The all important event for markets this week is the US Presidential Elections results that are out on the 8th of November. Markets have shed value going into elections but will they bounce back post results? Listen to our podcast on Will Markets Rally Post Elections for our analysis on the results and market movements.
Leaving out elections, economic data has been more positive than negative and that will add comfort to markets.
The Federal Reserve left the rate unchanged at 0.25% to 0.5% for the seventh time during its November 2016 meeting. Policymakers also added that the case for an increase in the federal funds rate has continued to strengthen.
U.S. Bureau of Labor Statistics reported payrolls in the United States increased by 161,000 in October of 2016, lower than upwardly revised 191,000 in September and below market expectation of 175,000. Unemployment rate fell to 4.9% in October from 5% in September while wage growth was the fastest since 2009. Job numbers add to the conviction of the strength in the US economy.
Total imports of United States fell 1.3% (M-o-M) to USD 225.6 billion in September 2016, hitting the lowest level since May 2016. Purchase of goods decreased by USD 2 billion to USD 183.7 billion, led by capital goods (- USD1.7 billion) and consumer goods (- USD0.8 billion). In contrast, imports of automotive vehicles, parts, and engines increased USD 1.2 billion, with passenger cars rising USD 1.1 billion. Imports from China declined 2.8%.
The Nikkei Japan Services PMI jumped to 50.5 in October 2016 from 48.2 in September 2016. PMI in Japan averaged 50.80 from 2013 until 2016, reaching an all-time high of 55.30 Index Points in October 2013.
Inventories of crude oil in the United States increased by 14.42 million barrels in October 2016. Inventories are well above market expectations of a near 1 million rise. Meanwhile, gasoline stocks decreased by 2.2 million barrels while markets were expecting a 1 million fall. Brent Crude Oil price fell by 8.3% last week.
US equities closed in negative territory on 4th November 2016 on growing concerns over the outcome of this week’s US presidential election. Facebook reported Q3FY16 results, revenue increased by 55.77% (Y-o-Y). Net income increased by 165% (Y-o-Y). Share price of Facebook fell by 8.60% in last week as the company guided for a possible slowdown in revenue growth for Q4FY16.
The Sensex and the Nifty fell by 2.39% and 2.37% in the last week.
The GST council on 3rd November 2016 decided upon a four-slab tax structure of 5%, 12%, 18% and 28% with low rates for essential items and highest for luxury goods, many of which would also attract additional cess.
The Finance Ministry has imposed provisional anti-dumping duty on import of hot rolled steel products from china. Provisional anti-dumping duty will be valid for a period of six months.
Bharti-Airtel has signed a pan-India deal worth of USD 60 million by Nokia to implement Voice-Over LTE (VoLTE) calling technology. VoLTE was first started by Reliance Jio in India this year.
Reliance Industries and its foreign partners may have to pay a penalty of more than USD 1 billion for commercially using the migrated gas from the block which is operated by ONGC in the Krishna-Godavari basin. Share price of Reliance Industries fell bt 4.93% last week.
Amara Raja Batteries reported increase in income from operation by 17.94% (Y-o-Y) and increase in net profit by 10.45% (Y-o-Y). Share price of Amara Raja Batteries fell by 2.5% last week.
Punjab National Bank reported decrease in net profit by 11.5% (Y-o-Y). Net interest income fell by 10.2% (Y-o-Y) due to tepid credit growth. Provisions for the bank spiked to Rs. 25330 million, higher by 35% (Y-o-Y). Share price of Punjab National Bank fell by 8% last week.
Dr.Lal Path Labs reported increase in revenue by 21.53% (Y-o-Y). Net profit increased by 714% (Y-o-Y) to Rs. 528 million. The growth in revenue and improvement in operating margin is largely attributed to the growth in volumes, seasonal factors, higher realization per patient, upward price revision and improved operational leverage. Price revision contributed 2.6% to revenue growth. Share price of Dr. Lal Path Lab fell by 3.29% last week.
United Breweries Ltd reported increase in income from operation by 3.16% (Y-o-Y). Net profit decreased by 48% (Y-o-Y) standalone basis. Total expenses for the company shot up by 5% (Y-o-Y). Share price fell by 17% last week.
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Industry and Stock Specific trends
The sectoral indices closed in the negative territory last week. The S&P Bankex, Auto, IT, PSU and Oil & Gas indices have lost 2.70%, 1.61%, 2.05%, 4.30% and 4.94% respectively.
The Nifty Index futures saw rise in open interest by 8% for the November series. There was a rise in open interest by 23% & 562% for the December series and January series respectively in the last week. Implied volatility(IV) fell for put option and call option rose in the last week last week. Rise in IV of Nifty put and call option shows unsteady marginal support for Nifty at current levels.
Vedanta Ltd has witnessed rise in turnover and open interest in the stock futures segment. Vedanta Ltd share price rose by 4.5% last week. Vedanta Ltd reported consolidated Q2FY17 net profit grew by 12% (Y-o-Y). Revenue fell by 4.3% (Y-o-Y) mainly impacted by oil, zinc and copper segments of the business, revenue grew by 9%(Q-o-Q).
Sun Pharma also witnessed rise in turnover and open interest in the stock futures segment. Pharma stocks, especially those which have large exposure to USA, saw a slump in their share price as USA prosecutors are undertaking an investigation into suspected price collusion. Sun Pharma share price fell by 7% on 4th November 2016 as the company has 48% of total revenue exposure from USA. Share price fell by 12% in the last week.
Foreign Institutional Investors (FIIs) Derivative Statistics have shown rise in the open interest across Index Futures, Index Options, Stock Options and Stock Futures on a week on week basis.
British Pound appreciated against USD by 0.45% to USD 1.2517 on 4th November 2016 from USD 1.2460. The Pound appreciated by 2.72% during the last week.
Mexican Peso depreciated against USD by 1.67% in last week. Pre-Election poll has witnessed a lead by Trump, which in turn put Mexican Peso at 18.9907 levels.
Indian Rupee appreciated against USD by 0.20%.