Market Outlook .... April 2015
Previous Week
Equity benchmarks staged a spectacular recovery during previous holiday shortened week and ended nearly 3% higher snapping a three week losing streak. Rally was broad based and supported by index heavyweights from banking and capital goods space. The NSE Nifty closed in green in two out of three trading sessions during previous week. The Broader markets outperformed the benchmark and witnessed a sharp pullback after recent decline as the BSE Mid cap and BSE Small cap closed up by 3.8% and 6.8% respectively
The 30 share S&P BSE Sensex closed at 28260, up by 801 points or 2.92%, while the NSE Nifty settled at 8586, up by 245 points or 2.94% for the week
Amid Nifty constituents Banking, Capital Goods, Cement, Healthcare, FMCG and Oil & Gas stocks where major gainers
Eight core industries growth for the month of Feb'15 recorded at 1.4% as compared to 6.1% recorded in the same month a year ago
The growth is largely driven by coal and electricity products wherein output increased by 11.6% and 5.2% YoY respectively while output of steel and natural gas declined by 4.4% and 8.1% YoY respectively
Crude prices closed at about US$ 56.0/barrel, up 5.3% during the week. Gold closed the week at US$ 1203.0 $/ounce, up 1.7% during the week. Bond yields inched slightly higher to 7.8%, up 3 bps during the week
The cumulative growth has remained steady at 3.8% in April-Feb 2014-15 over same period last year
Crude prices closed at about US$ 53.3/barrel, down 6.2% during the week
Gold closed the week at US$ 1186.3 $/ounce, down 1.5% during the week
Bond yields were slightly lower during the week, down by 6 bps to 7.73%
Week Ahead
Price action during the week resulted in strong bull candle which is completely enclosed inside previous week's bigger bear candle. Such a candlestick pattern indicates lack of follow through selling to previous week’s fall and change in sentiments. Sustenance above the high of previous week (8627) would signal extension of current pull back in prices
The index bounced back after taking support at the 80% retracement of the January to March rally (8275) and the bullish gap formed on January 15, 2015 post the first rate cut by the RBI at 8277 and in the process the index has also closed above the falling channel which enclosed the entire decline from the life-time highs of 9119
We expect Nifty to extend current pullback towards 8800 levels being the 61.8% retracement of the recent decline from 9119 to 8269. Last week’s low of 8270 remains an immediate support for Nifty which we expect to hold.
Important data releases in India next week- HSBC India Services and Composite PMI, RBI Cash Reserve Ratio, RBI Repurchase Rate, RBI reverse repo rate, Local Car Sales, Exports YoY, Imports YoY
Important data releases in US next week- Markit US Composite and Services PMI, Consumer Credit, U.S fed to release minutes from March 17-18 FOMC meeting, Initial Jobless Claims, Continuing Claims
Important data releases from the Eurozone next week- Markit Euro zone Services, Composite and Retail PMI, PPI MoM, PPI YoY,
Important data releases from Asia next week- China: CPI (YoY), PPI (YoY)
International Markets:
US Markets: The markets opened on a positive note benefiting from a number of positive catalysts. Buying interest was generated post the comments from People's Bank of China Governor about additional stimulus
On the economy front, a report showed higher than expected jump in pending home sales by 3.1% to 106.9 in February
Personal income rose by 0.4% (slightly more than expected) in the month of February
Personal spending also inched up by 0.1% in February. Initial buoyancy was lost due to profit taking
European Markets: The European markets opened on a positive note as Eurozone economic sentiment climbed to 103.9 from 102.3 in February
However as the week progressed the markets finished in the red
Investor concerns over the situation in Greece weighed on the markets, as well as Eurozone unemployment data
Unemployment remains high and came in higher than anticipated
The Eurozone unemployment rate dropped in February to the lowest since May 2012 to a seasonally adjusted 11.3% from a revised 11.4% in January
Sector Update – Telecom
As the March 2015 auctions ended the government has pocketed nearly
1.1 lakh crore with 28873 crore being its immediate pay in. Idea, Bharti Airtel and Vodafone were the top three spectrum winners with a total payout of 30307, 29130 and 25960 crore respectively.
