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Events to watch this week
- Federal funds
target rate raised 25 basis points
- Trump picks
Tillerson for secretary of state
currencies continue fall versus US dollar
small-business owners' optimism rises
The Week ahead:
- Eurozone wage
figures are released on Monday, 19 December
trade data and unemployment figures are released on Monday, 19 December
- The Bank of
Japan meets to decide monetary policy on Tuesday, 20 December
consumer confidence figures are released on Wednesday, 21 December
- The United
States announces estimates for Q3 GDP on Thursday, 22 December
the week,Global equities resumed their upward march
after digesting the Federal Open Market Committee's decision this week to raise
the key federal funds target rate by 25 basis points to a range of 0.50% to
0.75%. While the move was expected, markets needed a breather to factor in the
FOMC's statement that it would target three rate hikes in 2017, which was more
than expected. The S&P 500 Index increased 0.25% over the five days through
Thursday and is up 10.83% on a year-to-date basis. The STOXX Europe 600 index
is up about 6% over the past month, while the Nikkei 225 is up 8% over the same
period and 17.45% over the past three months. The 10-year US Treasury bond
yield continued to climb upwards after the FOMC announcement, reaching as high
as 2.58% this week, its highest level since September 2014.
CRUDE OIL-Rs 3,519barrel
GOLD-Rs 27,150/10 gram
MARKET ROUND UP
Market declined last week, tracking weakness in other global stocks
after the US Federal Reserve (US Fed) hiked interest rate on Wednesday, 14
December 2016. US Fed also hinted at a more aggressive pattern of rate
increases next year. Higher interest rates in the US could result in dollar
outflows from emerging markets towards the US. Selling the Indian stock market
was, however, contained by back-to-back positive data in the domestic economy.
In the week ended on Friday, 16 December 2016, the Sensex fell 257.62
points or 0.96% to settle at 26,489.56. The Nifty fell 122.30 points or 1.48%
to settle at 8,139.45. The BSE Mid-Cap index fell 2.38%. The BSE Small-Cap
index fell 1.68%. Both these indices underperformed the Sensex. Trading for the
week started on a negative note. Banking, telecom and index heavyweights ITC
and Infosys led modest-to-strong losses for key benchmark indices on Monday, 12
December 2016. The barometer index, the S&P BSE Sensex, fell 231.94 points
or 0.87% to settle at 26,515.24.
On the Economic Front,On the macro
front, India's industrial production declined 1.9% in October 2016 over October
2015. Twelve out of 22 industry groups in the manufacturing sector showed
negative growth in October 2016. The data was released by the government after
market hours on Friday, 9 December 2016.
Data released by the government during market hours on Wednesday, 14
December 2016, showed that the annual rate of inflation, based on monthly
wholesale price index (WPI), stood at 3.15% for the month of November 2016 as
compared to 3.39% for the previous month and minus 2.04% during the
corresponding month of the previous year.
Major Action &Announcement:
India dropped 6.18%. The company's consolidated net profit fell 77.37% to Rs
600.44 crore on 6.77% decline in total income to Rs 17625.09 crore in Q2
September 2016 over Q2 September 2015. The result was announced after market
hours on Tuesday, 13 December 2016.
State Bank of
India (SBI) fell 0.47% to Rs 264.75. SBI announced that the executive committee of
the central board (ECCB) of the bank at a meeting held on 9 December 2016,
approved divestment of 3.9 crore equity shares constituting 3.9% stake in SBI
Life Insurance Company at a price of Rs 460 per share, subject to all
regulatory approvals. The announcement was made after market hours on Friday, 9
Auto major Tata
Motors rose 1.82% to Rs 472.50. Tata Motors Group global wholesales including
Jaguar Land Rover (JLR) rose 1% to 91,832 units in November 2016 over November
2015. Global wholesales of all passenger vehicles rose 5% to 64,862 units in
November 2016 over November 2015. Global wholesales of all Tata Motors'
commercial vehicles and Tata Daewoo range fell 7% to 26,970 units in November
2016 over November 2015. The announcement was made after market hours on
Friday, 9 December 2016.
Industries (Sun Pharma) fell 3.85% to Rs 647.10. Sun Pharma and Israel-based
Moebius Medical, a biotechnology company that is developing novel pain relief
treatments for osteoarthritis, have entered into an exclusive worldwide
licensing deal to further develop MM-II, a novel pharmaceutical candidate for
the treatment of pain in osteoarthritis. The announcement was made after market
hours Monday, 12 December 2016.
State-run NTPC fell 2.53% to Rs
159.95. NTPC announced that it has decided to raise Rs 3925 crore through
private placement of secured non-convertible debentures at a coupon of 7.37%
per annum with a door to door maturity of 15 years today, 14 December 2016. The
proceeds will be utilized to finance capital expenditure/refinancing the debt
requirement in on-going projects and other general corporate requirements. The
announcement was made after market hours Tuesday, 13 December 2016.
