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Global indices consolidate as US$ stabilizes with Federal Reserve on hold!!

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Major headlines:

·         Telecom subscriber base crossed 1.12 bn in NOV

·         Government awards 6.26 lakh people to promote digital payments

·         Railways add 2 new features to its mobile app

INDEX PERFORMANCE

 

 

Indices

Support

Resistanes

Sensex

8525

8660

Nifty

27565

27950

 

Indian Indices: Asian markets opened in the green as value buying emerged after the recent bout of profit booking. With base metals seeing resumption of demand commodities could be clear gainers this year. Oil prices saw an uptick while Gold consolidated around US$ 1200.


Nifty saw bouts of profit booking through the day but managed to close in the green as Pharma stocks saw a sharp rebound. With the Rupee showing extreme strength & results of corporates surprising on the upside any fall would be an opportunity to buy since the left out feeling looms large. For today expect Pharma& IT to see value buying while commodities & banks could see profit booking.


The BSE Sensex is currently trading at 28228.56, up by 1.95 points or 0.01% after trading in a range of 28180.11 and 28280.58. There were 20 stocks advancing against 10 stocks declining on the index.The broader indices were trading in green; the BSE Mid cap index surged 1.05%, while Small cap index was up by 0.80%.

The CNX Nifty is currently trading at 8734.90, up by 0.65 points or 0.01% after trading in a range of 8717.75 and 8748.25. There were 30 stocks advancing against 21 stocks declining on the index.

MARKET INDICATORS

·           

 

Group ATopGainers

 

 

Company

Price (Rs)

% chg

Suntv

681.60

23.51

RCOM

37.75

11.85

Unitech

5.36

10.74

Glenmark

954.00

5.07

Group ATopLosers

 

 

ICRA

4025.65

-2.34

ICICIBANK

280.35

-1.82

ACC

1411.30

-1.69

Exideind

206.55

-1.48

Market Statistics

 

 

 

BSE

NSE

Advances

808

770

Declines

1371

693

 

Technical view: Nifty will make an attempt till 8780-8800 which should act as resistance while 8600 will act as strong support. Bank Nifty sees resistance closer to 20283 while 19800 acts as strong support.


Market Sentiment:

The market breadth on BSE was negative in the ratio of 808:1371, while 153 scrips remained unchanged.

 

Trading ideas :PNB (Buy above Rs 143 for target of Rs 150, SL at Rs 139.5): Stock has seen decent accumulation in the past five weeks with higher top and higher bottom formation in place. After this consolidation, PNB has broken out from a rounding bottom formation giving a close above crucial resistance of Rs 141. Past few days have seen volume spurting with price action on higher side indicating strength in the current momentum. We advise to Buy PNB above Rs 143, stop loss at Rs 139.5 and Target of Rs 150.

Corporate Snippets:

Dishman Pharmaceuticals and Chemicals Ltdhas received an Establishment Inspection Report (EIR) from the US health regulator on closure of inspection of its Bavla facility in Gujarat

NLC is installing 500 MW solar power plants for Rs. 21.70 billion at various places in Tamil Nadu. It said the power plants are expected to generate 83 crore unit of power per annum.

IL&FS Engineering and Construction Company Ltdhas received Letter of Intent for two Rural Electrification Works under DeenDayalUpadhyay Gram JyotiYojana, and Integrated Power Development Works of West Bengal State Electricity Distribution Company Limited, Kolkata worth  Rs5.16bn.

Nifty Movers: The top gaining sectoral indices on the BSE were PSU up by 0.82%, Power up by 0.58%, Metal up by 0.40%, Bankex up by 0.35% and Oil & Gas was up by 0.33%, while Consumer Durables down by 0.71%, IT down by 0.53%, Auto down by 0.41% and Capital Goods was down by 0.04% were the few losing indices on BSE.

Top Sectoral& Stock Screening: The top gainers on Nifty were BhartiInfratel up by 2.62%, Bank of Baroda up by 2.45%, Indusind Bank up by 1.76%, Idea Cellular up by 1.55% and BHEL was up by 1.40%. On the flip side, ICICI Bank down by 1.43%, Infosys down by 1.27%, Eicher Motors down by 1.17%, Tata Motors - DVR down by 0.96% and Bosch was down by 0.83% were the top losers.

 

On the global front: On the global front, Asian markets were exhibiting mixed trend with Chinese market declining after resuming the trade from the long Lunar New Year holidays. China raised the interest rates in open-market operations. The US markets made a flat closing in last session after showing a choppy trade amid uncertainty about monthly jobs report as well as the impact of President Donald Trump's policies.

Global Signals: Asian markets were trading mixed; Jakarta Composite rose 4.75 points or 0.09% to 5,358.47, FTSE Bursa Malaysia KLCI increased 6.15 points or 0.37% to 1,679.63, Taiwan Weighted gained 8.61 points or 0.09% to 9,437.58 and Nikkei 225 was up by 39.27 points or 0.21% to 18,953.85.On the flip side, Hang Seng decreased 111.88 points or 0.48% to 23,072.64, Shanghai Composite declined 18.07 points or 0.57% to 3,141.10 and KOSPI Index decreased 2.93 points or 0.14% to 2,068.08.

 

Nifty to outperform global indices as budget spurs rural spending with tax cuts!!

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Major headlines:

·         DishmanPharma receives EIR report from USFDA for Bavla facility

·         Tata Motors registers 46,349 units sale in Jan 2017

·         Tax incentives to corporates to cost Rs 83.492 cr in FY 17

INDEX PERFORMANCE

 

 

Indices

Support

Resistanes

Sensex

8525

8660

Nifty

27565

27950

 

Indian Indices: Asian markets opened in the green ex Japan which continues to see profit booking as the yen strengthens against the US$.With the Federal Reserve leaving rates unchanged & indicating no hurry for any further action US stocks closed marginally higher.The Japanese yen continues to see strength against the greenback which indicates the rally in US$ may be short lived.


Nifty saw hardly any volatility with strong buying emerging after no change in LTCG was announced. This saw short covering & value buying lift indices sharply higher as the left out buying spurred stock prices higher.For today expect consolidation around 8700 levels with sector/stock out performance continuing.


The BSE Sensex is currently trading at 28167.28, up by 25.64 points or 0.09% after trading in a range of 28078.08 and 28194.00. There were 15 stocks advancing against 15 stocks declining on the index.The broader indices were trading in green; the BSE Mid cap index was up by 0.80%, while Small cap index was up by 0.63%.The CNX Nifty is currently trading at 8719.55, up by 3.15 points or 0.04% after trading in a range of 8692.05 and 8727.00. There were 23 stocks advancing against 28 stocks declining on the index.

 

MARKET INDICATORS

·           

 

Group ATopGainers

 

 

Company

Price (Rs)

% chg

Tatacomm

772.30

7.00

Godrejind

463.15

6.25

Adanient

96.25

5.95

Cummins

896.00

5.54

Group ATopLosers

 

 

Renuka

14.90

-3.87

Hindalco

192.45

-3.27

HDIL

64.10

-3.03

Unitech

4.86

-2.99

Market Statistics

 

 

 

BSE

NSE

Advances

808

770

Declines

1371

693

 

Technical view: Nifty will attempt 8780 which was the 10th October 2016 high & which will act as resistance, while 8537 will act as strong support.Bank Nifty will find resistance @ 20283 while 19800 will act as strong support.


Market Sentiment:

The market breadth on BSE was negative in the ratio of 808:1371, while 153 scrips remained unchanged.

