Stock Market Update

Market Volatility to Continue This Week

Continuing on the trend last week, expect a volatile week this time around too due to expiry of derivatives contracts on Thursday. Investors will also be watching for global cues and the developments in the PNB fraud case. The last few weeks of correction in Indian markets has resulted in massive losses, especially for retail investors who were chasing momentum in mid and small-caps. There seems to be a pattern of distribution where frontline indices are holding steady within a band while the mid and small-caps continue to correct heavily. However, this should provide a good opportunity for an entry in the near future.

Last week saw Nifty trading in a range between 10,450 and 10,600, and the Bank Nifty index being dragged down by the Rs 11,000 crore Punjab National Bank fraud case. The rupee ended at 64.21 against the dollar, compared to 64.39 last week. FIIs were net sellers to the tune of 28.5 billion rupees ($44 million) while DIIs were net buyers to the tune of 23.7 billion rupees.

The highlight of the week was the bank fraud case involving jeweller Nirav Modi. The case may have a wider impact on the banking sector given the possibility that other jewellers could have exploited the letter of credit and bank guarantee facilities to fund their business operations. A pertinent point to note here is that the quantum of fraud is so huge that the likely recapitalisation amount that PNB is supposed to receive (54.7 billion rupees) from the government may be completely wiped off.

On the macro front, CPI inflation for January eased to 5.07 per cent, compared to a 17-month high of 5.21 per cent in December. Factory ouput continued to record strong growth for a second straight month at 7.1 per cent in December. IIP growth is expected to trend higher in January as commercial vehicle sales have expanded by 36.6 per cent. The positive contribution of cement, diesel and even two wheelers augurs well for growth recovery, especially for the rural economy.

Merchandise exports increased 9.1 per cent to $24.38 billion in January compared to a year ago, while imports surged 26 per cent to $40.68 billion. Trade deficit jumped 64.6 per cent to $16.30 billion in January.

With the results season almost over, all the focus will continue to remain on the global cues. Last week, the Dow Jones increased by 4.5 per cent and recovered 50 per cent of its recent losses. Hence, once the domestic concerns settle, Indian indices are likely to take part in global rally.

Posted by Digamber 

Market Volatility

Volatility to continue for some time led by global factors

Domestic equities markets have gone through nearly 10 % correction in the past week riding on the back of several factors – following global markets fall and domestic events (Union Budget, Long Term Capital Gains tax etc. Hardening of bond yields globally is one of the key factors driving the market correction. In the Indian context too Bond yields have increased from 6.3% in July 2017 to 7.6% now.

Many stocks which were quoted at higher valuations have been moderated and present an investment opportunity. Overall the economic outlook is favourable and a further consolidation in corporate earnings will give investors a decent earning opportunity.

There is consumption recovery – both urban and rural, savings as well as structural changes like GST which should boost economic sentiments.

Other factor that will play out are the on-going quarterly results season and crude oil price fluctuations, combined with the direction of foreign fund flows and the rupee's movement against the US dollar. All these will also impact investors’ decision to enter the market in one way or the other. Thus equities market this week will focus on earnings, macro-data and, of course, global cues.

If the global markets remain volatile, it might spill over to Indian markets. FPIs (Foreign Portfolio Investors) have been net sellers; hence support from DIIs (Domestic Institutional Investors) remains important in event of global volatility.

Barring today’s (Monday’s) rise in indices, in the past few weeks, a massive sell-off in the global markets has pulled the Indian equity indices deep into the red. Since February 1, 2018, the Bombay Stock Exchange (BSE) Sensex has shed around 1,900 points and the National Stock Exchange (NSE) Nifty50 over 500 points. Market regulator is of the view that Indian stock market volatility may continue for some more time due to global factors. However SEBI feels that there is no cause of worry in terms of volatility, as the country has a robust risk-management system and that there is no issue in terms safety of contracts or enforcement of contracts.

Apart from global cues, the on-going quarterly results season assumes significance as major firms like GAIL, Indian Hotels, DLF, Fortis Healthcare, GMR Infra, Welspun India, Idea Cellular, Jet Airways, Nestle India and Sun Pharma are expected to announce their quarterly results in the this week. The current earnings season is likely to provide strong signs of revival in corporate earnings, underlining the long-term growth prospects.

Besides the Q3 results, investors will keep a close watch on the upcoming macro-economic data points such as the Index of Industrial Production (IIP), Consumer Price Index (CPI), Wholesale Price Index (WPI) and Balance of Trade figures. The Central Statistics Office (CSO) is slated to release the macro-economic data points of IIP and CPI on February 12.

Technically Nifty has immediate supports at 10,276 points and any pull-back rallies could find resistance at 10,703 points.

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Success Story Nifty bank

Success Story !  On 19th Jan 2018 we spotted an opportunity of   Nifty bank @ price 26634  on our strategy of support and resistance today 5th Feb 2018 we book profit @ price 26200  the return on our investment was 1.66% i. e Rs. 17760 with in the time span of 17 Days. So by using this strategy one can get return on their investments in a short period.

Sucess Story Nifty

Success Story ! On 25th Jan 2018 we spotted an opportunity to short   Nifty @ price 11062  on our strategy of support and resistance today 5th Feb 2018 we book profit @ price 10690  the return on our investment was 3.46% i. e Rs. 27750 with in the time span of 10 Days. So by using this strategy one can get return on their investments in a short period....