Sector Update - Metals and Mining
The Rajya Sabha recently approved The Mines and Minerals Development and Regulation, Amendment Bill 2015. While the new mining law, recently passed, will aid in streamlining the process of grant and renewal of mining leases of commodities like iron ore, manganese ore, bauxite, etc
Sector Update – Banking
In the past three months, gains in Bank Nifty have been muted at 3.5% vs. the Nifty rising by 6.3%. The laggards have been PSU banks. Large PSU banks, on an average, have clocked negative returns of 16.5% in the past three months while large private banks gave positive returns of ~11.6%.
Initiating Coverage - Somany Ceramics
Somany Ceramics (Somany) emerged as the third largest tiles player in the Indian tiles industry. It witnessed 23.3% CAGR in topline in FY10-14 (industry average: 16.6%) through aggressive capacity expansion from 16.7 msm in FY10 to 42.5 msm currently largely through a JV model.
Techno Funda Pick - JK Tyre
The share price of JK Tyre has concluded a healthy corrective phase after taking support at its 52 week EMA at 92 levels. The pullback towards the long term average after a span of over a year triggered value buying and resulted in the formation of an Engulfing line bull candlestick pattern on the weekly charts.
Technical Delivery Call - Indian Oil Corporation
The key objective of this product is to identify the stocks based on technical parameters to ride the momentum with decent return potential from a medium term perspective. The report would highlight the key technical set-up for the stock and the requisite trading strategy to ride the possible future price action
Monthly Technical
Benchmark indices hit new all-time highs of 30024, 9119 (Sensex, Nifty, respectively) at the start of March 2015 after a surprise repo rate cut announcement by the RBI. However, the initial euphoria evaporated quickly as the markets entered a corrective phase and continued to lose ground even after discounting the positive news of the postponement of a rate hike by the US Federal Reserve.
Initiating Coverage - Gati Ltd
The e-tailing industry, currently at $3.5 billion, is expected to grow at ~50% CAGR over FY14-17E. Gati provides logistics solutions to a majority of e-commerce players. Moreover, through Gati Kausar, it would be able to tap the growth in the cold chain industry, which is expected to grow at a CAGR of ~15-17% over FY14-17E.
Happy Investing
Source : Icicidirect.com
Previous Week
Equity benchmarks staged a spectacular recovery during previous holiday shortened week and ended nearly 3% higher snapping a three week losing streak. Rally was broad based and supported by index heavyweights from banking and capital goods space. The NSE Nifty closed in green in two out of three trading sessions during previous week. The Broader markets outperformed the benchmark and witnessed a sharp pullback after recent decline as the BSE Mid cap and BSE Small cap closed up by 3.8% and 6.8% respectively
The 30 share S&P BSE Sensex closed at 28260, up by 801 points or 2.92%, while the NSE Nifty settled at 8586, up by 245 points or 2.94% for the week Amid Nifty constituents Banking, Capital Goods, Cement, Healthcare, FMCG and Oil & Gas stocks where major gainers Eight core industries growth for the month of Feb'15 recorded at 1.4% as compared to 6.1% recorded in the same month a year ago The growth is largely driven by coal and electricity products wherein output increased by 11.6% and 5.2% YoY respectively while output of steel and natural gas declined by 4.4% and 8.1% YoY respectively Crude prices closed at about US$ 56.0/barrel, up 5.3% during the week. Gold closed the week at US$ 1203.0 $/ounce, up 1.7% during the week. Bond yields inched slightly higher to 7.8%, up 3 bps during the week The cumulative growth has remained steady at 3.8% in April-Feb 2014-15 over same period last year Crude prices closed at about US$ 53.3/barrel, down 6.2% during the week Gold closed the week at US$ 1186.3 $/ounce, down 1.5% during the week Bond yields were slightly lower during the week, down by 6 bps to 7.73%Week Ahead
Price action during the week resulted in strong bull candle which is completely enclosed inside previous week's bigger bear candle. Such a candlestick pattern indicates lack of follow through selling to previous week’s fall and change in sentiments. Sustenance above the high of previous week (8627) would signal extension of current pull back in prices