 

Trading ideas :BHARATFIN (Buy above Rs 803 for target of Rs 845,SL at Rs 782): Stock has witnessed classic inverse head and shoulder pattern breakout on daily charts. Also, on hourly charts stock has given a breakout after consolidating in a range for quite some time. The breakout have been accompanied with stellar volumes, and the stock is likely to continue its prior up trend. Other momentum oscillators also indicate strength in the current upswing We advise to Buy BHARATFIN above Rs 803, stop loss at Rs 782 and Target of Rs 845.

Corporate Snippets:

Indian Oil Corporationis set to foray into retail, pipeline and refinery sectors in Bangladesh, Myanmar, Vietnam and Nepal.

Grasim industruessaid it is not making any "large investment" into Idea Cellular as part of the proposed merger between Idea and Vodafone.

SonaAutocomp Holding Limited has entered into an agreement with JTEKT Corporation, to sell its entire stake in Sona Koyo Steering SystemsLimited (SKSSL) for Rs4.19bn.

Nifty Movers: The top gainers on Nifty were Idea Cellular up by 3.63%, NTPC up by 2.49%, BhartiAirtel up by 2.25%, ITC up by 2.13% and Axis Bank up by 2.12%.

On the flip side, Hindalco down by 2.34%, Tata Motors down by 2.15%, Mahindra & Mahindra down by 2.10%, Bosch down by 1.66% and GAIL India down by 1.56% were the top losers.

Top Sectoral& Stock Screening:

The top gaining sectoral indices on the BSE were FMCG up by 1.03%, Oil & Gas up by 0.93%, PSU up by 0.71%, TECK up by 0.67% and IT up by 0.60%, while Metal down by 0.78%, Auto down by 0.64%, Capital Goods down by 0.35% and Realty down by 0.19% were the losing indices on BSE.

 

 

On the global front: On the global front, Asian shares were trading mostly in red, on tensions between Iran and the US, over a ballistic missile test by Tehran this week and even the tenor of President Donald Trump’s phone calls with world leaders. Japanese policymakers rejected Trump’s charges of currency manipulation on Wednesday. Prime Minister Shinzo Abe defended the Bank of Japan’s huge stimulus program and said it was to reflate the economy, and was not currency manipulation.

Global Signals:The Asian markets were trading mostly in red; Nikkei 225 decreased 159.88 points or 0.83% to 18,988.20, Hang Seng decreased 157.24 points or 0.67% to 23,161.15, Taiwan Weighted decreased 4.47 points or 0.05% to 9,443.48 and KOSPI Index decreased 3.19 points or 0.15% to 2,077.29.On the other hand, FTSE Bursa Malaysia KLCI increased 4.68 points or 0.28% to 1,676.22 and Jakarta Composite increased 15.09 points or 0.28% to 5,342.25.China market remains closed for the final day of Lunar New Year holidays that started on 27 January 2017.

 

Sensex, Nifty cheers up on Union Budget 2017

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Major headlines:

·         ArunJaitelypropses IT for education, more skill centres

·         Ananth Kumar calls Budget 2017-18 revolutionary

·         Moody’s analyst says India’s budget fiscally prudent reforms key

INDEX PERFORMANCE

 

 

Index

Close

% Chg

Sensex

27,141.64

1.76

Nifty

8,716.40

1.81

Indian Indices: Indian benchmarks gained momentum and were trading jubilantly in late afternoon session with frontline gauges surpassing their crucial levels of 28,000 (Sensex) and 8,650 (Nifty), as Finance Minister ArunJaitley made no reference to long-term capital gains tax on equities and also set a comfortable fiscal deficit target of 3.2% for the fiscal year 2017-18. Some support also came after FM unveiled a slew of measures in income tax, small housing and small and medium businesses, among others, in the Union Budget for 2017-18. Moreover, proposal to further liberaise FDI policy too uplifted the trading sentiments. On the sectoral front, banking sector stocks gained traction after Jaitley announced that the government will infuse another Rs 10,000 crore in public sector banks for re-capitalisation. Fertilisers stocks surged after FM committed to double farmer income in five years.

The BSE Sensex is currently closed at 28,141.64 up by 485.68 points or 1.76% after trading in a range of 27590.10 and 28157.41. There were 19 stocks advancing against 11 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 1.22%, while Small cap index was up by 1.13%.

The CNX Nifty is shut up at 8716.40, up by 155.10 points or 1.81% after trading in a range of 8537.50 and 8726.25. There were 34 stocks advancing against 17 stocks declining on the index.

MARKET INDICATORS

·           

 

Top Movers (Group A)

 

 

Company

Cmp

% chg

Gainers

 

 

Indiacem

161.85

11.20

Bhartfin

804.65

9.39

Manapuram

84.50

7.17

Edelweiss

118.05

7.12

Losers

 

 

Suzlon

16.25

-5.19

JetAirways

390.00

-3.13

Hathway

36.35

-2.94

TCS

2172.00

-2.60

Market Statistics

 

 

 

BSE

NSE

Advances

1397

648

Declines

1190

811

 

Crporate Front: The Finance Minister ArunJaitley during the Union Budget presentation in Parliament on Wednesday said that the Modi government took two tectonic policy initiatives - passage of GST Bill and demonetization. FM Jaitley also assured that the effects of demonetisation is not expected to spill over to the next year.


 

Market Sentiment:

The market breadth on BSE was positive in the ratio of 1397: 1190, while 159 scrips remained unchanged.

Macroeconomic front:

The Finance Minister ArunJaitley during the Union Budget presentation in Parliament on Wednesday said that 5 per cent Tax Deducted at Source (TDS) on insurance agents will be removed.The Minister also said that Life Insurance Corporation of India (LIC) will come up with 8 per cent of the guaranteed scheme for senior citizen of the country.

 

On the global front:

On the global front, European markets were trading in green after good factory data from Europe and Asia. Asian markets were trading in green. Back home, in scrip specific development, TCPL Packaging edged higher after the company commenced the commercial production from its Flexible Packaging Unit (FPU) situated at village Dapada, Silvassa in the Union Territory of Dadra and Nagar Haveli, with effect from February 01, 2017.


Commodity Updates:

Commodity Prices (MCX):

Commodity

Rs

% Chang

Gold

28941.00

-0.0

Silver

42190.00

0.67

Crude oil

3585.00

-0.8

Natural Gas

218.30

2.58

Alluminium

218.30

2.58

Copper

122.30

-0.33

Top Sectoral& Stock Screening:The top gaining sectoral indices on the BSE were Realty up by 3.40%, FMCG up by 2.30%, Auto up by 2.23%, Bankex up by 2.21% and Capital Goods up by 1.77%, while IT down by 1.76% and TECK down by 1.32% were the few losing indices on BSE.

Top Nifty Movers:The top gainers on Nifty were ICICI Bank up by 4.48%, ITC up by 3.84% and Bank of Baroda up by 3.84%, GAIL India up by 3.25% and HDFC up by 3.23%. On the flip side, HCL Tech down by 3.52%, Tech Mahindra down by 3.36%, Idea Cellular down by 2.82%, TCS down by 2.81% and AurobindoPharma down by 2.37% were the top losers.

 

Global Signals:

The Asian markets were trading mostly in green; KOSPI Index increased 12.91 points or 0.62% to 2,080.48, Jakarta Composite increased 37.23 points or 0.7% to 5,331.34 and Nikkei 225 increased 106.74 points or 0.56% to 19,148.08. On the flip side, Hang Seng decreased 85.87 points or 0.37% to 23,274.91.

