The record close in global indices backed by improved economic data and rising corporate profits will help spur the Sensex & Nifty to rally into the budget for fiscal 2017-18 to be presented to the parliament on the 1st of February 2017. Markets will expect a spend for growth budget even as inflation has fallen in the economy. Sensex & Nifty closed higher last week. Implied Volatility (IV) of call and put options declined last week indicating stable to positive market sentiments.
The FTSE 100 rose for the 14th day in a row by 45 points to 7337 levels to a fresh record high on 13th January 2017 amid volatility in the Pound following the news that Prime Minister Theresa May will deliver a speech on 17th January 2017 regarding plans over Brexit. It marked an all-time closing high with the longest rally ever. FTSE rose by 1.70% in the last week.
The US government posted a USD 28 billion budget deficit in December 2016, a 94.4% increase from a USD 14.4 billion gap the same month of the previous year and slightly above market expectations of a USD 25 billion gap.
China reported a USD 40.82 billion trade surplus in December 2016, compared to a USD 59.63 billion surplus a year earlier and below market expectation of a USD 46.5 billion surplus. Shangai Composite fell by 1.33% last week.
Wall Street closed in the green on 13th January 2017 as the earnings season began with JPMorgan and Bank of America beating expectations while earnings for Wells Fargo came below expectations. On weekly basis, Dow Jones fell by 0.40%, Nasdaq rose by 1%, S&P 500 fell by 0.10%. All the three equity indices are trading at record highs or close to record highs.
Takeda Pharmaceuticals will buy US cancer drug developer Ariad Pharmaceuticals in a USD 5.2 billion deal. Takeda ltd will be paying USD 24 for each share of Ariad which is almost 70% higher than the previous closing price of. USD 13.
The Sensex and the Nifty gained by 1.79% and 1.90% respectively in the last week.
Consumer prices in India increased 3.41% (Y-o-Y) in December 2016, following a 3.63% rise in November 2016 and below market expectations of 3.57%. It is the lowest inflation rate since November 2014 as food prices came down. The slowdown in inflation intensified in the last two months of 2016 after demonetization brought down currency in circulation, hurting consumption.
IIP growth increased more than expected by 5.7% in November 2016, the month in which demonetisation was announced.
The trade deficit in India fell to USD 10.37 billion in December 2016 from a USD 11.5 billion gap a year earlier.Exports jumped 5.7% (Y-o-Y) to USD 23.88 billion, reaching the highest value since March of 2015 as non-petroleum sales went up 5.4% (Y-o-Y). Imports increased at 0.5% to USD 34.25 billion, the highest figure since July of 2015. Oil purchases jumped 14.61%(Y-o-Y) mainly due to rising oil prices while gold imports fell 48.5% (Y-o-Y).
Aurobindo Pharma is in talks to acquire Portugal’s Generis Farmaceutica for Euro 135 million. In the last week, company has received USFDA nod for anti – epileptic drug. Share price of Aurobindo Pharma fell by 0.6% last week.
TCS reported Q3Fy17 results on 12th January 2017, in dollar terms revenue increased by 0.3% (Q-o-Q). In rupee terms, revenue increased by 1.5% (Q-o-Q) to Rs. 297,350 million and net profit increased by 3% (Q-o-Q) to Rs. 67,780 million. Digital business grew by 30% (Y-o-Y) which contributed 16.8% of total revenues. Share price of TCS fell by 0.70% last week and post announcement of results share price fell by 4.20%. One of the reason for the fall was the elevation of Mr Chandrasekaran as the chairman of Tata sons Board. Investors were concerned about the management of TCS which was very ably managed by Mr.Chandrasekaran.
IndusInd bank reported 29% (Y-o-Y) increase in net profit to Rs. 7510 million, net interest income surged by 33% (Y-o-Y) to Rs. 14,600 million. Net NPA’s rose by 0.37% (Q-o-Q). Share price of IndusInd bank rose by 5% last week.
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Industry and Stock Specific trends
The sectoral indices closed in positive territory last week. The S&P Bankex, Auto, PSU, Oil & Gas and IT indices have gained by 3.62%, 1.19%, 2.88%, 0.76% and 0.73% respectively.
The Nifty Index futures saw rise in open interest by 6% for the January series. There was a rise in open interest by 69% for February series and March series by 51% in the last week. Implied volatility(IV) fell for put and call options in the last week. Fall in IV for call and put option shows steady support for Nifty at present levels.
Infosys witnesses rise in turnover and Open Interest in Stock Derivatives
Infosys has witnessed significant rise in open interest in the stock future segment in the last week, open interest rose by 32% on weekly basis. Share price of Infosys rose by 0.16% in last week but on the day (13th January 2017) of Q3Fy17 results announcement Infosys share price fell by 4.3%.
On 13th January 2017, post market hours Infosys management had reported Q3Fy17 results. In constant revenue terms, revenue declined by 0.3% (Q-o-Q) and net profit increased by 1.5% (Q-o-Q) to USD 547 million. In rupee terms, revenue declined by 0.2% to Rs 172,730 million and net profit increased by 2.8% to Rs. 37080 million. Company management expects revenue to grow at 7.2% – 7.6% for Fy17, less than the 9.1% growth in last year.
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.
Indian rupee depreciated by 0.410% against USD, USD/INR pair is trading at 68.2310.