The index bounced back after taking support at the 80% retracement of the January to March rally (8275) and the bullish gap formed on January 15, 2015 post the first rate cut by the RBI at 8277 and in the process the index has also closed above the falling channel which enclosed the entire decline from the life-time highs of 9119 We expect Nifty to extend current pullback towards 8800 levels being the 61.8% retracement of the recent decline from 9119 to 8269. Last week’s low of 8270 remains an immediate support for Nifty which we expect to hold. Important data releases in India next week- HSBC India Services and Composite PMI, RBI Cash Reserve Ratio, RBI Repurchase Rate, RBI reverse repo rate, Local Car Sales, Exports YoY, Imports YoY Important data releases in US next week- Markit US Composite and Services PMI, Consumer Credit, U.S fed to release minutes from March 17-18 FOMC meeting, Initial Jobless Claims, Continuing Claims Important data releases from the Eurozone next week- Markit Euro zone Services, Composite and Retail PMI, PPI MoM, PPI YoY, Important data releases from Asia next week- China: CPI (YoY), PPI (YoY)International Markets:
US Markets: The markets opened on a positive note benefiting from a number of positive catalysts. Buying interest was generated post the comments from People's Bank of China Governor about additional stimulus On the economy front, a report showed higher than expected jump in pending home sales by 3.1% to 106.9 in February Personal income rose by 0.4% (slightly more than expected) in the month of February Personal spending also inched up by 0.1% in February. Initial buoyancy was lost due to profit taking European Markets: The European markets opened on a positive note as Eurozone economic sentiment climbed to 103.9 from 102.3 in February However as the week progressed the markets finished in the red Investor concerns over the situation in Greece weighed on the markets, as well as Eurozone unemployment data Unemployment remains high and came in higher than anticipated The Eurozone unemployment rate dropped in February to the lowest since May 2012 to a seasonally adjusted 11.3% from a revised 11.4% in JanuarySector Update – Telecom
As the March 2015 auctions ended the government has pocketed nearly
1.1 lakh crore with 28873 crore being its immediate pay in. Idea, Bharti Airtel and Vodafone were the top three spectrum winners with a total payout of 30307, 29130 and 25960 crore respectively.Sector Update - Metals and Mining
The Rajya Sabha recently approved The Mines and Minerals Development and Regulation, Amendment Bill 2015. While the new mining law, recently passed, will aid in streamlining the process of grant and renewal of mining leases of commodities like iron ore, manganese ore, bauxite, etc
Sector Update – Banking
In the past three months, gains in Bank Nifty have been muted at 3.5% vs. the Nifty rising by 6.3%. The laggards have been PSU banks. Large PSU banks, on an average, have clocked negative returns of 16.5% in the past three months while large private banks gave positive returns of ~11.6%.
Initiating Coverage - Somany Ceramics
Somany Ceramics (Somany) emerged as the third largest tiles player in the Indian tiles industry. It witnessed 23.3% CAGR in topline in FY10-14 (industry average: 16.6%) through aggressive capacity expansion from 16.7 msm in FY10 to 42.5 msm currently largely through a JV model.
Techno Funda Pick - JK Tyre
The share price of JK Tyre has concluded a healthy corrective phase after taking support at its 52 week EMA at 92 levels. The pullback towards the long term average after a span of over a year triggered value buying and resulted in the formation of an Engulfing line bull candlestick pattern on the weekly charts.
Technical Delivery Call - Indian Oil Corporation
The key objective of this product is to identify the stocks based on technical parameters to ride the momentum with decent return potential from a medium term perspective. The report would highlight the key technical set-up for the stock and the requisite trading strategy to ride the possible future price action
Monthly Technical
Benchmark indices hit new all-time highs of 30024, 9119 (Sensex, Nifty, respectively) at the start of March 2015 after a surprise repo rate cut announcement by the RBI. However, the initial euphoria evaporated quickly as the markets entered a corrective phase and continued to lose ground even after discounting the positive news of the postponement of a rate hike by the US Federal Reserve.
Initiating Coverage - Gati Ltd
The e-tailing industry, currently at $3.5 billion, is expected to grow at ~50% CAGR over FY14-17E. Gati provides logistics solutions to a majority of e-commerce players. Moreover, through Gati Kausar, it would be able to tap the growth in the cold chain industry, which is expected to grow at a CAGR of ~15-17% over FY14-17E.
Happy Investing
Source : Icicidirect.com
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