All the European markets were trading in green; France’s CAC increased 43.85 points or 0.92% to 4,792.75, UK’s FTSE 100 increased 47.06 points or 0.66% to 7,146.21 and Germany’s DAX increased 115.87 points or 1% to 11,651.18.

 

 

Budget Highlights of 2017

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Here are the highlights of this year's budget: 

 

Income Tax rate cut to 5 pc for individuals having income between Rs 2.5 lakh to Rs 5 lakh 

 

10 pc surcharge on individual income above Rs 50 lakh and upto Rs 1 cr to make up for Rs 15,000 cr loss of due to cut in personal I-T rate 

 

15 pc surcharge on income above Rs 1 cr to continue 

 

Of 3.7 cr individuals who filed tax returns in 2015-16, 99 lakh showed income below exemption limit 

 

Direct tax collection not commensurate with income and expenditure pattern 

 

Revenue deficit reduced to 2.1 pc from 2.3 pc for 2016-17 

 

Govt pegs fiscal deficit target at 3.2 per cent for 2017-18 and 3 per cent for next year. 

 

Monetary policy to be expansionary in major economies 

 

More steps will be taken to benefit farmers and the weaker sections; budget being presented during weak global economy 

 

Pace of remonetisation has picked up;demonetisation effects will not spill over to next year 

 

Functional autonomy of the railways to be maintained 

 

Demonetisation will help in transfer of resources from tax evaders to government: 

 

Merger of Railways Budget with General Budget brings focus on a multi-modal approach for development of railways, highways and inland water transport 

 

Only transient impact on economy due to demonetisation; long term benefit include higher GDP growth and tax revenue 

 

GDP will be bigger, cleaner after demonetisation 

 

Effects of demonetisation not expected to spill over to the next year, says Finance Minister 

 

 

Effects of demonetisation not expected to spill over to the next year, says Finance Minister 

 

 

Govt took two tectonic policy initiatives - passage of GST Bill and demonetisation 

 

Demonetisation was a continuation of series of measures taken by govt in 2 yrs; it is bold and decisive measure 

 

We are seen as engine of global growth; IMF sees India to grow fastest in major economies 

 

36 pc increase in FDI flow; forex reserves at USD 361 billion in January enough to cover 12 months needs 

 

CAD declined from 1 pc last year to 0.3 pc in first half of current fiscal: FM 

 

 

India has emerged as bright spot in the world: FM 

 

 

Uncertainty around commodity prices especially oil to have impact on emerging economies: FM 

 

Double digit inflation has been controlled; sluggish growth replaced by high growth; war on blackmoney launched: FM 

 

We have moved from discretionary based administration to policy based administration: FM Jaitley 

 

Agricultural sector is expected to grow at 4.1 per cent this fiscal, says Jaitley 

 

Demonetisation was a bold and decisive strike in a series of measures to arrive at a new norm of bigger, cleaner and real GDP 

 

Committed to double farm income in 5 yrs 

 

Plan, non-plan classification of expenditure done away with in the Budget for 2017-18 to give a holistic picture 

 

Mini labs by qualified local entrepreneurs to be set up for soil testing in all 648 krishi vigyan kendras in the country 

 

Budget presentation advanced to help begin implementation of schemes before onset of monsoon 

 

We will continue the process of economic reform for the benfit of poor 

 

Spend more in rural areas, infra, poverty alleviation, while maintaining fiscal prudence as guiding principle of Budget 

 

Our agenda for next year is to transform, energise and clean India 

 

World Bank expects GDP growth rate at 7.6 pc in FY18 and 7.8 pc in FY19 

 

Allocation under MNREGA increased to 48,000 crore from Rs 38,500 crore. This is highest ever allocation 

 

Rs 9,000 cr higher allocation for payment of sugarcane arrears 

 

Target of agriculture credit fixed at Rs 10 lakh cr in 2017-18 

 

Tax administration honouring the honest is one of the 10 pillars of Budget 2017-18 

 

National Testing agency to conduct all examinations in higher education, freeing CBSE and other agencies 

 

133-km road per day constructred under Pradhan Mantri Gram Sadak Yojana as against 73-km in 2011-14 

 

Govt to set up dairy processing fund of Rs 8,000 crore over three years with initial corpus of Rs 2,000 crore 

 

1 cr households to be brought out of poverty under Antodya Scheme 

 

Participation of women in MNREGA increased to 55 pc from 45 pc in past 

 

Modern law on contract farming will be drafted and circulated to states 

 

Dedicated micro-irrigation fund to be created with a corpus of Rs 5000 crore 

 

Market reforms will be undertaken, states will be asked to denotify perishables from Essential Commodities Act 

 

Space technology to be used for monitoring MNREGA implementation 

 

Sanitation coverage in villages has increased from 42 pc in Oct 2016 to 60 pc, a rise of 18 pc, says FM 

 

We propose to provide safe drinking water to 28,000 arsenic and fluoride affected habitations 

 

To construct one crore houses by 2019 for homeless. PM Awas Yojana allocation raised from Rs 15,000 cr to Rs 23,000 cr 

 

100 pc electrification of villages to be completed by May 2018 

 

27,000 cr on to be spend on PMGSY; 1 cr houses to be completed by 2017-18 for houseless 

 

PM Kaushal Kendras will be extended to 600 districts; 100 international skill centres to be opened to help people get jobs abroad 

 

The allocation for rural agri and allied sector in 2017-18 is record Rs 1,81,223 crore 

 

In higher education, we will undertake reforms in UGC, give autonomy to colleges and institutions 

 

A system of annual learning outcome in schools to be introduced; innovation fund for secondary education to be set up 

 

Two new AIIMS to be set up Jharkhand and Gujarat 

 

New rules regarding medical devices will be devised to reduce their cost 

 

1.5 lakh health sub centres to be converted to Health Wellness Centres 

 

National Housing Bank will refinance indiviual loans worth Rs 20,000 crore in 2017-18 

 

Rs 500 cr allocated to set up Mahila Shakti Kendras; Allocation raised from Rs 1.56 lakh cr to Rs 1.84 lakh cr for women & child welfare. 

 

Capital and development expenditure pegged at Rs 1.31 lakh cr for railways in 2017-18 from Budget 

 

Allocation for SCs increased from Rs 38,833 cr to Rs 52,393 cr, a rise of 35 per cent 

 

35 pc increase in allocation for SC to Rs 52,393 cr 

 

For senior citizens, Aadhaar based health cards will be issued 

 

Model Shops and Establishment Bill to open up additional opportunities for employment of women 

 

Select airports in tier-II cities to be taken up for operations, development on PPP mode 

 

New metro rail policy to be unveiled 

 

Railway tariffs to be fixed on the basis of cost, social obligation and competition 

 

Service charge on e-tickets booked through IRCTC will be withdrawn 

 

Delhi and Jaipur to have solid waste management plants and five more to be set up later 

 

Government proposes Coach Mitra facility to redress grievances related to rail coaches 

 

500 stations will be differently abled by providing lifts and escalators 

 

Unmanned railway level crossings to be eliminated by 2020 

 

Railway line of 3,500 km will be commissioned in 2017-18 as against 2,800 km in 2016-17 

 

Total allocation for rural, agri and allied sectors for 2017-18 is a record Rs 1,87,223 cr, up 24 per cent from last year 

 

Rs 1 lakh cr corpus for railway safety fund over five years 

 

A scheme for senior citizens to ensure 8 per cent guaranteed returns 

 

Dedicated micro-irrigation fund to be set up by NABARD to achieve mission of Per Drop, More Crop 

 