(HUL) fell 3.26% to Rs 817.30. HUL announced that Pond's Exports (PEL), a
subsidiary of HUL, engaged in the business of manufacturing of leather
products, has entered into an agreement with Hindustan Foods for sale of
certain movable assets and inventory with respect to the leather business of
PEL. Hindustan Foods has thus made an entry in the leather shoes exports space
with a global clientele. The announcement was made during market hours on
Friday, 16 December 2016.
In Overseas Markets,On the global
front, the two-day Federal Open Market Committee (FOMC) meeting concluded on
Wednesday, 14 December 2016, with the US central bank hiking the interest rates
by 25 basis points, an outcome that was largely factored in by the markets
globally. This is the first interest rate hike for the US market since December
last year. However, the investors were caught unaware with its forward-looking
stance, which indicated that the central bank may cut rates at a much faster
pace than expected in 2017. The US Fed signalled that there could be three
interest rate hikes next year, up from the two flagged in the September policy
meeting, media reports suggested, which impacted the markets last week.
Global Economic News:
Markets take rate
increase in stride
This week's FOMC decision to raise the federal funds rate by 25 basis
points comes a full year after its last hike. While the yield on the 10-year US
Treasury bond was about the same last year, the market environment was quite
different then. This week's hike came amid rising euphoria in equity markets,
as investors continued to reallocate from defensive and "bond-like"
equity positions into riskier segments of the market. Equity market volatility
is much lower this year, and there is greater dispersion among stock prices.
Credit and liquidity conditions are also stronger now versus a year ago.
High-yield sector spreads, for example, are compressed near their 24-month
lows, signaling favorable conditions for corporate borrowers. Energy sector
spreads, which peaked around 1,600 basis points this year, have recently fallen
below 500 basis points, according to Strategas Research Partners.
Trump to nominate Exxon Mobil CEO Rex Tillerson as secretary of state
President-elect Donald Trump this week announced his intention to
nominate Exxon Mobil chief executive Rex W. Tillerson as secretary of state.
The choice of Tillerson's was criticized by senators on both sides of the
aisle, who object his business dealings with Russia and its president, Vladimir
Putin. Tillerson has spent his entire career at Exxon. Trump also announced
that former Texas governor Rick Perry is his choice for energy secretary.
Global currencies fall versus US dollar
The US dollar continued to strengthen this week versus most major
currencies. The Japanese yen has declined 11% since the US presidential
election, while the Mexican peso has fallen 10%. China's yuan has also slid,
while its capital outflows have ticked up. Japan surpassed China as the largest
holder of US government bonds this week. China's government has been selling
foreign currency reserves in an effort to protect the yuan.
Small-business owners optimistic but still not spending on capex
The US NFIB small-business optimism index rose by 3.5 points in
November to 98.4, beating consensus estimates and rising above its 42-year
average. Small-business owners reported, however, that they are less optimistic
about capital expenditures. Just 24% of those surveyed plan to spend on capex
in the next 3 to 6 months.
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
Sales & Consumer Sentiment
Pick of the week:
UPL Ltd For Target Rs. 700.00
Strategy:- UPL added around 6% of open interest as fresh long positions
along with some delivery based buying in previous sessions. Daily vwap is
around 655 levels. On charts, it has created a fresh buying pivot on daily as
well as on intraday charts above 100 EMA. We recommend doing a covered call
strategy as per levels given below.
BUY UPL DEC FUTS BETWEEN 657-660, SL
640, TARGET 700.
Nifty Futures rose sharply by 140 points in first 35 mins of trading
friday. Nifty opened gap down at 8129 and made a low of 8123 followed by a
sharp buying to make a high of 8264. However, Nifty traded in a range of 78
points for rest of the day to finally close at 8177. The open interest data
showed a heavy buying on the 8th Dec from a low of 8164 in Nifty Futures. Nifty futures took support of the same level,
8166, in the second half of trading. Nifty futures is expected to find its
major support at 8160 levels, with an immediate resistance at 8260. However, if
8160 is breached on the down side might result in Nifty retesting its November
low of 7921. The Open Interest data yesterday along with the Cash market
activity display a weakness before this week.
Now coming week
holding 8250 nifty can move towards 8330/8370/8444. Bearish below 8250
for a move towards 8180/8100.
Nifty opened below
8250 and did the target of 8180 and low made 8121 near 8100. Bulls are backend
till we do not close above 8154, Above 8154 target 8230/8272. Below 8130 move
Zone of 8154-8250 is like no
trade zone for trend followers and paradise for scalper :). As Time Cycle is
changing so expect this range to break in next 2 trading sessions. Above 8250
target 8330/8370/8444.Below 8150 target 8100/8050/7972. High made friday 8178
and close at 8139 so small range breakdown has happened ,
Monday we should see follow down move towards 8100/8050 till we are closing
below 8150, Trading activity will reduce in next 2 weeks best strategy is to
sit out analyze the trades of 2016 and see what all improvement can be done so
that 2017 will be more better than 2016. Invest time in education and spend
time with your families, Every day is not meant for trading. Below 8150
target 8100/8050/7972, Above 8250 target 8330/8370/8444. Bank
Nifty continue to frustrate trend traders.