Friday, August 15, 2014

Weekly Review 18.08.2014

Dear All,

Nifty rose on Thursday to their highest close in nearly two-and-a-half weeks as newly elected Prime Minister Narendra Modi's speech for clues to his reform plans for the world's largest democracy.

"The market needs commitment and I think Modi will deliver that in the key areas of infrastructure and capex revival," said Deven Choksey, managing director at K R Choksey Securities.

Rashesh Shah, Chairman & CEO, Edelweiss Group:- There has been a lot of expectation largely built up by the media around everything and obviously, the Prime Minister has been fairly quiet on any announcement for some time. Over the years, I have not seen any PM making big economic announcements on August 15th because it is not the platform for economic policy announcements.

So, I would expect a lot of announcements around India and social issues and foreign affairs and all but it is unlikely that we get lot of economic led announcements tomorrow. Currently, the government is trying to go after the low hanging fruit. A lot of incremental improvement is where the focus is and there is a school of thought amongst investors that maybe the big bang announcements will come after the state elections are over. Until the state elections are done, the government may not want to take risk of alienating anybody. So, if you want to see structural reforms, some of them maybe unpopular, you should think that they will come after the state elections.

Dipen Sheth, Head-Institutional Research, HDFC Securities:- To my mind, from a market men's perspective, that could be a little disappointing. Let us understand that governments do not exist to please markets or market men. After all, there is a country to run which is a big messy elephant of a country. It is going to take a while to get things under a fix. We can do a little of nitpicking and say this could have been done better, that could have been done better but it is not that nothing has happened. It is just that you and I might have aspired for a little more so maybe this will change a little bit. We have an event coming up over the weekend which is the 15th of August and that offers an opportunity to make interesting noises and change gears as it were. Will it happen or not, is what we shall see on that day.

Dhiraj Sachdev: Dhiraj Sachdev, Senior VP & Fund Manager-Equities, HSBC AM India:- Market has been running on high hopes and high expectations already. It is unreasonable to expect big bang announcements on specific dates. It can be done over a period of time as things progress. Our sense is that there is expectation from the government's side on pursuing the economic reforms taking important policy decisions overtime and that is why the markets will see corrections but they will be short term in nature.

Prime Minister Narendra Modi in his maiden Independence Day speech spoke on a wide range of issues, from financial inclusion schemes to stressing on need to enhance manufacturing.

1) Promote Made in India: Giving an open invitation to the world to make India a manufacturing hub, Modi said, "Come make in India. Be it plastics or cars or satellites or agricultural products, come make in India."

We must dream of 'Made in India' products across the world. "We need to encourage the manufacturing sector. We need to channelise the strength of the youth through manufacturing," Modi stressed. "Manufactured goods should have zero defect as also zero effect on environment," Modi added.

"We should strive to be a nation that doesn't import, but exports," Modi said. "I urge the youth to reduce dependence on imported products," Modi added.

2) Pradhan Mantri Jan-Dhan Yojana: Modi launched the 'Pradhan Mantri Jan Dhan Yojana' to help poor open bank accounts which will come with the facility of a debit card and an insurance cover of Rs 1 lakh.

3) Digital India: "We should dream of a Digital India. Digital India is a dream for the poor, with broadband connectivity, we can ensure long-distance education," Modi said.

4) Sansad Adarsh Gram Yojana: Modi asked all MPs to developed a model village in their constituencies by 2016. "One village for a constituency should be developed on the model grounds. Two more can be developed by 2019." "If we have to build the nation we have to start from the villages"

5) Moratorium on violence: Modi declared that he would like to run the country on the basis of consensus and not on majority in Parliament and called for a 10-year moratorium on caste and communal violence.

Modi also asked the misguided youth who have taken to terrorism and naxalism to shed their guns and adopt the path of peace and development.

6) Planning Commission to be replaced: Modi said that he would replace the Planning Commission that for decades guided the country's economy with a more modern institution.

"The times have changed since the Planning Commission was created. In a short span of time we will initiative a new institution that will work in place of the Planning Commission," Modi said. "We need creative thinking on the Planning Commission's role."

Soon after Modi's speech it was announced that the Planning Commission would be replaced by National Development Reforms Commission.

7) Clean India: The government plans to launch the Swacch Bharat plan in October. "Let us pledge that we will not make surroundings dirty. Pledge to develop a clean India," Modi said. "Mahatma Gandhi's 150th anniversary is coming in a few years. How should we celebrate it? He respected cleanliness. We should pledge for clean India," he added.

>>> NIFTY - Daily Chart <<<

>>> click the chart to view on full screen <<<

Last week Bulls able to hold 50 Day Moving Average shows - they are regaining their control once again. Corrective Wave 2 started from 7837 last almost 10 days to took support @ 7540 below 50 dma.

>>> Nifty - Hourly Chart <<<

>>> click the chart to view on full screen <<<

Clear Moving Average Cross Over & Break Out above the Trend line shows - Bulls are in full control.

>>> Bank Nifty - Daily Chart <<<

>>> click the chart to view on full screen <<<

Unlike Nifty - Bank Nifty needs to cross the hurdle 50 dma to confirm the 4th wave consolidation ends. Cross above the channel may bring more cheers to bulls.