Week ahead, the most important events will be the US Fed’s monetary policy meeting and the jobs data report. The Bank of England and the Bank of Japan will also provide an update on their monetary policy. Eurozone will be reporting GDP and inflation numbers. In domestic market, large cap companies like HDFC, Tata Steel and Bharti Airtel will be reporting Q2Fy18 numbers.
FIIs/FPIs have sold Indian equity shares worth Rs. 113 billion in the month of September 2017 and have bought shares worth Rs. 28 billion till now in this month.
The Nifty Index futures witnessed rise in open interest by 1011% for the November series. There was a rise in open interest by 69% for December series in the last week. Implied volatility(IV) rose for put option and fell for call option in the last week. Rise in IV for put and fall in IV for call option shows volatility could rise for Nifty at present levels.
The US economy expanded at an annualized 3% during Q1Fy17, beating expectations of 2.5% and only slightly below 3.1% reported in the previous quarter which was the strongest growth rate since Q1Fy15. Positive contributions from personal consumption expenditures, private inventory investment, non-residential fixed investment, exports, and federal government spending were partly offset by negative contributions from residential fixed investment and state and local government spending.
Consumer prices in Japan rose 0.7% (Y-o-Y) in September 2017, the same as in the prior month and matching market expectation. Prices of food increased at a faster pace while cost of transport was flat and cost of housing continued to fall.
The number of Americans filing for unemployment benefits increased by 10,00 to 233,000 in the week ended 21st October 2017, slightly below market expectations of 235,000.
The ECB held its benchmark refinancing rate at 0% on 26th October 2017, as widely expected, and decided to reduce its quantitative easing programme to a monthly pace of 30 billion Euro from January 2018 with the option of extending it in September 2018.
Stocks of crude oil in the United States increased by 0.856 million barrels in the week ended 20th October 2017, following a 5.731 million decline in the previous period and compared with market expectations of a 2.578 million drop.
The British economy advanced 0.4% during Q3Fy17, beating market expectations of 0.3%. The expansion was mainly driven by services boosted by computer programming, auto trades and retail trade.
The Bank of Russia lowered its benchmark repo rate by 25bps to 8.25% on 27th October 2017, as widely expected, noting that inflation held close to its 4% target in recent months while economy continued to grow at a steady pace.
Wall Street closed modestly in the green on Friday leading the gainers are Intel (7.50%), Microsoft (6.22%) and Apple (3.50%). Indices touched record highs on 24th October 2017 propelled by strong earnings from manufacturers, as Caterpillar, 3M, General Motors and Fiat Chrysler delivered better-than-expected quarterly results. On weekly basis, Dow Jones rose by 0.45%, Nasdaq rose by 1.09% and S&P 500 gained by 0.23% in last week.
Brent crude oil rose above USD 60 a barrel on Friday for the first time in more than two years on rising expectations that OPEC countries and other major producers will agree to extend their production-cut deal through the end of 2018.
The Sensex and Nifty gained by 2.37% and 1.74% respectively in the last week.
Government, on the 24th of October, announced the biggest road construction programme in Indian history to create 84,000 kms of roads over the period of next 5 years with a total investment of Rs 6920 billion. Among the 84,000 kms of total roads, 34,800 kms of National Highways will be built under ‘Bharatmala Pariyojan scheme- Phase I’ with a total investment of Rs 5350 billion. Government is confident about laying 7,000 kms National Highway per year.
Click here to read our article on “3 Best Road Construction Stocks – Government’s “Bharatmala Pariyojan scheme”.
Central Government has announced a Rs 2,100 billion capital infusion plan for PSU banks and biggest highway construction plan to develop approximately 83,677 km of roads by 2022 with an investment of Rs 6,920 billion to boost the economy. This move comes after India’s GDP growth rate fell to 3 years low, which is well below the levels needed to create jobs for the economy to sustain itself. Central Government has tried to step up public spending for growth and has already exhausted 96.2% of the fiscal deficit target for FY-18, making it essential that private investment picks up.
Click here to read our article on “Rs 2.11 trn Bank Recap – Impact on Gsecs, Credits, INR, Sensex & Nifty”.
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Industry and Stock Specific trends
The sectoral indices closed in mixed territory last week. The S&P Bankex, PSU, Auto and Oil & Gas indices rose by 4.5%, 10%, 1.9% and 2.13% respectively in last week. S&P IT index by 0.37% in last week.
YES Bank witnesses highest rise in turnover in Stock Derivatives
The Nifty Index futures witnessed rise in open interest by 1011% for the November series. There was a rise in open interest by 69% for December series in the last week. Implied volatility(IV) rose for put option and fell for call option in the last week. Rise in IV for put and fall in IV for call option shows unsteady support for Nifty at present levels.
YES Bank witnesses rise in turnover in Stock Derivatives
YES Bank has witnessed rise in open interest in the stock future segment in the last week. Share price of YES Bank fell by 15% in last week. YES Bank has reported Q2FY18 results, net profit rose y 25% (Y-o-Y) to Rs. 10 billion but bank has reported provisions of Rs. 4 billion which is 150% (Y-o-Y) higher. Yes Bank reported gross NPAs of Rs. 20 billion.
Foreign Institutional Investors (FIIs) Derivative Statistics have shown rise in the open interest across Index Options, Stock Options, Stock futures and Index futures on a week on week basis.
Indian rupee depreciated by 0.07% against USD, USD/INR pair closed at 65.09.