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Events to watch this week
- Trump sworn in as US president
- China’s Xi: No one will win a trade war
- IMF sees fast US growth
- Draghi: ECB rates to stay low for an extended period
The Week ahead:
- Global flash purchasing managers’ indices are released
on Tuesday, 24 January
- US existing home sales data are reported on Tuesday, 24
- The UK Q4 gross domestic product is released on
Thursday, 26 January
- The US Q4 GDP is released on Friday, 27 January
For the week,Global
equities were little changed on the week as markets awaited clearer policy
signals from the incoming US administration. Steady US 10-year-note yields of
2.42% greeted the new president, virtually the same yield that prevailed when
Barack Obama was first sworn in eight years ago. West Texas Intermediate crude
fell slightly from a week ago, to $52.60 per barrel from $53, while global
Brent crude dropped to $55.40 from $56. Volatility, as measured by the Chicago
Board Options Exchange Volatility Index (VIX), rose to 12.4 from 11.20 a week
CRUDE OIL-Rs 3,642barrel
GOLD-Rs 28,612 gram
Indian equity benchmark indices the S&P BSE Sensex and the Nifty 50
index closed the week ended Friday, 20 January 2017 on sour note. The trading
for the week was lacklustre during four trading sessions from Monday, 16
January to Thursday, 19 January 2017, with a range-bound trading, amid mixed
global cues. Albeit, a noticeable slide on the bourses on Friday, 20 January
2017, pulled key indices lower.
The slide on the last trading session of the week is attributable to
the caution ahead of US President-elect Donald Trump's inauguration later in
the global day on Friday, 20 January 2017. Markets across the globe await a
clear cut direction from Trump on US' economic policies.
The Sensex lost 203.56 points or 0.74% to settle at 27,034.50. The
Nifty declined 51 points or 0.6% to settle at 8,349.35.
In the broader market, the BSE Mid-Cap index shed 0.43%, with the
decline in this index lower than the Sensex's decline in percentage terms. The
BSE Small-Cap index bucked the market trend by advancing 0.56% during the week.
Macro Economic Front:
On the Economic Front,data showed during
market hours on Monday, 16 January 2017 that inflation based on wholesale price
index (WPI) rose 3.39% in December 2016 from 3.15% in November 2016. Another data showed after market hours on Friday, 13 January 2017
that India's trade deficit declined 9.9% to $10.37 billion in December 2016
over December 2015.
The International Monetary Fund (IMF) on Monday, 16 January 2017, cut
India's economic growth estimate for 2016-17 to 6.6% from its earlier
projection of 7.6% due to the impact of the government's move to scrap some
high value currency notes in early November.
Major Action &Announcement:
TCS rose 1.57%. The company announced a partnership with Aurus, Inc., a
global leader in innovative payments technology, to deliver payment solutions
for retailers using TCS OmniStore, a first of its kind unified store commerce
platform. The announcement was made after market hours on Monday, 16 January
Infosys declined 2.7%. The company announced its internal carbon price
at $10.5 per ton of CO2e, at an event organized by the Carbon Pricing
Leadership Coalition (CPLC) in Zurich. A significant milestone for Infosys, the
price will be applicable for a period of two years and will represent the cost
of decarbonizing 1 ton of CO2e. The announcement was made after market hours on
Monday, 16 January 2017.
State Bank of India (SBI) advanced 0.04%. The bank said that it
concluded the issue of $500 million fixed rate senior unsecured notes having a
maturity of 5 years at a coupon of 3.25% payable semi-annually. The
announcement was made after market hours on Tuesday, 17 January 2017.
Maruti Suzuki India fell 0.51%. The company launched the much awaited
premium urban compact vehicle for the millennials, IGNIS. The announcement was
made after market hours on Friday, 13 January 2017.
