures on Friday, 13 January
• US retail sales figures for December are reported on Friday, 13 January

For the week,Global equities extended gains this week amid upbeat economic data and continued hopes for US fiscal stimulus. So far, US markets continue to hold just below record levels, with the 20,000 mark in the Dow Jones Industrial Average yet to be breached as of this writing, though the FTSE 100 set all-time highs this week. Ten-year US Treasury note yields fell to 2.40% from a pre-Christmas level of 2.53%. Oil prices firmed modestly, with West Texas Intermediate crude rising to $53.90 from $53.25 before the holidays. Global Brent rose to $56.90 from $55.80. The Chicago Board Options Exchange Volatility Index (VIX) was little changed at 11.45.

NIFTY- 8,243.80
CRUDE OIL-Rs 3,678barrel
GOLD-Rs 27,875/10 gram
Rs/$-Rs 67.96

MARKET ROUND UP

Key benchmark indices logged small gains in first week of calendar year 2017. Key indices edged lower in three out of five trading sessions during the week. Gains were triggered as buying of equities by domestic institutional investors outpaced selling by foreign portfolio investors. The S&P BSE Small and Mid-Cap indices outperformed the Sensex during the week.

In the week ended Friday, 6 January 2017, the Sensex rose 132.77 points or 0.5% to settle at 26,759.23. The Nifty 50 index rose 58 points or 0.71% to settle at 8,243.80.

The BSE Mid-Cap index gained 290.38 points or 2.41% to settle at 12,321.72. The BSE Small-Cap index gained 394.20 points or 3.27% to settle at 12,440.33. Both these indices outperformed the Sensex.

Macro Economic Front:

On the Economic Front,manufacturing PMI in India fell to 49.60 in December 2016 from 52.30 in November. A reading above 50 indicates economic expansion, while a reading below 50 points toward contraction. The reading pointed to the first contraction since December 2015, as output, new orders and new export orders fell amid cash shortages in the economy. Data was announced during trading hours on Monday, 2 January 2017.

Major Action &Announcement:

Wipro fell 0.86%. The company announced that its Digital TV Middleware solution has successfully enabled Hisense 4K TVs in Japan. Hisense Co. is a multinational white goods, brown goods and electronics manufacturer. The Wipro solution supports Hisense 4k TV product features ISDB-T/S Broadcast and HD-PVR to enable a premium viewing experience for customers. The announcement was made before market hours on Thursday, 5 January 2017.

According to reports, the new bill would require workers on the H-1B visa pay a minimum of $100,000, up from $60,000 currently. The bill also removes the Master's degree exemption to the cap on the number of visas available, as per reports. The bill comes after companies such as Disney and Southern California Edison have come under fire for outsourcing their IT operations to Indian companies.

Sun Pharmaceutical Industriesrose 1.78%. The company announced successful phase 3 confirmatory clinical trial results for Seciera (cyclosporine A, 0.09% ophthalmic solution), for the treatment of dry eye disease. Seciera is a patented, novel, proprietary nanomicellar formulation of cyclosporine A 0.09%. It is a clear, preservative-free, aqueous solution. Seciera is being developed by Ocular Technologies, a company recently acquired by Sun Pharma. Following this acquisition, Sun Pharma owns exclusive, worldwide rights to Secier and is developing it to commercialize for global markets including US, Europe, and Japan, as well as several emerging markets.

Tata Motors gained 5.61%. The company's British luxury unit Jaguar Land Rover (JLR) reported a 30% jump in retail sales in US in December 2016. JLR on Wednesday, 4 January 2017, announced its US retail sales for the month of December 2016. JLR's US sales rose 30% to 12,573 units in December 2016 over December 2015. Jaguar sales jumped 259% to 4,294 units in December 2016 over December 2015. Land Rover sales declined 2% to 8,279 units in December 2016 over December 2015.

Maruti Suzuki India rose 5.45%. The company said its total sales fell 1% to 1.17 lakh units in December 2016 over December 2015. The company announced the monthly sales volume on Sunday, 1 January 2017.

Mahindra & Mahindra (M&M) rose 3.49%. The company said its total tractor sales rose 9% to 14,047 units in December 2016 over December 2015. The company's total auto sales declined 4% to 36,363 units in December 2016 over December 2015. The company announced the monthly sales volume during market hours on Monday, 2 January 2017.

Global Front:

In Overseas Markets,China's Caixin Manufacturing Purchasing Managers' index (PMI) rose 51.9, compared to 50.9 in November on the back of increased demand. A reading above 50 represents expansion in a sector, whereas a reading below 50 represents contraction. The private manufacturing survey results come after figures at the weekend showed China's official PMI fell to 51.4 in December.

Activity in China's service sector expanded at a faster pace in December, a private gauge showed on Thursday, 5 January 2016, adding to recent signs of firmness in China's economy. The Caixin China services purchasing managers' index rose to 53.4 in December from 53.1 in November, Caixin Media Co. and research firm Markit said. A reading above 50 indicates a month-to-month expansion, while a reading below that points to a contraction.

