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Events to watch this week
Fed chair briefs Congress on monetary policy
China inflation running low
G-20 summit concludes
Bank of Canada hikes rates
US retail sales miss
The Week ahead:
Mon, 17 Jul
Consumer price index
Wed, 19 Jul
Japan Policy rate
Wed, 19 Jul
Thu, 20 Jul
Continuing jobless claims
Thu, 20 Jul
Flash consumer confidence indicator
Thu, 22 Jul
Fri, 21 Jul
Consumer price index
Mon, 17 Jul
Consumer price index
For the week,Global equities moved up this week with solid gains. The yield on the US 10-year Treasury note faded seven basis points on the week, to 2.32%, while the price of West Texas Intermediate crude oil moved up to $46.35 a barrel from $44.50 a week ago. Volatility, as measured by the Chicago Board Options Exchange Volatility Index (VIX), dropped to 9.89 from 11.75 last week.
CRUDE OIL-Rs 2990barrel
MARKET ROUND UP
Key benchmark indices hit record high with the BSE Sensex conquering the psychologically significant 32,000-level as a drop in June retail inflation data sparked hopes of a rate cut by the Reserve Bank of India. Global stock markets also provided some tailwind after US Federal Reserve chair Janet Yellen, in a House testimony, signalled that the approach to higher rates will be steady, prompting investors to buy more in risky emerging markets.
The government data released after market hours on Wednesday, 12 July 2017, showed that retail inflation has eased to a record in June and factory output growth slowed sharply in May. Inflation as measured by the Consumer Price Index (CPI) slowed to 1.54% in June from 2.18% in May. The Index of Industrial Production (IIP) rose 1.7% in May compared with 3.1% in April.
During the week, the Sensex surged 660.12 points or 2.10% to settle at 32,020.75. The Nifty 50 index advanced 220.55 points or 2.28% to settle at 9,886.35.
Broader market trailed large caps. The S&P BSE Mid-Cap index jumped 1.64%. The S&P BSE Small-Cap index surged 0.49%. Both these indices underperformed the Sensex.
Macro Economic Front:
On the Economic Front,The government data released after market hours on Wednesday, 12 July 2017, showed that retail inflation has eased to a record in June and factory output growth slowed sharply in May. Inflation as measured by the Consumer Price Index (CPI) slowed to 1.54% in June from 2.18% in May. The Index of Industrial Production (IIP) rose 1.7% in May compared with 3.1% in April.
Major Action &Announcement:
Telecom major BhartiAirtel was the major Sensex gainer last week. It rose 5.45% to Rs 405.60. Last week certain media reports indicated that the Tata group and Bharti Enterprises are in discussions to form an alliance across telecom and direct-to-home television businesses. Both the groups have held exploratory talks to evaluate a mega alliance involving their telecom, overseas cable & enterprise services, and direct-to-home TV businesses. Discussions between both sides have revolved around a possible merger between Tata Teleservices, Tata Sky and Tata Communications with the Sunil Mittal-owned BhartiAirtel, which includes its wholly-owned DTH arm, reports added.
IT major Infosys 3.85% to Rs 972.05.The company increased its revenue growth guidance in both dollar and rupee terms for FY 2018 at the time of announcing Q1 June 2017 results. Infosys' consolidated net profit fell 3.3% to Rs 3483 crore on 0.2% decline in revenue to Rs 17078 crore in Q1 June 2017 over Q4 March 2017. The results are as per International Financial Reporting Standards (IFRS) and was announced before market hours on Friday, 14 July 2017.
Bank shares were in demand. State Bank of India rose 4.07% to Rs 291.60 after the bank's executive committee gave final approval for divestment of 8 crore shares in SBI Life through an initial public offering (IPO). The shares being offered for sale by SBI will be available at a price that would be fixed and determined by SBI Life, SBI, and BNP Paribas Cardiff, in consultation with the book-running lead managers, SBI said.
Reliance Industries (RIL) rose 2.70% to Rs 1,531.05. RIL's telecom subsidiary Reliance JioInfocomm (Jio) announced on 11 July 2017 that Jio Prime Members can enjoy unlimited services for 3 months with Rs 399 plan. The earlier launched Rs 309 plan will provide 2 months of unlimited Jio services.
Tata Motors rose 3.46% to Rs 451.90 after the company's British luxury unit Jaguar Land Rover (JLR) reporting good sales growth in June 2017. JLR reported a 11% growth in sales at 51,591 units in June 2017 over June 2016, driven by healthy China market. Shares of Tata Motors advanced 2.28% to settle at Rs 446.75 yesterday, 10 July 2017. Jaguar sales grew by 16.4% to 15,343 units in June 2017 over June 2016. Land Rover sales rose 8.9% to 36,248 units in June 2017 over June 2016.
Drug major Sun Pharmaceutical Industries gained 0.20% to Rs 570.50 after the company said it has entered into settlements with certain plaintiffs in re Modafinil Antitrust Litigation matter currently pending in the United States District Court for the Eastern District of Pennsylvania. The settlements extend to all claims brought by Apotex Corporation and the Retailer Purchaser Plaintiffs. The settlements remain are confidential.