Digi Gaon will be launched to promote tele-medicine and education 

 

Crude oil strategic reserves to be set up in Odisha and Rajasthan apart from 3 already constructed 

 

Coverage of Fasal Bima Yojana to go up from 30 pc of cropped area to 40 pc in 2017-18 and 50 per cent next year 

 

For transport sector, including railways, road and shipping, government provides Rs 2.41 lakh crore 

 

Allocation of Rs 10,000 cr for Bharat Net project for providing high-speed broadband in FY18 

 

Allocation for national highways stepped up to Rs 64,000 cr from Rs 57,676 cr 

 

Budget allocation for highways stepped up to Rs 64,000 crore in FY18 from Rs 57,676 crore 

 

Dispute resolution in infrastructure projects in PPP mode will be institutionalised 

 

Rs 2,74,114 crore allocated for defence expenditure, excluding pension; This includes Rs 86,000 crore for defence capital 

 

Govt to further liberalise FDI policy 

 

Over 90 per cent of FDI proposls are now processed through automatic route 

 

FIPB will be abolished 

 

Trade Infrastructure Export Scheme to be launched in 2017-18; total allocation for infra at record Rs 3.96 lakh cr 

 

Second phase of solar power development to be taken up with an aim of generating 20,000 MW 

 

After demonetisation on Nov 8 last year, deposit of between Rs 2 lakh and Rs 80 lakh made in 1.09 cr bank accounts at an average of Rs 5.03 lakh till Dec 30 

 

More funds beyond Rs 10,000 cr for recapitalisation of banks will be provided if needed 

 

The shares of railway CPSCs like IRCTC and IRFC to be listed on various stock exchanges 

 

We are largely a tax non-compliant society 

 

New ETF with diverse stocks will be launched in 2017-18 

 

Of 76 lakh individuals who reported income of over Rs 5 lakh, 56 lakh are salaried 

 

Integrated public sector oil major to be created to match global giants 

 

Govt will amend the Multi-state Cooperative Act to protect the poor and gullible investors 

 

Urgent need to protect poor from chit fund schemes, draft bill placed in public domain 

 

Computer emergency response team to be set for cyber security of financial sector 

 

Govt to introduce two new schemes to promote BHIM App - referal bonus for users and cash back for traders 

 

Govt doubles distribution target under Mudra Yojana to Rs 2.44 lakh crore for 2017-18 

 

Over Rs 80 lakh deposits in 1.48 lakh cr at an average of Rs 3.31 cr per account 

 

Customs duty on LNG halved to 2.5 pc 

 

FPI to be exempt from indirect transfer provisions 

 

Political parties can receive donations in cheque, electronic mode; electoral bonds to be issued by RBI 

 

Maximum amount of cash donation a political party can receive will be Rs 2000 from any one source as part of effort to clean political funding 

 

Capital expenditure stepped up by 25.4 pc in FY18 over previous year 

 

Total expenditure in FY18 at Rs 21.47 lakh cr 

 

Duty exempted on various POS machines and iris readers to encourage digital payments 

 

Rs 7,200 cr revenue loss due to reduction in tax on smaller companies 

 

Govt mulling introduction of legal changes to confiscate assets of offenders, including economic offenders, who flee the country 

 

Govt to set up a web-based interactive platform for defence pensioners 

 

Head post offices to issue passports 

 

Govt considering option to amend Negotiable Instruments Act to ensure that holders of dishonoured cheques get payment 

 

FRBM review committee has recommended 60 pc debt to GDP ratio; 0.5 pc of GDP deviation from stipulated fiscal deficit targets

 

Payment regulatory board to be set up in RBI to regulate electronic payments, replacing Board for Regulation and Supervision in Payments and Settlements System 

 

3 yr period for long-term capital gains tax on immovalble property reduced to 2 years; base year indexation shifted from 1.4.1981 to 1.4.2001 

 

A proposal to receive all government receipts beyond a certain threshold through e-modes under consideration 

Global markets consolidate with sentiment turning sour as profit booking deepens against Trump rhetoric uncertainty.

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Major headlines:

·         Property prices fell due to cash crunch

·         Retail inflation likely to be below 5% survey

·         Speaker to take call on Budget

INDEX PERFORMANCE


 

 

Indices

Support

Resistanes

Sensex

8525

8660

Nifty

27565

27950

 

Indian Indices: Asian markets opened flat as after 2 days of weakness some consolidation may keep indices range bound.Dow Jones had another triple digit selloff as sentiment turned weak with profit booking the theme for this week.Gold prices rallied as buying defensive assets aginst the back drop of risk off trade played out.


Nifty will see sharp volatility for today as we prepare for the Union Budget against the global back drop of uncertainty at its highest in recent months.The lingering rumour of change in LTCG(long term capital gain) tax will be key in deciding market trend in the very short term.For once India may be in the sweetest spot ever as it continues to be the best destination against the global back drop of uncertainty as the resumption of normalcy after the demonetization exercise will trigger huge local consumption led spending even as the Government prepares to unleash huge tax breaks to spur the economy.


The BSE Sensex is currently trading at 27662.21, up by 6.25 points or 0.02% after trading in a range of 27590.10 and 27725.16. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.15%, while Small cap index was up by 0.14%.

 

MARKET INDICATORS


·           

 

Group ATopGainers

 

 

Company

Price (Rs)

% chg

MMTC

65.40

4.14

Unitech

4.99

3.31

JPassociat

11.76

3.07

RDEL

62.30

3.06

Group ATopLosers

 

 

Idea

104.90

-4.81

CYIENT

444.00

-3.80

HCLTECH

780.00

-3.57

Jetairways

390.80

-2.93

Market Statistics

 

 

 

BSE

NSE

Advances

808

770

Declines

1371

693

 

Technical view: Nifty will find support around 8400 while 8720 will act as resistance. Bank nifty finds support @ 19021 which is the 100 DMA while 19800 will act as resistance.


Market Sentiment:

The market breadth on BSE was negative in the ratio of 808:1371, while 153 scrips remained unchanged.

 

Trading ideas :WOCKPHARMA Feb Fut (Sell below Rs 648 for Target of Rs 636 ,SL at Rs 654): Stock is moving in a downtrend after it took resistance at its 50-DMA and made a short term top around Rs 728 on 6th Jan 2016.

 Multiple attempts to close above the 50-DMA went futile, and the stock has further witnessed a fresh breakdown from a bearish pennant formation. This would lead to a phase of fresh down trend. We advise to SELL WOCKPHARMA Feb Fut below Rs 648, stop loss at Rs 654, and Target of Rs 636.

Corporate Snippets:

NatcoPharma said a US District Court has ruled in favour of its marketing partner Mylan by invalidating Israel-based Teva Pharmaceuticals’ patents related to multiple sclerosis drug Copaxone 40 mg/mL.

Rural Electrification Corp (REC)has signed loan agreement with Tamil Nadu's power generation and transmission utilities for financial assistance of Rs68.90bn.


Lokesh Machines Ltd has signed up with Taiwanese company Tongtai Machine & Tool Co Ltd to manufacture hi-speed vertical machining centre model EZ5 for the Indian market as well as for re-export from its new facility at Kallakal near Hyderabad.

Nifty Movers:   The top gainers on Nifty were Bank of Baroda up by 2.45%, Grasim Industries up by 2.16%, SBI up by 2.13%, Maruti Suzuki up by 1.56% and Tata Motors - DVR up by 1.19%.  On the flip side, Idea Cellular down by 4.45%, HCL Tech down by 3.72%, TCS down by 2.75%, AurobindoPharma down by 2.46% and Tech Mahindra down by 2.26% were the top losers.