Mahindra & Mahindra (M&M) lost 2.1%. The company announced its
foray into Turkey, through the acquisition of
HisarlarMakinaSanayiveTicaretAnonimSirketi (Hisarlar), a farm equipment company
based in Turkey. The announcement was made during market hours on Friday, 20
Coal India lost 3.51%. The board of directors of Central Coalfields, a
subsidiary of Coal India approved revision of coking coal prices on 14 January
2017. The increase in price is done by subsuming the washery recovery charge
(WRC) which was being charged separately in the case of non-linked washery
grade coking coal keeping in view the observation of ADRM. The announcement was
made on Saturday, 14 January 2017.
NTPC fell 0.32%. The company said that first unit of 250 megawatts (MW)
of Nabinagar Thermal Power Project of 1000 MW capacity of Bhartiya Rail Bijlee
Company, BRBCL-a subsidiary of NTPC was declared on commercial operation from
15 January 2017. The announcement was made during market hours on Monday, 16
Tata Steel advanced 1.84%. CARE Ratings downgraded the credit ratings
of the company's unsecured non-convertible debentures (NCDs), long term
unsecured rupee loan and unsecured subordinated perpetual securities by 1 notch
citing uncertainties relating to the disposal/restructuring of Tata Steel UK
business. The announcement was made at the fag end of market hours on Thursday,
19 January 2017.
In Overseas Markets,UK Prime Minister
Theresa May in a speech on Tuesday, 17 January 2017, indicated Britain will
press for a firm exit from the European Union. May said she'll put the terms of
the country's exits from the EU to a parliamentary vote. Setting out a vision
that could determine Britain's future for generations and the shape of the EU
itself, May answered criticism that she has been coy about her strategy with a
12-point plan for what has been dubbed a hard Brexit.
Among economic data in US, industrial output accelerated last month at
its strongest pace in two years. The housing-market index from the National
Association of Homebuilders showed that builder sentiment slipped in January
after notching its highest reading of the business cycle in December. Despite
the drop, the January number was the second-highest reading of the cycle.
The European Central Bank held rates and its bond-buying program steady
at its Thursday's (19 January 2017) meeting. The bank's President Mario Draghi
said the governing body stood ready to intervene further if conditions
Global Economic News:
Trump vows to restore America’s promise
In his inaugural address, President Donald Trump pledged to transfer
power from Washington, D.C., back to the American people. He called for defending
the US’s borders while rebuilding its infrastructure. Every decision, whether
on trade, taxes or immigration, will be made to benefit American workers and
families, he said. While he expects other nations to put their interests first
as well, he said the United States will reinforce old alliances and build new
China’s Xi warns on trade war risks
In the first appearance by a Chinese leader at the World Economic Forum
in Davos, Switzerland, President Xi Jinping defended globalization. He cautioned
other countries against pursuing protectionist policies, adding that no one
will emerge as a winner in a trade war. On the domestic front, Xi said that the
economy has entered a new normal, driven by household consumption. He affirmed
a 6.7% 2016 economic growth target, in the middle of the government’s 6.5%–7%
range, but the slowest since 1990.
IMF ups US growth forecast
The US economy will grow 2.3% this year and 2.5% in 2018, according to
freshly revised International Monetary Fund forecasts. The IMF raised its
forecast by 0.1% for 2017 and 0.4% for 2018. The global growth outlook remained
steady from October estimates of 3.4% this year and 3.6% in 2018. The fund
estimates that the global economy expanded 3.1% in 2016.
Banks heading for the Brexit?
This week, several banks announced plans to move staff out of London in
the wake of Brexit, including HSBC and UBS. Meanwhile, Germany’s Handelsblatt reported that Goldman Sachs may relocate half of its London staff of
6,500. Some jobs will move to New York, while approximately 1,000 could move to
Frankfurt, the paper reported. UK prime minister Theresa May this week outlined
her plan to put Brexit to a vote in Parliament before triggering Article 50.
She said she expects the United Kingdom to leave both the European Union’s
single market and its customs union.