In Overseas Markets,China will unveil GDP data for second quarter on Sunday, 16 July 2017. China's industrial production data for June 2017 will be unveiled on Sunday, 16 July 2017. Eurozone Consumer Price Index (CPI) data for June will be declared on Monday, 17 July 2017.
Eurozone interest rate decision will be held on Thursday, 20 July 2017. The six members of the European Central Bank (ECB) Executive Board and the 16 governors of the euro area central banks vote on where to set the rate.
Global Economic News:
Yellen testifies on Capitol Hill
US Federal Reserve chair Janet Yellen testified on monetary policy before the House Financial Services Committee this week as markets continued to digest the Fed's recently announced balance sheet reduction plans. Chair Yellen reiterated that the Fed expects a tightening labor market to lead to increased inflation, despite recent weak inflation data. She added, however, that the Fed may change course from its policy plans if needed. Last month, the central bank raised rates for the third time since December 2016.
China inflation running Low
The United States is not the only region experiencing low inflation. China's consumer price index was reported at 1.5%, missing a 3% target. Its producer price index was reported at 5.5%, which was in line with expectations. It is worth noting that the slowdown in inflation is consistent with the slowdown in inflation in the US and many other countries. It is occurring as policymakers in the US, Canada and eurozone are all moving, or signaling that they will move, away from the low-interest-rate environment of recent years.
Bank of Canada raises rates
The Bank of Canada raised rates by a quarter of a percentage point to .75% while suggesting that monetary policy will remain accommodative for the foreseeable future. Of concern is the stability of the housing market, where prices have risen rapidly in recent years, particularly in areas such as Toronto and Vancouver, where prices have doubled since 2009.
GLOBAL CORPORATE NEWS
G-20 summit concludes
The G-20 summit of leaders of major economies concluded in Hamburg, Germany this week after discussions on a broad range of topics, including trade, climate change and immigration policy. Many leaders attending the summit appeared at odds with US president Donald Trump, particularly over trade policy and climate change. On the trade front, Japan and the European Union signed the Japan–EU Economic Partnership Agreement after several years of negotiation.
US retail sales off
Headline retail sales were down .2% month over month, with six of the 16 categories falling into negative territory. Department stores in particular were hurt, falling .7% after a similar drop in May. The recent drop in sales and subsequent selloff in retail stocks have attracted the interest of professional investors in search of a bargain.
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:
Week Bill Announcement
Tuesday (18 July)
Housing Market Index
Wednesday (19 July)
Thursday (20 July)
Jobless Claims &Natural Gas Report
Friday (21 July)
Note Major Event
FundamantelPick of the week:
Derivative Ideas Dewan Housing Finance Corporation Ltd For Target Rs.465.00
DHFL added around 3% of open interest as fresh long positions. On charts, it has breached past 10 sessions’ congestion zone on the higher side with noticeable rise in volumes. It is also trading in higher highs-higher lows formation on charts. Hence, we suggest buying DHFL July futures as per levels given below.
BUY DHFL JULY FUTS BETWEEN 442-444, SL 432, TARGET 465.
Due to yesterday's move, we are now at a touching distance from 9900. We must accept the fact that we were unable to catch last 140 points on the index as we generally avoid chasing extended moves in the market. We would still continue with this strategy and would keep advising booking index specific longs in this rally. The main reason behind not participating in such kind of extended moves is we have historically seen how market surprises in the last leg of the euphoric moves. But, at the same time, one can look to find potential trades in individual stocks. Now, since the index is an uncharted territory, it becomes very difficult to give upside levels; but, 9900 - 9920 should be the levels to watch out for on a closing basis. On the other hand, 9850 - 9800 would be seen as an immediate support zone.
Other technical observations
Bearish below 9610 only. As per time cycle till 9787 is held bulls can push nifty towards the scarocant figure of 10000 by 30 July. Low made today was 9853 so nifty opened gap up above 9830 and rallied all the way till 9897, now bulls are holding 9830 we can move towards 9936/9961/10000. Bearish below 9792 for a move towards 9700/9610. Time cycle turn date of 12 July again helped in capturing good move in market. Till 9820 is held bulls are in control, bulls are in control and can push nifty towards 9936/9961/10000. Bearish below 9792 for a move towards 9700/9610
Normal rainfall in most parts of India, retail inflation falling to eight months low, hopes of rate cut in the upcoming RBI policy meet in August and dovish statements from Federal Reserve Chair Janet Yellen lifted the Indian equity market to scale fresh all time high. Markets even chose to ignore the worst outage (technical glitch) witnessed on the National Stock Exchange, which kept the biggest exchange of the country halted nearly for three hours on July 10. AU Small Finance Bank saw a successful listing and gained over 51% on debut although the stock slipped significantly on Friday. For the week, NSE Nifty and BSE Sensex surged by 2.2% each. Nifty had crossed 9900 while Sensex hit 32000 for the first time ever.
Results season which kicked off was a mixed bag as IndusInd Bank reported decent numbers for the first quarter of FY18. Although Net NPAs as a percentage of net advances, came in at 0.44% as against 0.38% YoY. TCS reported lower than expected June quarter results while Infosys fared much better as it managed to beat markets estimates. It reported 1.3% growth in consolidated net profit at Rs 3,483 crore for the quarter ended June 2017.