A rising consensus on BJP victory in UP Polls suggest that the government will go as a strong favourite to retain its power in 2019 elections. This provides a strong platform for reforms and tough decisions. GST implementation on schedule for 1st July rollout is positive. While poll expectations and results can be completely different, markets will go with a positive sentiment into the 11st March state election results date.
Domestic GDP data and Global economic data have been largely positive and record high equity indices in US and Eurozone are adding to the market sentiment.
Sensex and Nifty are likely to trend higher in the coming weeks.
Last week, the week on week rally in Indian equities was broken, as investors chose to book profits. Indian GDP reported a remarkable resilience to the effect of demonetisation. Next week two initial public offerings – D-Mart owner Avenue Supermarts (Rs 1,870 crore) and Radio City operator Music Broadcast (Rs 488.5 crore) – are scheduled to be opened for subscription.
This week the market will look for exit polls for the Uttar Pradesh State election results.
The Indian economy advanced 7 percent year-on-year in the last three months of 2016, slowing from an upwardly revised 7.4 percent rise in the previous quarter but beating expectations of a 6.4 percent growth. The expansion was mainly driven by a surge public spending and agriculture. The GDP is expected to grow 7.1 percent in the fiscal year ending in March 2017.
The eight core infrastructure sector output, comprising nearly 38% of the weight of items included in the Index of Industrial Production (IIP), rose 3.4% in January 2017 over January 2016. Its cumulative growth was 4.8% in April-January 2016-2017.
US President Donald Trump promised to provide tax cuts for companies and middle-class citizens, invest $1 trillion in infrastructure and increase defence spending in his maiden speech to Congress in the last week. Trump made no suggestions on how he would pay for his plans.
The number of Americans filing for unemployment benefits decreased by 19 thousand to 223 thousand in the week ended February 25th 2017, from the previous week’s revised level of 242 thousand. The figure came in below expectations of 243 thousand to hit the lowest level since March 1973.
Consumer prices in the Euro Area increased by 2 percent year-on-year in February 2017, following a 1.8 percent rise in the previous month and in line with market expectations, the preliminary estimate showed. It was the highest inflation rate since January 2013, on a surge in energy prices.
Wall Street major indices closed at new record highs on 3rd March 2017 as investors continued to assess the prospects for President Trump’s economic plans. On weekly basis, Dow Jones rose by 0.89% and Nasdaq rose by 0.44%.
Snapchats hyped IPO was listed in the last week on the NYSE at USD 24 per share, a 40% gain for the select few investors who got them at the IPO price of USD 17.
The Sensex and the Nifty declined by 0.21% and 0.46% respectively in the last week.
Maruti Suzuki India fell 2.37% to Rs 5,891.80. The company said its total sales rose 10.9% to 0.13 million units in February 2017 over February 2016. The company’s total domestic sales rose 11.7% to 0.12 million units in February 2017 over February 2016. Exports grew by 2.2% to 9,545 units in February 2017 over February 2016.
Tata Motors fell 0.41% to Rs 460.10. The company’s total sales rose 2% to 47,573 vehicles in February 2017 over February 2016. The company’s domestic sales of Tata commercial and passenger vehicles rose 3% at 42,679 units in February 2017 over February 2016.
Mahindra & Mahindra (M&M) rose 0.84%. The company reported a 11% growth in its total tractor sales to 15,007 units in February 2017 over February 2016. The company’s domestic tractor sales grew by 9% to 13,834 units in February 2017 over February 2016. Exports surged 35% to 1,173 units in February 2017 over February 2016. M&M’s total auto sales declined 3% to 42,714 units in February 2017 over February 2016. Total domestic sales fell 2% to 40,414 units in February 2017 over February 2016. Exports dropped 13% to 2,300 units in February 2017 over February 2016.
Hero MotoCorp rose 2.94%. The company reported 4.75% drop in sales of 524,766 units of two-wheelers in the month of February 2017 over February 2016.
Bajaj Auto rose 0.64%. The company said its total vehicles sales rose 0.37% to 0.273 million units in February 2017, compared to 0.272 million units in February 2016. The company’s sales from domestic market declined by 8% to 0.159 million units in February 2017 over February 2016. While sales from export increased by 16% to 0.114 million units in February 2017 over February 2016. Sales from motorcycles segment grew 4% to 0.244 million units in February 2017 over February 2016.
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Industry and Stock Specific trends
The sectoral indices closed mostly in the negative territory last week. The S&P Bankex, Auto, Oil & Gas and PSU indices have declined by 1.89%, 0.9%, 1.81% and 2.59% respectively. The S&P BSE IT index rose 1.23% in the last week.
Reliance Industries witnesses highest rise in turnover in Stock Derivatives
The Nifty Index futures saw rise in open interest by 40% for the March series. There was a rise in open interest by 83% and 74% for April and May series respectively in the last week. Implied volatility(IV) fell for put option and rose for call option in the last week. Fall in IV for put and rise for call option shows unsteady support for Nifty at present levels.
Reliance Industries witnesses rise in turnover in Stock Derivatives
Reliance Industries has witnessed rise in open interest in the stock future segment in the last week. Share price of Reliance Industries rose by 6.4% in last week.
The promoter group entities of Reliance Industries (RIL) propose to restructure their shareholding in RIL by inter se transfer of shares among the promoter group entities and have made the necessary disclosures in this regard in the last week. The proposed inter se transfers will not result in any change in promoter group shareholding in RIL.
As part of the rejig, the Mukesh Ambani promoter group, which owns a near-majority stake in RIL, plans to shrink the number of firms owning shares in the company. The promoter group entities acquiring the stake are Devarshi Commercials LLP, Karuna Commercials LLP, Tattvam Enterprises LLP, Srichakra Commercials LLP, Svar Enterprises LLP, Vasuprada Enterprises LLP, Shreeji Comtrade LLP, and Shrikrishna Tradecom LLP. The above eight promoter group companies of RIL will acquire around 1.19 billion shares, or 36.7%, from 15 other promoter group companies in an inter se transfer of shares.
Foreign Institutional Investors (FIIs) Derivative Statistics have shown rise in the open interest across Index Options, Stock Options and Stock Futures on a week on week basis. Index Futures have witnessed fall in open interest on weekly basis.