A large amount of share buyback announcement, a slew of lawsuits in the US over suspected securities fraud and the ongoing boardroom battle between a founder-promoter and the company’s board will continue to swing the Infosys stock, which has a large weightage in the Nifty & Sensex.
This week, central bankers, including US Federal Reserve’s Janet Yellen and ECB’s Mario Draghi, will meet for their annual get-together at Jackson Hole, Wyoming, to discuss everything that matters to the global economy. Meeting output will be watched closely by market participants.
Last week, Federal Reserve July meeting minutes suggest that Fed policymakers are worried about inflation that has dropped to 1.5% in June 2017 from 1.8% in February 2017, which is below Fed target of 2%, reducing the chance that the Fed will tighten interest rates in the next monetary meeting. The resignation of many top CEOs from US President Donald Trump’s manufacturing council following weak initial response to the Charlottesville issue and the sudden removal of White House Chief Strategist Steve Bannon have ignited fresh tensions in the US political environment.
FIIs/FPIs have bought Indian equity shares worth Rs. 51.6 billion in the month of July 2017 and have sold shares worth Rs.88.64 billion till now in this month.
The Nifty Index futures witnessed rise in open interest by 7% for the August series. There was a rise in open interest by 32% and 7% for September and October series in the last week. Implied volatility(IV) fell for call option and put option in the last week. Fall in IV for put and call option shows steady support for Nifty at present levels.
Global Economy
Eurozone’s current account surplus fell to 28.1 billion Euros in June 2017 from 41.5 billion Euros in the same month of the previous year, as the goods surplus narrowed to 32.3 billion Euros and the services surplus declined to 4.6 billion Euros. In the first half of the year, the current account surplus decreased to 138 billion Euros from 169 billion Euros in the same period of 2016. The inflation rate in the Euro Area was recorded at 1.30% in July 2017.
Federal Reserve July meeting minutes suggest that Fed policymakers are worried about inflation that has dropped to 1.5% in June 2017 from 1.8% in February 2017, which is below Fed target of 2%. Minutes also suggest that the Fed is poised to begin reducing its USD 4.2 trillion bond portfolio.
The trade surplus in the Euro Area narrowed to 26.6 billion Euros in June 2017. Exports rose 3.9% while imports increased at a faster pace at 6.2%. During the first six months of the year, the trade surplus decreased to 107 billion Euros, imports jumped 11% and exports rose 8%.
The number of Americans filing for unemployment benefits declined by 12,000 to 232,000 in the week ended 12th August 2017 from the previous week’s unrevised level of 244,000 and below market expectations of 240,000.
Stocks of crude oil in the US decreased by 8.95million barrels in the week ending 11th August 2017.
Japan’s trade surplus fell 17% to JPY 418.77 billion in July 2017 from JPY 504 billion in the same month a year earlier but above market expectation of a surplus of JPY 392 billion. Exports rose 13% (Y-o-Y) to JPY 6,494.9 billion while imports increased by 16% (Y-o-Y) to JPY 6,076.1 billion.
Global Market
Wall Street slipped on Friday, paring early gains after White House announced that Steve Bannon would stop being Chief Strategy. On weekly basis, Dow Jones fell by 0.84%, Nasdaq fell by 0.64%, S&P 500 fell by 0.65% in last week.
The FTSE 100 fell by 0.9% on Friday, following political tensions in the US and a terror attack in Barcelona. On weekly basis, FTSE rose by 0.19%.
Standard & Poor’s credit rating for Greece stands at B- with positive outlook. Moody’s credit rating for Greece was last set at Caa2 with positive outlook. Fitch’s credit rating for Greece was last reported at B- with positive outlook. In general, a credit rating is used by sovereign wealth funds, pension funds and other investors to gauge the credit worthiness of Greece thus having a big impact on the country’s borrowing costs.
Indian Market
The Sensex and Nifty gained by 1% and 1.31% respectively in the last week.
CPI inflation for July 2017 was at 2.36%. Index rose 1.67% on a (M-o-M). In July 2016 CPI inflation was at 6.07% while for June 2017 it was at 1.46%. Consumer Food Price Index (CFPI) rose 3.21% on (M-o-M) and declined by 0.29% (Y-o-Y) against 2.12% fall in June 2017 and 8.35% rise in July 2016.
India’s trade deficit widened sharply to USD 11.45 billion in July 2017 from USD 7.76 billion in the same month of the previous year and below market expectations of a USD 12 billion gap. Exports advanced 3.9% (Y-o-Y) to USD 22.54 billion and imports jumped 15% (Y-o-Y) to USD 33.99 billion.
Hindalco Industries plans to prepay another Rs.40 billion debt this fiscal to further deleverage its balance sheet. The company plans to bring down its net debt to Ebitda ratio to below 3 from the current level of 3.3. The net debt for Fy17 is of Rs.190 billion. Share price of Hindalco Industries rose by 0.10% in last week.
Tata Global Beverages will launch its premium natural mineral water brand Himalayan in the US market. Himalayan is currently available in India and Singapore. The mineral water brand will now enter the US market in a phased manner, through an agreement signed by its subsidiary with Talking Rain Beverage Company. Share price of Tata Global Beverages rose by 28% in last week.
Portfolio Performance
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Industry and Stock Specific trends
The sectoral indices closed in mixed territory last week. The S&P Bankex, Auto, PSU and Oil & Gas indices rose by 0.31%, 2.14%, 2.45% and 3% respectively in last week. S&P IT fell by 1.8% in last week.
Infosys witnesses highest rise in turnover in Stock Derivatives
The Nifty Index futures witnessed rise in open interest by 7% for the August series. There was a rise in open interest by 32% and 7% for September and October series in the last week. Implied volatility(IV) fell for call option and put option in the last week. Fall in IV for put and call option shows steady support for Nifty at present levels.
Infosys witnesses rise in turnover in Stock Derivatives
Infosys has witnessed rise in open interest in the stock future segment in the last week. Share price of Infosys fell by 6% in last week. On 18th August 2017, Infosys Ltd CEO Vishal Sikka resigned. Vishal sikka who joined as CEO of Infosys in 2014 has resigned from the post due several conflicts of interests with the co-founders. On 19th August 2017, Infosys board announced buyback of shares worth Rs. 130 billion aggregating up to 4.92% of the paid-up equity.
Foreign Institutional Investors (FIIs) Derivative Statistics have shown rise in the open interest across Index Options, Stock Options, Index futures and Stock Futures on a week on week basis.
Currency
Indian rupee appreciated by 0.094% against USD, USD/INR pair closed at 64.10.
