The Reserve Bank of India’s (RBI) Monetary Policy Committee (MPC) will announce the outcome of its meeting on 02nd August 2017. Market participants are largely anticipating an interest rate cut due to falling consumer price inflation. FIIs/FPIs have bought shares worth Rs.51.72 billion (Indian Equity Market) till now in this month. On global front, US investors will be closely watching non-farm payrolls, balance of trade and factory orders which will be announced later this week.
Last week, share price of Dr. Reddy’s Laboratories and ICICI Bank Ltd fell 5.9% and 3.6%, respectively, after reporting weak quarterly results.
The US economy expanded at an annualized 2.6% growth in Q2, following a 1.2% growth in Q1 and matching market expectations. The growth was boosted by a rise in business equipment investment, consumption, and federal government spending. In contrast, residential fixed investment declined and both exports and non-residential fixed investment slowed.
The Federal Reserve left the target range for its federal funds rate unchanged at 1% to 1.25% during its July 2017 meeting and policymakers mentioned that they will start reducing its USD 4.5 trillion portfolio relatively soon. The committee considered near-term risks to the economic outlook as roughly balanced, but said it will closely monitor inflation.
Consumer prices in Japan rose 0.4% (Y-o-Y) in June 2017, the same as in the prior two months and matching market estimates. Food inflation was steady while cost of transport and housing declined. Core consumer prices, which exclude fresh food, went up 0.4% (Y-o-Y) and unchanged from the preceding month’s reading and in line with market estimates. The figure remained at its highest level since March of 2015.
The UK economy expanded at an annualized 0.3% growth in Q2, in line with market expectations and following a 0.2% expansion in Q1. The growth was driven by service sector mainly boosted by retail trade and film production and distribution, while construction and manufacturing contracted.
The Eurozone Manufacturing PMI fell to 56.8 in July 2017 from 57.4 in June 2017 and below market expectations of 57.2. It was the lowest reading since March 2017, as output expanded the least in six months while export order book growth remained solid and the pace of job creation was the second-highest on record.
Stocks of crude oil in the United States fell by 7.208 million barrels in the week ended 21st July 2017, following a 4.72 million drop in the previous period and much higher than market expectations of a 2.62 million decline.
The number of Americans filing for unemployment benefits increased by 10,000 to 244,000 in the week ended 21st July 2017 from the previous week’s revised level of 234,000 and above market expectations of 241,000.
Wall Street closed mixed on Friday, as market participants assessed the US economy expansion at an annualized 2.6% in Q2, following a 1.2% growth in Q1 and matching market expectations. Technology shares ended mostly in the green, although a 2.5% decline in Amazon stocks following downbeat earnings for Q2. The Dow Jones gained 34 points to a new record of 21830. On weekly basis, Dow jones rose by 1.16%, S&P 500 lost by 0.02% and Nasdaq fell by 0.20%.
Oil prices increased for the fifth session and were up more than 1% on Friday, after US stockpiles fell more than expected and Saudi Arabia said earlier in the week that it would cut oil output in August 2017. On weekly basis, Brent crude oil rose by 9.3%.
The Sensex and Nifty gained by 0.88% and 1% respectively in the last week.
Competition Commission of India (CCI) has approved Idea Cellular’ s proposed merger with Vodafone India. The two had announced the USD 23 billion deal to create India’s leader in the telecom sector. Share price of Idea Cellular rose by 5% in last week.
Click here to read our analysis on “RJio forces Idea & Vodafone Merger”
Reliance Defence and Engineering Limited launched the first two Naval Offshore Patrol Vessels (NOPVs) Shachi and Shruti at their shipyard in Pipavav, Gujarat. The ships are part of a five-ship project being constructed for the Indian Navy. The cost of 5 NOPVs being built by Reliance is approximately Rs 25 billion. As of Fy17, sales of Reliance Defence and Engineering stood at Rs. 5.57 billion and operating margin is 4.5%. Share price of Reliance Defence and Engineering rose by 5% in last week.
Our model Twelve Stock Retirement Portfolio has given a one-year return of 40% and has outperformed the benchmark Sensex by 24%.
On a weekly basis, Twelve Stock Portfolio has gained by 0.18% in value and the Benchmark BSE Sensex has gained by 0.88%. The Portfolio underperformed the benchmark by 0.70%.
The Nineteen Stock Portfolio has given a one-year return of 19% and has outperformed the benchmark BSE 500 by 20%.
On a weekly basis, the Nineteen Stock Portfolio has gained 0.50% in value and the Benchmark BSE 500 has gained 0.47%. The Portfolio outperformed the benchmark by 0.03%.
Our Shariah Twelve Stock Model Retirement Portfolio has given one-year return of 48% and has outperformed the benchmark by 33%.
On a weekly basis, Shariah Twelve Stock Model Retirement Portfolio has lost 0.02% in value and the Benchmark Sensex has gained by 0.88%. The Portfolio underperformed the benchmark by 0.89%.
On a weekly basis, Ten Stock Growth Portfolio has gained 0.25% in value and the Benchmark Sensex has gained by 0.88%. The Portfolio underperformed the benchmark by 0.63%.
Our Global Ten Stock Model Retirement Portfolio has given one-year return of 29% and has outperformed the benchmark S&P 500 index by 15%.
On a weekly basis, Global Ten Stock Model Retirement Portfolio has lost 0.32% in value and the Benchmark S&P 500 has lost by 0.02%. The Portfolio underperformed the benchmark by 0.30%.
Industry and Stock Specific trends
The sectoral indices closed in mixed territory last week. The S&P Bankex, IT, PSU and Oil & Gas indices rose by 1.91%, 0.38%, 0.07% and 0.10% respectively in last week. S&P Auto index fell by 0.13%.
Indian rupee appreciated by 0.264% against USD, USD/INR pair closed at 64.14.