Global Economic News:

December US payrolls solid but unspectacular
The United States added 156,000 new jobs in December while the unemployment rate edged up to 4.7%. A 2.9% annual rise in average hourly earnings was the most attention-grabbing aspect of Friday’s report. It was the largest yearly gain in wages since 2009. Rising wages, unless offset by gains in worker productivity, could negatively impact corporate earnings down the road. Wage increases may also keep the US Federal Reserve on guard for additional rate hikes in the months ahead. The US reported a wider trade deficit on Friday, with a fall in exports likely to trim economic growth estimates for the fourth quarter. The deficit expanded to $45.2 billion in November, a nine-month high, from $42.4 billion in October.

Global growth rebound continues
Solid purchasing managers’ surveys from December were reported early this week, suggesting that the uptick in global growth seen in recent months continued through year-end. The US reported its 91st consecutive month of manufacturing growth, with the Institute for Supply management index rising to 54.7 from 53.2. The United Kingdom’s manufacturing purchasing managers' index rose to 56.1, the highest in two and a half years, despite the looming specter of Article 50 being invoked later this year.

US auto sales set record
Global auto manufacturers sold a record-setting 17.55 million new cars and light trucks in the US in 2016, according to research firm Autodata. Sixty percent of the sales were classified as light trucks since SUVs fall into that category. In 2015, 17.48 million units were sold, 56% of them light trucks.

Australian trade returns to surplus
For the first time in nearly three years, Australia recorded a trade surplus in November. Rebounding commodity prices helped lift the trade account into the black, and the data suggest that the economy might avoid a technical recession after shrinking by 0.5% in Q3.

Unhappy holidays for many US retailers
Many US retailers struggled this holiday season as sales continued to migrate to the Internet. Two notable cases were Macy’s and Sears, traditional anchor tenants of US shopping malls, which each announced the closure of more than 100 stores. Additionally, Sears announced the sale of its iconic Craftsman tool brand to Stanley Black & Decker for $900 million.

GLOBAL CORPORATE NEWS

China forced to defend yuan amid outflows
It was a wild week for China’s yuan. On Thursday, overnight offshore deposit rates were ratcheted up to 80% in an attempt to squeeze out speculative short positions in the currency. That move set off a frantic short-covering rally, but the rally was largely reversed on Friday. In a further attempt to keep funds from leaving China, the government introduced additional capital controls effective 1 January and encouraged state-owned enterprises to sell foreign currencies. China is believed to be trying to stabilize the currency in advance of US president-elect Donald Trump’s inauguration on 20 January.

NEW 52-WEEK HIGH BSE (A):

NEW 52-WEEK LOWS BSE (A):

MAJOR WEEKLY GAINERS IN BSE A CATEGORY:

MAJOR WEEKLY LOSERS IN BSE A CATEGORY:

Eyes will be set on the certain US economic data releases are:

Monday (09 Jan)
Consumer Credit
Tuesday(10 Jan)
NFIB Small Business & Wholesale Trade

Wednesday(11 Jan)
MBA Mortgage Applications
Thursday(12 Jan)
Jobless Claims
Friday(13 Jan)
Retail Sales

Fundamental Pick of the week:

BUY Tata Motors Ltd For Target Rs. 600.00

TATAMOTORS is a well know Indian MNC and a flagship company of the Tata Group. After acquiring Jaguar Land Rover, it gained global recognition as well.Technically, it is a sound stock and is on recovery mode after retracing 50% as per Fibonacci levels of the rise 265-598 levels.

We firmly believe; it has potential to outperform its peers as well as broader markets. Hence, we advocate buying this stock in range 480-490 with 440 stop loss for 600 targets.

Recommendation

Buy Tata Motors Ltd  @ 480-490 Stoploss 440 Target 600 CMP 498

Indian Market Outlook:

Nifty ended marginally lower in the passing month, tracking mixed global cues and not so favorable domestic factors. After marginal bounce in the first week, it maintained its negative tone for most part of the month; however, recovery in final week of the calendar year significantly trimmed the losses. Finally, it settled at 8185.80; down by nearly half a percent.

It rebounded after retesting the crucial support mark of 7900, raising hope of sustainable recovery in January month.

TECHNICAL VIEW:

Technically, charts are in the favor of rebound but a lot depends upon the upcoming earning season. On the daily chart, the Nifty is trading above the 20- day moving average (DMA) and the 40-DMA, ie 8121 and 8195, respectively. The momentum indicator is positive on the daily chart.

On the hourly chart, the Nifty is trading between the 20-hour moving averages (HMA) and the 40-HMA, ie 8246 and 8208, respectively. The hourly momentum indicator has turned positive. The market breadth was negative, with 639 advances and 962 declines on the National Stock Exchange.

Conclusion:

Nifty has immediate hurdle at 8300 and requires participation from the banking space for further recovery. Meanwhile, stock specific movement, especially in the cash segment, is offering ample trading opportunities and we expect this trend to continue ahead also. So, traders should plan their positions keeping in mind the above factors.