Top Sectoral& Stock Screening: The top gaining sectoral indices on the BSE were Realty up by 1.03%, PSU up by 0.88%, Capital Goods up by 0.70%, Consumer Durables up by 0.63% and Oil & Gas up by 0.61%, while IT down by 2.24%, TECK down by 1.88%, Metal down by 0.31% and Power down by 0.18% were the losing indices on BSE.

 

 

On the global front: On the global front, Asian shares were trading mostly in green, taking cues from Chinese manufacturing data and as investors awaited the latest views from the Federal Reserve on monetary policy in its first review of the year. China’s official manufacturing Purchasing Managers' Index (PMI) continued in expansion in January, as the mainland economy shows signs of stabilizing, reaching 51.3, down slightly from 51.4 in December.

 

Global Signals: The Asian markets were trading mostly in green; KOSPI Index increased 10.9 points or 0.53% to 2,078.47, Jakarta Composite increased 30.63 points or 0.58% to 5,324.73 and Nikkei 225 increased 111.41 points or 0.59% to 19,152.75.On the other hand, Hang Seng decreased 165.55 points or 0.71% to 23,195.23.China, Malaysia and Taiwan stock exchange has been closed for the day on account of holiday.

 

Yes Bank Stock Research Report

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Company Overview:

 

 

YES BANK has been recognized amongst the Top and Fastest Growing Banks in various Indian Banking League Tables by prestigious media houses and Global Advisory Firms, and has received several national and international honours for our various Businesses including Corporate Investment Banking, Treasury, Transaction Banking, and Sustainable practices through Responsible Banking. YES BANK is steadily evolving as the Professionals’ Bank of India with the long term mission of “Building the Finest Quality Bank of the World in India” by 2020.

Key points

Strong NII, declining COFs help profits:

Yes Bank posted strong results for Q3FY2017 with a strong net interest income (NII) growth as well maintaining the asset quality. The NII for Q3FY2017 increased by 30.3% year on year (YoY) to Rs1,507.5crore on the back of strong advances and growth in the current and savings account (CASA). The net interest margin (NIM) expanded to 3.5% (up 10 basis points [BPS] from Q2FY2017). NIMs expansion was mainly due to the cost of funds (CoF) coming down due to softening interest rates and a rise in CASA deposits. While the treasury profit helped the Other income grow by 33.8% YoY to Rs998.3 crore, the bank is steadily building its fee income stream.

 Strong growth traction continues:

Yes Bank saw strong growth traction as its advances grew smartly by 38.7% YoY to Rs117,087 crore with Corporate Banking (which accounts for 68.9% of the advances) was up 42% YoY and Retail & Business banking business (including micro, small & medium enterprises [MSME]; forming 31.1% of the advances) was by 32% YoY. Deposits grew by 30.5% YoY to Rs132,375.8crore.

 

Performance highlights:.

The performance on CASA deposits front was robust (CASA ratio up 300BPS from Q2 to 33.3%), helped partly by the demonetisation drive but also indicating the improvement in retail segment. Both SA deposits (Rs29,348crore) and CA deposits (Rs14,778 crore) grew by 13% and 14% respectively since Q2FY2017. The management has indicated that amongst the small and medium enterprises (SME) clients, most are adopting the formal banking channel which is positive for the long term.

Brand Pillars:

The YES BANK brand is built around key Brand Pillars, which epitomize the growing strengths of the Bank. All communication and advertising has been created around these key brand pillars.

  • Growth: YES BANK's core promise is growth for its internal and external stakeholders symbolized in ‘Say YES to Growth!’
  • Trust: YES BANK's Promoters, Investors, and Top Management team are all of the highest pedigree with a demonstrated track record, thus inspiring and establishing a Trust Mark – ‘Say YES to Trust!’
  • Innovation & Technology: YES BANK is establishing the highest standards in customer service by adopting cutting-edge, innovative Technology. The only thing constant about technology used at YES BANK is Evolution.

Valuation :

 

Particulars

FY 15

FY 16

FY17E

Net Interest Income(cr)

3487.8

4566.7

5459.1

Net Profit

2005.4

2539.4

3133.2

EPS

48.7

60.4

74.5

EPS Growth (%)

8.57

23.98

23.38

PE (X)

21.8

17.6

14.2

Book Value

283.0

327.0

386.1

P/BV

3.7

3.2

2.7

RoE (%)

21.3

19.9

20.9

RoA (%)

1.6

1.7

1.8

 

Highlights the fact:

1)Yes Bank, by virtue of its size (and thereby avoiding large-ticket problem loans), and business mix has been able to perform better than peers.

2)Yes Bank has consciously decided to pursue balance sheet growth via customer assets (advances plus credit substitutes).

3)Yes Bank’s asset quality has been good with the gross non-performing advances (GNPA) stable at 0.85% and net non-performing advances (NNPA) also stable at 0.29% as compared with Q2 and credit cost at only 8BPS for Q3FY2017.

4)Faster deposit repricing compared to assets may actually help the bank to sustain or improve its margins in the near term.

5)The standard restructured advances were at Rs500 crore (42BPS of advances) having reduced from 0.67% (Rs568.3 crore) in Q3FY2016. There was no additional restructuring and no sale to asset reconstruction company during the quarter and the total security receipts (SRs) stood at Rs258 crore (22BPS of the advances) which make for a robust performance in the backdrop of rampant asset quality stress among its banking peers.

 

Technically View:

 

The stock is currently trading around 50 days and 100 days, moving average that is all about good positive moov& uptrend signal on daily base. RSI &MFI is present at 57 and 78respectivally, which is uptrend& showing the sideways formation for the short term period. The stock is currently in the upward formation and when it hold above 1400 then somemore upside is expecting with major support is found 1360 level. MACD line is greaterthen signal line 10 day Avg Volume is very high.

 

VALUATION & OUTLOOK:

 

Yes Bank is available at 2.9x FY2018 BV which is attractive given its comfortable capital position. It has a capital to risk (weighted) assets ratio (CRAR) of 16.9% (Tier-1 at 12.2%), attractive return on equity (RoE) of 20+% and return on asset (RoA) of 1.8+%.

 

It has successfully built an attractive franchise and a steadily growing retail business. We are positive on Yes Bank and maintain a “Buy” rating on the stock with an unchanged price target of Rs1,520.

 

We retain our Buy recommend in this script with a price target of Rs 1500-1520 in the very short term outlook. So Entry would be around 1360-1380as recomanded in this counter.

 

Yes Bank Stock Market Research Report

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Company Overview:

 

 

YES BANK has been recognized amongst the Top and Fastest Growing Banks in various Indian Banking League Tables by prestigious media houses and Global Advisory Firms, and has received several national and international honours for our various Businesses including Corporate Investment Banking, Treasury, Transaction Banking, and Sustainable practices through Responsible Banking. YES BANK is steadily evolving as the Professionals’ Bank of India with the long term mission of “Building the Finest Quality Bank of the World in India” by 2020.

Key points

Strong NII, declining COFs help profits:

Yes Bank posted strong results for Q3FY2017 with a strong net interest income (NII) growth as well maintaining the asset quality. The NII for Q3FY2017 increased by 30.3% year on year (YoY) to Rs1,507.5crore on the back of strong advances and growth in the current and savings account (CASA). The net interest margin (NIM) expanded to 3.5% (up 10 basis points [BPS] from Q2FY2017). NIMs expansion was mainly due to the cost of funds (CoF) coming down due to softening interest rates and a rise in CASA deposits. While the treasury profit helped the Other income grow by 33.8% YoY to Rs998.3 crore, the bank is steadily building its fee income stream.

