US equities closed at record highs last week, continuing the Trump Bump. European equities followed suit post ECB policy. The Sensex & Nifty too rallied last week but are still down from record highs. Will the Trump Bump take up Sensex & Nifty to record highs? The answer is yes as global feel good equity rally will be accompanied by a investment and consumer friendly Union Budget 2017-18, as the government will have fiscal space for spending on demonitisation.
ECB in its policy meet on the 8th December 2016 extended its bond purchase program to December 2017 from March 2017 but lowered the quantum of purchases from 80 billion euro a month to 60 billion euro a month starting April 2017. Interest rates were unchanged at 0% and deposit rate at -0.40%. ECB President Mario Draghi forecast inflation for the Eurozone at 1.3%. 1.5% and 1.7% over the next three years while growth was forecast at 1.7% for 2016 and 2017 and 1.6% for 2018 and 2019.
Click here to read our analysis on ECB monetary policy meeting.
Consumer prices in Brazil rose 6.99% (Y-o-Y) in November 2016, down from an increase of 7.87% in the previous month and below market expectations of 7.08%. It was the lowest inflation rate since December 2014, as prices rose at a slower pace for food, housing and transportation. However, inflation remained above the central bank’s official target of 4.5%.
The trade deficit in the UK narrowed to 2 billion Pounds in September 2016 from an upwardly revised 5.8 billion Pounds in the previous month. It was the smallest trade gap since May 2016, as exports increased by4.6%, boosted by a 8.7% rise in the export of goods, while imports declined by 3.5%.
Germany reported a current account surplus of 18.4 billion Euros in October of 2016, from upwardly revised 24.4 billion Euros in September. DAX is up by 6.56% in last week.
South Africa’s current account deficit widened to 176 billion Rands, or 4.1% of GDP, in the third quarter of 2016 from a downwardly revised 123 billion Rands, or 2.9% of GDP, in the second quarter of 2016, mainly due to weaker global demand for the country’s goods.
Post-election rally in the US continued till 9th December 2016, major U.S. indices closed on a positive note on 9thDecember 2016. On weekly basis, Dow rose by 3.06%, S&P 500 rose by 3% and Nasdaq rose by 3.60%.
European stocks closed higher on 9th December 2016 after the ECB held rates at record lows. DAX rose by 6.56% and FTSE rose by 3.33%.
Click here to read our analysis on ECB monetary policy meeting.
The Sensex and the Nifty roseby 1.97% and 2.16% in the last week.
RBI against all expectations kept policy rates unchanged in its two-day policy meet that ended on the 7th of December 2016. Markets were expecting a 25bps to 50bps rate cut and have since reacted negatively to the policy decision. Ten-year g-sec yields rose 13bps post policy while Sensex & Nifty fell by 1%. INR stayed flat. RBI left repo rate at 6.25% at its monetary policy meeting.
Click here to read our analysis on RBI monetary policy.
Industrial production in India fell 1.9% (Y-o-Y) in October 2016, following 0.7% growth in September 2016 and lower than market expectations of a 1% gain.
Dalmia Cement Ltd has announced an investment of Rs.2000 million in its Odisha plant to expand the capacity to meet the demand. Share price of Dalmia Cement rose by 6% last week.
Mumbai’s sole gas supplier Mahanagar Gas Ltd has hiked the prices of CNG and domestic PNG by Rs 0.85/kg and Rs 0.50/ SCM. Share price of Mahanagar Gas rose by 1% last week.
NMDC Ltd has reported iron ore sales of 22.59 metric ton till 30th November 2016. Iron ore sales are up by 27%(Y-o-Y). Share price of NMDC rose by 6.13% last week.
US FDA has found deviations in goods manufacturing of Sun Pharma at Halol Plant, this plant contributes about 50% of revenues to Sun Pharma. USFDA has issued a 14-pages concern about the plant, share price of Sun Pharma fell by 7% in last week.
Our model Twelve Stock Retirement Portfolio has given a one-year return of 20.25% and has outperformed the benchmark Sensex by 14.33%.
On a weekly basis, Twelve Stock Portfolio has gained 2.97% in value and the Benchmark BSE Sensex has gained 1.97%. The Portfolio outperformed the benchmark by 0.82%.
The Nineteen Stock Portfolio has given a one-year return of 16.47% and has outperformed the benchmark BSE 500 by 6%.
On a weekly basis, the Nineteen Stock Portfolio has gained 2.57% in value and the Benchmark BSE 500 has gained2.16%. The Portfolio outperformedthe benchmark by 0.42%.
Our Global Ten Stock Model Retirement Portfolio has given one-year return of -1.18% and has underperformed the benchmark S&P 500 index by 13.44%.
On a weekly basis, Global Ten Stock Model Retirement Portfolio has gained 4.52% in valueand the Benchmark S&P 500 has gained by 3.06%. The Portfolio outperformed the benchmark by 1.46%.
Industry and Stock Specific trends
The sectoral indices closed in the positive territorylast week. The S&P Bankex,Auto,IT, PSU and Oil & Gas indices have gained by 2.57%, 4.16%, 1.13%, 3.01%and 3.45% respectively.
The Nifty Index futures saw rise in open interest by 9% for the December series. There was a rise in open interest by 36% for January series and February series by 44% in the last week. Implied volatility(IV)fell for put and call options in the last week. Fall in IV for call option shows steady support for Nifty at present levels.
Sun Tv Network has witnessed rise in turnover and open interest in the stock futures segment.Sun Tv Network share price rose by 13% in last week. Sun Tv reported increase in net profit by 21% (Y-o-Y) to Rs.27305 million, revenue increased by 10% (Y-o-Y) to Rs.6254 million. Share price of Sun Tv Network rose by 6% on 5th December 2016 with the news of Tamil Nadu Chief Minister J Jayalalitha’s critical condition. Since, Sun Tv Network is headed by Kalanithi Maran, who is the nephew of DMK Chief M Karunanidhi. Sun Tv Network stock has witnessed spike in volume after political developments in Tamil Nadu.
Foreign Institutional Investors (FIIs) Derivative Statistics have shown rise in the open interest across Index Options, Index Futures, Stock Options and Stock Futures on a week on week basis.
The Euro depreciated by 1% against USD after the European Central Bank announced a six-month extension to its quantitative easing programme. Currently EUR/USD is trading at 1.0561.
Indian rupee appreciated by 1.15% against USD, USD/INR pair is trading at 67.5840.