GLOBAL CORPORATE NEWS
Draghi says rates to stay very low even after halting
Interest rates will stay low or head even lower for an extended period,
European Central Bank president Mario Draghi said on Thursday, after the
Governing Council left its monetary policy unchanged. Draghi looked past a
recent uptick in European inflation measures and said the ECB is ready to
increase the size of its quantitative easing program, if needed. The Bank of
Canada too held policy steady this week, though Governor Stephen Poloz
maintained that a rate cut is an option if the Canadian economy takes a hit
from more protectionist US policies. Poloz’s dovish tone sent the Canadian
dollar lower. US Federal Reserve chair Janet Yellen said Thursday that the Fed
is close to its goals and that she expects to hike rates "a few times”
this year. Futures markets have just over two 25-basis-point hikes priced in at
present. Yellen added that allowing the economy to run persistently hot would
be risky and unwise.
52-WEEK HIGH BSE (A):
52-WEEK LOWS BSE (A):
GAINERS IN BSE A CATEGORY:
LOSERS IN BSE A CATEGORY:
Eyes will be set on the
certain US economic data releases are:
Monday (23 Jan)
Existing Home Sales
MBA Mortagage Applications
Claims& New Home Sales
Pick of the week:
Accumulate PTC India Financial Services Ltd For Target Rs.50.00
* PTC India Financial Services (PFS) is a non-banking
finance company promoted by PTC India (60% stake). PFS has been granted the
status of Infrastructure Finance Company by RBI. It offers wide range of debt
and equity linked financing products meeting the financing needs of power
projects and is exclusively devoted to power sector.
* PFS, initially, had the largest exposure to thermal power
projects at ~60% till FY12, primarily sourced as a reference from parent
company PTC India. The company is now able to garner business on its own with
focus on small and medium renewable power projects, which constitute 44% of the
overall loan book and garner better yields.
* NIMs (~6%), ROE (~16-20%) , ROAs(~3%) have remained
stable for the company . Asset quality has deteriorated over FY15 with G/ NNPAs
of 3.4/2.3% in FY16 due to slip up in a couple of accounts.
Accumulate PTC India Financial Services Ltd @ 41-42 Stoploss 38
Target 50 CMP 41.60
Indian Market Outlook:
The Indian markets posted modest gains in the last session despite
choppy trade, as investors remained optimistic of upbeat corporate earnings
results. Today, the start is likely to be soft to cautious on mostly
unsupportive global cues. However, markets may see recovery in latter trade and
shore up with India emerging as the 'sweet spot' along with neighbour China to
rev up the global economic growth at the World Economic Forum (WEF) Annual meet
in Davos. Along with China, India was also applauded as a major driving force
for world growth with leaders and economists emphasising the need for increased
regional cooperation. IT and pharma stocks will be under pressure ahead of
Donald Trump's swearing-in as US President today. There will be caution on
talks of pricing pressure on pharma, and new H1B norms for IT companies. The
aviation stocks will be in action, as more than three dozen airports across
India, which today do not handle a single flight, may get connected under the
government’s UDAN (UdeDeshKaAamNaagrik) scheme. Bids by interested airlines
have been received to connect 43 such new airports for 190 routes. There will
be lots of individual result reactions too, to keep the markets buzzing for the
Nifty not able to go anywhere through the week and is stuck
in a small range between Gann levels 8373-8465. Imp levels to watch today are
8397-8460 either side rally will happen after a long consolidation during the
week. Lower supports on breach of 8397 is 8373-8348-8301. Over all the bullish
trend we got from the lows of 7893 had fizzled out and to regain strength Nifty
has to close the week ab 8465. There is no major support form the Nifty
components except Banking and Financials which also now looks tired.
BankNifty support 19072 and hurdle 19220. Either side will see a rally.
Yesterday saw weakness and was choppy with in a range and trying to get
Nifty index traded sideways for most past of the passing
week but steep sell-off on Friday i.e. 20th January made it settle at the
weekly lowest levels. The sell off was due to Donald Trump’s inauguration as
the 45th US President. Market participants were seen taking a cautious stance
ahead of the same. Overall markets bias remains in favor of the bulls; hence,
dips from the current levels can be utilized to accumulate good quality stocks
for medium to long-term. For the up coming week, we expect Nifty index to trade
in range 8250-8500. Auto and Bankex top our preferred list of sectoral pivots.