 Strong growth traction continues:

Yes Bank saw strong growth traction as its advances grew smartly by 38.7% YoY to Rs117,087 crore with Corporate Banking (which accounts for 68.9% of the advances) was up 42% YoY and Retail & Business banking business (including micro, small & medium enterprises [MSME]; forming 31.1% of the advances) was by 32% YoY. Deposits grew by 30.5% YoY to Rs132,375.8crore.

 

Performance highlights:.

The performance on CASA deposits front was robust (CASA ratio up 300BPS from Q2 to 33.3%), helped partly by the demonetisation drive but also indicating the improvement in retail segment. Both SA deposits (Rs29,348crore) and CA deposits (Rs14,778 crore) grew by 13% and 14% respectively since Q2FY2017. The management has indicated that amongst the small and medium enterprises (SME) clients, most are adopting the formal banking channel which is positive for the long term.

Brand Pillars:

The YES BANK brand is built around key Brand Pillars, which epitomize the growing strengths of the Bank. All communication and advertising has been created around these key brand pillars.

  • Growth: YES BANK's core promise is growth for its internal and external stakeholders symbolized in ‘Say YES to Growth!’

  • Trust: YES BANK's Promoters, Investors, and Top Management team are all of the highest pedigree with a demonstrated track record, thus inspiring and establishing a Trust Mark – ‘Say YES to Trust!’
  • Innovation & Technology: YES BANK is establishing the highest standards in customer service by adopting cutting-edge, innovative Technology. The only thing constant about technology used at YES BANK is Evolution.

Valuation :

 

Particulars

FY 15

FY 16

FY17E

Net Interest Income(cr)

3487.8

4566.7

5459.1

Net Profit

2005.4

2539.4

3133.2

EPS

48.7

60.4

74.5

EPS Growth (%)

8.57

23.98

23.38

PE (X)

21.8

17.6

14.2

Book Value

283.0

327.0

386.1

P/BV

3.7

3.2

2.7

RoE (%)

21.3

19.9

20.9

RoA (%)

1.6

1.7

1.8

 

Highlights the fact:

1)Yes Bank, by virtue of its size (and thereby avoiding large-ticket problem loans), and business mix has been able to perform better than peers.

2)Yes Bank has consciously decided to pursue balance sheet growth via customer assets (advances plus credit substitutes).

3)Yes Bank’s asset quality has been good with the gross non-performing advances (GNPA) stable at 0.85% and net non-performing advances (NNPA) also stable at 0.29% as compared with Q2 and credit cost at only 8BPS for Q3FY2017.

4)Faster deposit repricing compared to assets may actually help the bank to sustain or improve its margins in the near term.

5)The standard restructured advances were at Rs500 crore (42BPS of advances) having reduced from 0.67% (Rs568.3 crore) in Q3FY2016. There was no additional restructuring and no sale to asset reconstruction company during the quarter and the total security receipts (SRs) stood at Rs258 crore (22BPS of the advances) which make for a robust performance in the backdrop of rampant asset quality stress among its banking peers.

 

Technically View:

 

The stock is currently trading around 50 days and 100 days, moving average that is all about good positive moov& uptrend signal on daily base. RSI &MFI is present at 57 and 78respectivally, which is uptrend& showing the sideways formation for the short term period. The stock is currently in the upward formation and when it hold above 1400 then somemore upside is expecting with major support is found 1360 level. MACD line is greaterthen signal line 10 day Avg Volume is very high.

 

VALUATION & OUTLOOK:

 

Yes Bank is available at 2.9x FY2018 BV which is attractive given its comfortable capital position. It has a capital to risk (weighted) assets ratio (CRAR) of 16.9% (Tier-1 at 12.2%), attractive return on equity (RoE) of 20+% and return on asset (RoA) of 1.8+%.

 

It has successfully built an attractive franchise and a steadily growing retail business. We are positive on Yes Bank and maintain a “Buy” rating on the stock with an unchanged price target of Rs1,520.

 

We retain our Buy recommend in this script with a price target of Rs 1500-1520 in the very short term outlook. So Entry would be around 1360-1380as recomanded in this counter.

 

Markets start week on cautious note with profit booking on the anvil.US$ sees weakness as Trump immigration policy causes debate on the same on wider forum!!

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Major headlines:

·         Oil extends declines on rising U.S output

·         NPPA slashes prices of 33 essential medicines

·         Demonetisation to bring revenue to Government

INDEX PERFORMANCE

 

 

Indices

Support

Resistanes

Sensex

8525

8645

Nifty

27519

27820

 

Indian Indices:With most Asian markets shut for holiday the cues from Australia & Japan were weak with both indices seeing cuts of nearly 1%. Globally after a superb start to the New Year profit booking seems the theme for this week as caution returns at higher levels.US$ weakened further while bond yields also softened as gold prices rallied indicating flight to safety after a heady run for equities.


Nifty will also see initial weakness after rising sharply last week as 8700 proves a resilient top. With the Union Budget to be announced on Wednesday expect range bound market movement for today &tomorrow with rumours on stock/sector driving prices. Foreign flows to stay positive with US$ weakness prompting value buying.


The BSE Sensex is currently trading at 27859.52, down by 22.94 points or 0.08% after trading in a range of 27813.32 and 27916.20. There were 12 stocks advancing against 18 stocks declining on the index. The broader indices were trading mixed; the BSE Mid cap index was up by 0.13%, while Small cap index was down by 0.08%.

The CNX Nifty is currently trading at 8627.50, down by 13.75 points or 0.16% after trading in a range of 8617.75 and 8650.15. There were 16 stocks advancing against 35 stocks declining on the index.


MARKET INDICATORS

·           

 

Group ATopGainers

 

 

Company

Price (Rs)

% chg

IDEA

83.55

7.39

RDEL

60.80

6.20

RCOM

32.45

5.02

Jindalstel

83.00

4.53

Group ATopLosers

 

 

Aplltd

560.50

-2.50

CUB

150.75

-2.43

Edelweiss

110.10

-2.35

MRF

52150.00

-2.10

Market Statistics

 

 

 

BSE

NSE

Advances

1084

1020

Declines

1146

470

 

Technical view: Nifty faces resistance around 8700-8720 while support emerges around 8580-8600.Bank Nifty finds resistance around 19800 while support emerges around 19400.

Market Sentiment:

The market breadth on BSE was negative in the ratio of 1084:1146, while 168 scrips remained unchanged.

 

Trading ideas :EICHERMOT (Buy above Rs 23600 for target of Rs 24300, SL at Rs 23250): Stock has given a breakout from downward sloping trendline on daily charts, which connected two previous lower highs. Also stock managed to successfully close above its 100-DMA placed at Rs 23070 levels. The breakout has been confirmed on lower time frame charts with spurt in volumes, which may augur well for the stock. We advise to Buy Eicher Motor above Rs 23600, stop loss at Rs 23250 and Target of Rs 24300.

Corporate SnippetsLokesh Machines Ltd is set to enter into an agreement with EMCO GmbH of Austria for the manufacture and sale of the latters machines in India and export supplies.

Jain Irrigation Systems will raise USD 200mn through issuance of dollar bonds—for the first time –to overseas investors, primarily to retire debt.

Aditya Birla Group plans to invest Rs 70 bn in the next two years in Andhra Pradesh on expanding existing businesses.

