Sunday, June 04, 2017

Weekly Review - 05th June, 2017

Dear All,

Market participants say there is strong positive sentiment among investors, due to strong macroeconomic indicators and stability. There is also ample liquidity, with stable inflow from both domestic and foreign institutions.

The positive momentum is continuing with expectation that the Reserve Bank is likely to be less hawkish in the monetary policy meeting next week. Declining crude oil prices, along with positive global cues, are also helping Indian markets to scale new heights.

Analysts expect a recovery in corporate earnings to be the key headwind in the medium to long term. Although the markets have scaled new heights in the past two years, growth in earnings per share (EPS) has been flattish.

Institutional buying is expected to continue, as domestic mutual funds still get impressive flow. As for foreign funds, India is expected to receive good inflow, owing to the positive risk appetite of investors. Mutual funds have purchased shares worth Rs 11,224 crore from the Indian markets in the year so far.Foreign institutions bought shares worth Rs 51,200 crore ($8 billion) in the first five months.

Although blue-chip stocks continue to see strong demand, the broader markets seem to have been trading flat in the past month. Analysts say the broader markets could be entering a phase of correction, since the valuations of these stocks had surged in the recent past, without a meaningful recovery in earnings.

Even though March quarter GDP numbers have come as a dampener, the early arrival of monsoon and sustained optimism among investors have kept the market on a high during the week gone by.

GST meet:-

The GST Council, chaired by Finance Minister Arun Jaitley, at its 15th meeting held on Saturday, decided to tax gold at 3 per cent, footwear below Rs 500 at 5 per cent and biscuits at 18 per cent under the goods and services tax, which will be rolled out from July 1. The council also decided on rates of yarns, agriculture machinery, apparels and rough diamond, among others. Last month, the GST Council fixed tax rates for over 1,200 goods and 500 services in the 5, 12, 18 and 28 per cent tax brackets. GST will subsume all major levies including excise, service tax and VAT, unifying 16 different taxes, and making India a single market. The council, Jaitey said, will again meet on June 11, before the rollout of the new indirect tax regime.

Economic data :-

On the macro front, the Nikkei Services PMI data for May is scheduled to be released on June 5. India’s services sector expanded at the slowest pace in three months in April as the PMI fell to 50.2 in April 2017 from 51.5 in March 2017.

UK snap election :-

Come June 8 and the UK will go to vote in the 'snap election' announced by Prime Minister Theresa May in mid-April. She called an early general election, claiming that divisions at Westminster risked hampering Brexit negotiations. The move came as a shocker to everyone as May and Number 10 (10 Downing Street, colloquially known in the United Kingdom as Number 10, the official residence and the office of the British Prime Minister) have repeatedly insisted that she would not seek a general election before the scheduled 2020 poll.

India Grid Trust to debut on Street :-

India Grid Trust, which recently concluded its Rs 2,250 crore initial public offering, will make stock market debut on June 6. The IPO of India Grid Trust, second for an infrastructure investment trust (InvIT), was subscribed 1.17 times. The price band for the offer, open during May 17-19, was set at Rs 98-100 per unit.

ECB monetary policy meet :-

The European Central Bank is slated to announce its next monetary policy on June 8. According to a poll of economists conducted by Reuters, the central bank should sound a little more optimistic on the economy at the meeting and could raise its assessment of risks to balanced or begin discussing shift from its bias to ease policy.

The central bank is not likely to signal any change yet to the pace of its asset purchases, which will continue at 60 billion euros per month until December. And fewer than 10 per cent of the regular survey panel said the ECB would drop the possibility of increasing those purchases, said a Reuters report.

US jobs data :-

In an unexpected development, the US nonfarm payrolls increased by just 138,000 in May as manufacturing, government and retail sectors lost jobs. The consensus forecast was 185,000 new jobs. The development could derail a possible interest rate hike by the Federal Reserve in the second half of this year. The unemployment rate, however, fell to a 16-year low of 4.3 per cent.

Terror strikes the UK again :-

World woke up on Sunday to the saddest news of a terrorist attack in the UK, four days ahead of general elections, as militants drove a van at high speed into pedestrians on London Bridge before stabbing many Saturday night revelers on the street and in nearby bars, killing at least six people and wounding more than 30.

The incident is likely to have a bearing on stock markets across the globe, including India.

>>> Nifty Weekly Chart <<<

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Weekly chart shows a IHS Break Out - Means More Momentum left for Bulls.

>>> Nifty Daily Chart <<<

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Price must hold 9630 to test 9680 - 9700 & 9800.

>>> Bank Nifty Daily Chart <<<

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Above 23460 price may rally till 24060.

>>> CNX-IT Daily Chart <<<

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Key Resistance 10630 - 10670 - 10720 & 10790 if crossed may trigger a fresh rally on all IT Stocks.

>>> CNX - Pharma - Daily Chart <<<

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CNXPharma - almost bottomed out - Expect a Huge Short covering and Fresh Rally in All Pharma Stocks.

>>> Cipla Posted on 30th May, 2017 <<<

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We were long on Cipla - and posted the same on 30th May, 2017.

>>> Cipla - Booked Profit Rs.23000/- <<<

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Booked Profit Rs.23000/- Also if Price manage to stay above 528 - More rally till 543 - 558 & 580 Possible soon.

>>> Equitas - Daily Chart <<<
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Price completed ABC correction and started moving up. We are Long and looking for a Rally.