Sensex and Nifty witnessed a tepid movement last week and this week being a short week, is expected to be volatile as state assembly elections are held in five states, which is important for the ruling Bhartiya Janta Party.
23rd February 2017 is derivatives contract expiry, which can spur volatility in Indian markets as fresh positions for next month i.e. 30th March 2017 derivative contracts would witness some selling pressure due to state election results, which are scheduled on 11th March 2017.
There was rise in open interest by 97% and 19% for March and April series in the last week. Implied volatility(IV) rose for put options and call options in the last week. Rise in IV for put and call options shows unsteady support for Nifty at present levels.
Eurozone’s current account surplus widened sharply to EUR 47.0 billion from EUR 41.4 billion i.e. 13.5% (Y-o-Y). The primary income surplus increased to EUR 18.2 billion from EUR 13.0 billion a year ago, and the goods surplus rose to EUR 32.8 billion from EUR 31.4 billion, while the services surplus was nearly unchanged at EUR 6.4 billion.
The number of Americans filing for unemployment benefits increased by 5000 to 239,000 in the week ended 11th February 2017, from the previous week’s level of 234,000 and below market expectations of 245,000.
Stocks of crude oil in the US went up by 9.527 million barrels in the week ended 10th February 2017, following a 13.83 million increase in the previous week and compared to market expectations of a 3.513 million rise. Gasoline stocks rose by 2.846 million, compared to expectations of a 0.752 million drop. Brent crude oil price fell by 1.60%.
Retail sales in the UK fell unexpectedly by 0.3% (M-o-M) in January 2017, following an upwardly revised 2.1% drop in December 2016 and missing market expectations of a 0.9% gain, amid increased prices of fuel and food.
BOJ in its policy meet on the 14th of February 2017 reiterated its commitment to maintain 10-year Japanese Government Bond (JGB) yields at around 0%. BOJ by maintaining JGB yields well below theoretical yields will cause the Yen to depreciate against the USD, leading to the currency becoming a funding currency for carry trades in higher return assets that can potentially cause asset bubbles.
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U.S. Fed Chair Janet Yellen’s testimony before Congress appeared slightly more hawkish and market participants will now be looking out for Federal Open Market Committee (FOMC) minutes this week to provide further clues on the Fed’s assessment of economic conditions and monetary policy stance.
Wall Street major indexes closed at new record highs on 17th February 2017 as investors continued to assess the prospects for President Trump’s economic plans and the Fed interest-rate hikes. On weekly basis, Dow jones rose by 1.75%, S&P 500 rose by 1.51% and Nasdaq rose by 1.81%.
The Sensex and the Nifty gained by 0.47% and 0.32% respectively in the last week.
NSE announced changes in Nifty constituent’s effective 31st March 2017. Indiabulls Housing Finance and IOC are in, while Idea and BHEL are out of the Nifty 50. IDFC Bank will replace Bank of India in the Nifty bank index. ICICI Pru Life, Petronet LNG and Rural Electrification Corporation (REC) will be included in the Nifty 100 index, whereas Apollo Hospitals Enterprises, Bharat Forge and Castrol India will move out.
Wholesale prices (WPI) in India rose by 5.25% (Y-o-Y) in January 2017, following a 3.39% gain in December 2016 while markets expected a 3.89% rise. It was the 10th straight month of increase and the highest since July 2014.
Consumer prices (CPI) in India rose by 3.17% (Y-o-Y) in January 2017, down from a 3.41% rise in December 2016 and below market expectations of 3.22%. It is the lowest inflation rate since the series began (2011) and was due to a sharp slowdown in food prices.
Share price of Cadila Healthcare surged 25% last week after its Moraiya facility did not get any observations in inspection from USFDA. Sun Pharma rallied 8.5%on hopes of early USFDA clearance to Halol plant, which has been under warning letter since December 2015.
Government plans to disinvest up to 10% in Coal India which is valued at Rs. 1989 billion at current market price. This process would likely to happen in August 2017 and post disinvestment Government stake will reduce to 69%.
TCS management will be discussing share repurchase on 20th February 2017 and the result of the outcome might spur the volatility of TCS share price. Share price of TCS rose by 0.80% last week.
BSE had reported Q3Fy17 results, net profit fell by 17% (Y-o-Y) to Rs. 637 million due increase in expenses by 15% (Y-o-Y) to Rs. 1123 million. Total income from operations on consolidated basis for BSE increased by 8.7% (Y-o-Y) to Rs.1747 million. Share price of BSE fell by 4% in last week.
Tata Motors reported Q3Fy17 results, net profit fell by 96% (Y-o-Y) to Rs.1120 million mainly due to slow down in JLR business and tepid domestic performance. Revenue fell by 4% (Y-o-Y) to Rs. 685,410 million. Share price of Tata Motors fell by 11.11% last week.
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Industry and Stock Specific trends
The sectoral indices closed in the mixed territory last week. The S&P Bankex, Oil & Gas and IT indices have gained by 1.16%, 0.69 and 1.60% respectively. Whereas, S&P Auto and PSU indices lost 2.76% and 2.03% respectively.
HDFC Bank witnesses rise in turnover and Open Interest in Stock Derivatives
The Nifty Index futures saw rise in open interest by 12% for the February series. There was a rise in open interest by 97% and 19% for March and April series in the last week. Implied volatility(IV) rose for put option and call options in the last week. Rise in IV for put and call options shows unsteady support for Nifty at present levels.
HDFC witnesses rise in turnover and Open Interest in Stock Derivatives
HDFC Bank has witnessed rise in open interest in the stock future segment in the last week. Share price of HDFC Bank rose by 5.60% in last week.
On 16th February 2016 post market hours, RBI has removed the restrictions on foreign investors from buying shares of HDFC Bank. Foreign investors investment in Indian private bank is capped at 74%, when the limit touches 72% RBI places these banks on the caution list. Post RBI notice on removal of restrictions for foreign investors, on 17th February 2017 HDFC Bank share price rose by 9.50% intraday. However, at the end of the day share price of HDFC Bank share price fell from highs to close higher by 3.39% after RBI called an emergency meeting of the custodians to deal with the shareholding limit breach by foreign investors.
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 0.164% against USD, USD/INR pair is trading at 67.0467.