MarutiSuzki India Ltd said that it will increase prices of products ranging from Rs 1500 to Rs 8014 (ex-showroom, Delhi) across models.

Nifty Movers:  The top gainers on Nifty were Idea Cellular up by 7.05%, BhartiAirtel up by 4.49%, Grasim Industries up by 2.19%, Sun Pharma up by 1.60% and Dr. Reddy’s Lab up by 1.39%.

On the flip side, AurobindoPharma down by 2.14%, Tata Motors - DVR down by 1.77%, BhartiInfratel down by 1.27%, Hero MotoCorp down by 1.24% and Wipro down by 1.19% were the top losers.

Top Sectoral& Stock Screening: The top gaining sectoral indices on the BSE were Realty up by 1.00%, Capital Goods up by 0.38% and FMCG up by 0.22%, while IT down by 0.86%, Auto down by 0.65%, Consumer Durables down by 0.60%, Oil & Gas down by 0.40% and Bankex down by 0.32% were the losing indices on BSE.

The top gainers on the Sensex were BhartiAirtel up by 4.44%, Sun Pharma up by 1.74%, Dr. Reddy’s Lab up by 1.28%, Power Grid up by 0.71% and Lupin up by 0.70%.

 

 

 

On the global front: On the global front, Asian markets were exhibiting mixed trend at this point of time, though most of the Asian equity benchmarks are closed on Monday for Lunar New Year holidays. The US markets made a mixed closing in last session after a lack luster trade, as investors weighed disappointing fourth-quarter data on domestic economic growth and a spate of earnings.

 

Global Signals: The Asian markets were trading mixed; Nikkei 225 decreased 108.27 points or 0.56% to 19,359.13, while Jakarta Composite increased 3.98 points or 0.07% to 5,316.82.

Markets in China, Singapore, South Korea, Taiwan, Malaysia and Hong Kong were shut on Monday for the Lunar New Year holiday.

 

Global equity rally building momentum as bond yields rise with return of 'risk on' trade. Gold falls as oil consolidates after sharp pullback, Dow tops 20000, with Nikkei hitting new 52 week highs!!

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Major headlines:

·         Higher debt limits room to cut fiscal deficit.

·         NPPA slashes prices of 33 essential medicines

·         Infrastucture sector may get a rise in budget allocation

INDEX PERFORMANCE

 

 

Indices

Support

Resistanes

Sensex

8525

8645

Nifty

27519

27820

 

Indian Indices: Asian indices opened flat after 2 days of huge rallies as the Japanese index hit new 52 week highs along with the Dow Jones index which easily topped 20000. The return of 'risk on' trade is seeing rise in US bond yields which is seeing money chase equities for higher return. Gold prices after a sharp rally saw un winding as defensive assets took a back seat, while oil consolidated after seeing a sharp upswing in the last week.

Nifty will test fresh 3 month highs as the markets open after a holiday on Thursday. The sharp move in the Nifty on expiry days caught most by surprise with 'bears being squeezed' as the Nifty closed above 8600.With foreign investors also joining the bull market expect any decline to be used as buying opportunity as money on the sideline would re enter. For today expect the broader mid cap stocks to outperform as risk returns with investors betting on the mid & small cap stocks.

The BSE Sensex is currently trading at 27955.18, up by 247.04 points or 0.89% after trading in a range of 27759.48 and 27959.38. There were 21 stocks advancing against 9 stocks declining on the index. The broader indices were trading in green; the BSE Mid cap index was up by 1.12%, while Small cap index was up by 0.94%.

 

MARKET INDICATORS

·           

 

Group ATopGainers

 

 

Company

Price (Rs)

% chg

IIFL

307.00

8.44

Ashokaley

92.15

6.41

Welcorp

90.15

5.93

Unitech

4.85

6.36

Group ATopLosers

 

 

IDFC

57.00

-3.72

Prestige

78.60

-3.62

TRENT

247.20

-2.60

Edelweiss

112.75

-2.08

Market Statistics

 

 

 

BSE

NSE

Advances

1487

1020

Declines

730

470

 

Technical view: Nifty easily closed above most resistances with 8570 now being the strong support & resistance now coming close to 8720. Bank Nifty also finds support @19260 while resistance now comes @ 19740.


Market Sentiment:

The market breadth on BSE was positive in the ratio of 1487:730, while 149 scrips remained unchanged.

 

Trading ideas: BANKBARODA (Buy above Rs 162 for target of Rs 170, SL at Rs 158.5): Stock has been consolidating in a trading band of Rs 153-160 from past ten trading sessions. Multiple attempts to close above Rs 160 went futile, as stock reversed direction from Rs 159-160 zone. On daily charts, stock not only managed to give a close above the crucial resistance of Rs 160, but also closed above all the major averages (100-200 DMA). We advise to Buy BANKBARODA above Rs 162, stop loss at Rs 158.5 and Target of Rs 170.


Rollover Analysis: Nifty has posted highest gains (eoe) since March 2016. For this series, Nifty Bank index outperformed Nifty Index by 1.88% after the lackluster December series. Call option writers were among the biggest loser's as the call base kept on shifting from 8200 to 8600. A huge short covering in 8500CE strike helped Nifty regain 8600 level for the first time since 01 Nov.2016. Long gamma positions were the flavor of the series.

FII's continued its selling spree in the Cash segment for the January series while forming long positions in Index Futures. Long/Short ratio of Index Futures was above 2x for almost entire series. Rollovers of Nifty/Banknifty stood at 73%/61% (1.91cr/20 lakh shares) as against 69%/68% (1.68c/19 lakh shares) previous expiry. Rollover is higher for both Nifty and Banknifty in terms of Open Interest and with rising cost of carry, a positive start to the new series can be expected. On the options front, February series has maximum calls base at 9000 strike (3.6mn shares) and maximum put base at 8400 strike (3.2mn shares) indicating a trading range ceiling and floor at the start of the month.

Nifty Movers: The top gainers on Nifty were BHEL up by 3.90%, Bank of Baroda up by 3.03%, Axis Bank up by 2.98%, Eicher Motors up by 2.45% and ICICI Bank up by 2.40%.

On the flip side, Bosch down by 1.39%, Wipro down by 1.38%, Kotak Mahindra Bank down by 1.02%, Lupin down by 0.97% and Cipla down by 0.82% were the top losers.

Top Sectoral& Stock Screening: The top gaining sectoral indices on the BSE were Oil & Gas up by 1.39%, PSU up by 1.38%, Capital Goods up by 1.28%, Bankex up by 1.27% and Consumer Durables up by 1.20%, while there were no losers.

The top gainers on the Sensex were Axis Bank up by 2.87%, ICICI Bank up by 2.48%, HDFC up by 2.12%, GAIL India up by 2.11% and Maruti Suzuki up by 2.03%.

 

 

On the global front: On the global front, Asian shares were mostly trading in red, with several markets shut. Japan reported national core CPI rose 0.2% year-on-year in December, below the expected 0.3% pace. Back home, the NSE Nifty and BSE Sensex were trading above the psychological 8,650 and 27,900 levels respectively.

Global Signals: The Asian markets were trading mostly in red; Hang Seng decreased 13.39 points or 0.06% to 23,360.78, FTSE Bursa Malaysia KLCI decreased 5.86 points or 0.35% to 1,686.36 and Jakarta Composite decreased 5.17 points or 0.1% to 5,312.47.On the other hand, Nikkei 225 increased 30.04 points or 0.15% to 19,432.43.

South Korean markets are closed for holidays on Friday and Monday. Chinese markets are shut for the Lunar New Year holiday and will resume trade on Friday, February 3. Taiwan is also closed for Lunar New Year and will reopen on Thursday, February 2.

 

Union Budget 2017 expectation report by Sharetipsinfo.com

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The Union Budget is round the corner, Will this budget heal the demonetization pain?

 

The Finance Minister (FM) ArunJaitley will present NDA’s fourth budget under the current term on February 1, 2017. We believe that the government is likely to relax its FY2018E fiscal deficit target of 3% by 30-50 bps. This is likely to increase its spending ability by `50,000cr-`80,000cr in FY2018E. While this could move the focus away from fiscal discipline path, the possible gains of ~`1lakh crore by taxing the black money deposits would support the government’s spending in FY2018E. We are positive on the interest rate, as banks are expected to witness lower cost of funds by retaining the low cost deposits received through demonetization. Overall we expect 1) increase the tax slab limits to boost consumption, 2) Infrastructure spending to revive capex cycle, and 3) rural schemes to remove distress from rural economy.

Demonetization has created short term pain for the economy

The sudden liquidity crunch after the note ban has seen consumption sectors such as auto, real estate, building materials, consumer durables, etc., take a severe beating. The rural economy has also been adversely affected, as cash crisis led to a slowdown in the small scale businesses resulting in job losses. However, the economy is expecting remedial action through the budget.

One-off gain to maintain fiscal discipline

Over the last three years, government has achieved significant progress towards achieving Fiscal Responsibility and Budget Management (FRBM) Act target of 3%. The government is likely to step up rural infrastructure spending, which may partially pressurize its financials; however the one-off gain of ~`1 lakh crore by taxing the black money deposits supports these spends without pressurizing the financials. The collection of lower one-off taxes, however, may pose risk to FY2018E fiscal deficit.

Budget likely to take corrective measures

We believe that the government is likely to take corrective measures which would offer remedy to the demonetisation wounds. In our opinion, increase in individual income tax slab limits and reduction in corporate tax rate is expected to be the highlight of the budget in order to revive the consumption cycle. The PM’s address on December 30, 2016 announced various corrective measures to fix the rural economy, such as affordable housing, interest subvention, credit support for small businesses, etc. We expect more measures in the upcoming budget to remove distress from rural economy.

Before we try to gaze at what it might have in store, there are 4 points to be noted at the outset:

1) Deviating from the tradition of presenting the Union Budget on the last day of February, this year the Budget will be presented on the 1st day of February. This is primarily from the point of view of getting the Budget announcements implemented from the 'beginning' of the new fiscal instead of its implementation after a few months into the new fiscal.

2) Almost a century old practice of presenting a separate Railway Budget is getting done away with from this Budget onwards, as the Railway Budget presentation is getting merged with the Union Budget.

3) The Budget date is just a few days ahead of the elections in 5 states, which includes the politically crucial state of Uttar Pradesh. This holds significance considering the fact that the Union Budget (including the Railway Budget) is an event wherein various social and welfare schemes get announced, tax and fiscal incentives are given out, the influence of which on the voter community is debatable.

4) The Budget will be presented in the backdrop of the government's recent demonetization drive, which has had an impact of varying degrees across sectors and has perceptibly affected both – consumer and business sentiments.

Of the above, while points 1 & 2 are just facts-to-be-noted, point 3, though important, the decision w.r.t. the Budget presentation date is as yet pending with the Election Commission. However, whether the eventual date will have a significant bearing on the final contours of the Budget is difficult to guess, we believe it is point 4 that is of relevance this time around.

Reeling under the challenges posed by the government's demonetization drive, businesses and consumers at large have seemingly built high expectations from the Budget. These largely revolve around getting reliefs aimed at higher disposable income in the hands of the population and/or improving affordability, which in turn will aid in improving consumer sentiments and support business and economic growth.

Higher tax exemption limits, lower duties on products, higher tax incentives to encourage home buying, incentivize savings, etc. are among the usual desired expectations, which will help in meeting the objective of improving consumer and business sentiments to a certain extent. Apart from these, in wake of the short-term impact witnessed on the rural and the informal segments of the economy, the government is expected to enhance its focus here.

Notably, while the government has already expressed its intention to double farmers' income by the year 2022 and this Budget could spell few measures aimed at this, the MSME segment, which has also been adversely impacted on account of it representing a good part of the informal economy with cash being the primary exchange for transactions, is also expecting few relief measures to flow its way.

Focus on government's pet projects like Make in India, Digital India and Swachh Bharat are expected to continue to receive considerable attention considering the potential objectives that can be achieved through these. While the Make in India and Swachh Bharat campaigns can be a great source for job creation considering the investments that they could attract, strengthening of the Digital India campaign will support the government's initiative of transforming the Indian economy to a less-cash economy.

Efforts at job creation and lifting the rural economy, which has been particularly impacted post-demonetization, is likely to be amongst the key agendas, which could be addressed through greater focus on agriculture and micro small and medium enterprises (MSME) sectors. Increased emphasis on the latter will aid in the revival of investment cycle, which will boost credit demand in the system.

On the taxation front, the expectations of a largesse are high by consumers and the business community alike in wake of the pain inflicted by the recent demonetization drive and are looking up to the government to bring things back to normalcy in the economy. However, considering the fact that the government's financial gains in the near-term have been restricted from the demonetization drive, its capability to deliver an out-of-theordinary budget also gets curtailed.

Nonetheless, to alleviate the challenges recently cropped up in the economy, and also with an eye on the upcoming state elections, tweaking in personal income-tax slabs could be announced. Further, with the Finance Minister having indicated in his earlier Budget the reduction in corporate tax rate, the current Budget is an opportune time to initiate this move. The Service Tax, however, may be hiked to move towards greater alignment with the GST rates, which is expected to be implemented in 1HFY18.

On the Fiscal path front, while the government has targeted a fiscal deficit of 3% of GDP, considering that it will have to be the front-runner in pump-priming the economy in wake of lack of private investments, a 25-50 bps increase may be considered by the government.

In conclusion, we expect the Budget to keep its focus relatively higher on the rural economy and the various social and welfare measures related to healthcare, education, agriculture, etc. along with investments in infrastructure / housing. This is primarily in wake of the challenges thrown up by the demonetization drive and the upcoming state elections. But with the limited benefits yielded by the former to the government in the near-term, it is unlikely that the government has much scope to deliver a 'populist' budget. Nonetheless, in terms of sectors, we expect Infrastructure (Roads / Power / Cement), Housing (Banks / NBFCs), Agriculture (Agro-chemicals / Irrigation / Fertilisers / Tractors) and Rural (Consumer Durables / FMCG) to benefit from the budget announcements.

Lower interest rates + tax cuts = Consumption boost

We believe that government’s aim is to leave consumers with more disposable income and fuel the consumption demand. Therefore, increase in tax slabs and lowering corporate tax rate will play an important trigger, as interest rates have come off in a big way. With banks retaining low cost deposits, their cost of funds is expected to remain low for a long period, indicating that interest rates will also remain low going ahead. The low interest rate and low taxes would accelerate revival in consumption demand.

Budget conviction picks

With the focus on tax reduction we expect consumption sector is likely to be a direct beneficiary from this budget. We expect FMCG, consumer durables, automobile sectors to benefit going ahead. We prefer companies like ITC, P&G, Asian Granito, Mirza International, etc. in this space. We also expect the credit cycle to revive with lower interest rates and government’s impetus on housing sector and companies like Axis Bank, LIC Housing and DHFL to remain our best play. We like L&T, Powergrid and KEI industries in the infrastructure space. 

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