Week ahead, the most important events will be the release of industrial production and housing trend in US. Europe and China would be declaring inflation numbers. In domestic market, large cap companies like Wipro, Axis Bank and Bajaj Auto will be reporting Q2Fy18 numbers.
FIIs/FPIs have sold Indian equity shares worth Rs. 113 billion in the month of September 2017 and have sold shares worth Rs. 17 billion till now in this month.
The Nifty Index futures witnessed rise in open interest by 14% for the October series. There was a rise in open interest by 17% and 153% for November and December series respectively in the last week. Implied volatility(IV) rose for call option and fell for put option in the last week. Rise in IV for call and fall in IV for put option shows unsteady support for Nifty at present levels.
Global Economy
US consumer prices increased 2.2% (Y-o-Y) in September 2017, missing market expectations of 2.3% and following a 1.9% gain in the previous month. It was the highest inflation rate since April 2017, as hurricane-related production disruptions at oil refineries in the Gulf Coast area boosted energy prices.
Consumer prices in Mexico rose 6.35% (Y-o-Y) in September 2017, easing from 6.66% in the previous month and lower than market expectations of 6.48%. The inflation rate decelerated for the first time since June 2016 to hit the lowest level in three months, driven by lower prices of food.
Non-farm payrolls in the US fell by 33,000 in September 2017, following an upwardly revised 169,000 rise in August 2017 and well below market expectations of a 90,000 gain.
The trade deficit in the US narrowed to USD 42 billion in August 2017 from a revised USD 43.6 billion in July 2017 and less than market expectations of a USD 42.7 billion gap.
Industrial production in the UK increased 0.2% (M-o-M) in August 2017, following an upwardly revised 0.3% rise in the prior month and matching market expectations.
The UK’s deficit on trade in goods and services widened by GBP 1.39 billion to GBP 5.63 billion in August 2017 from an upwardly revised GBP 4.24 billion gap in July 2017 and way above market expectations of a GBP 2.80 billion gap. It was the largest trade deficit since September 2016, as the goods trade gap hit a record high.
Japan’s current account surplus increased to 2.38 JPY trillion in August 2017 and above market estimates of a surplus of 2.26 JPY trillion. The surplus of goods account widened to 3.19 JPY trillion (from 2.18 JPY trillion in August 2016), as exports jumped 16% (Y-o-Y) while imports surged by 15% (Y-o-Y).
China’s trade surplus fell sharply to USD 28.47 billion in September 2017 from USD 40.94 billion in the same month a year earlier and below market consensus of USD 39.50 billion. Imports jumped 18.7% (Y-o-Y) to USD 169.79 billion and exports rose at a slower rate 8% (Y-o-Y) to USD 198 billion.
Stocks of crude oil in the United States fell by 2.747 million barrels in the week ended 6th October 2017, following a 6.023 million decline in the previous period and compared with market expectations of a 1.991 million drop.
Global Market
Wall Street closed modestly in the green on Friday, as the US consumer prices increased 2.2% (Y-o-Y) in September 2017, missing expectations of 2.3% and following a 1.9% gain in August 2017. It was the highest inflation rate since April 2017 as hurricanes boosted gasoline prices. Excluding food and energy, inflation stood at 2-year low of 1.7%. On weekly basis, Dow Jones rose by 1.64%, Nasdaq rose by 1.46% and S&P 500 gained by 1.20% in last week.
The Nikkei 225 touched two decades high of 20,955 on Thursday, its highest closing level since December 1996, following the record highs overnight on Wall Street after the release of minutes of the US Fed’s latest monetary policy meeting.
Crude oil price increased by 2% to USD 50.48 a barrel on Tuesday on news that Saudi Arabia is planning to further curb oil exports in an attempt to reduce the global supply glut. Also, Brent crude oil price jumped 1.2% to USD 56.42 a barrel.
Indian Market
The Sensex and Nifty gained by 1.94% and 1.88% respectively in the last week.
Consumer price inflation came in at increased 3.28% (Y-o-Y) in September 2017, unchanged from the previous month’s five-month high and below market expectations of 3.6%. Food inflation slowed while prices rose at a faster pace for housing, fuel and clothing. Inflation Rate in India averaged 6.80% from 2012 until 2017, reaching an all-time high of 12.17% in November 2013 and a record low of 1.54% in June 2017.
Industrial production rose 4.3% (Y-o-Y) in August 2017, beating market consensus of 2.4% and following a downwardly revised 0.9% gain in July 2017.
India’s trade deficit widened to USD 8.98 billion in September 2017 from USD 9.07 billion in the same month of the previous year, but below market expectations of a USD 11 billion gap. Exports advanced 25% (Y-o-Y) to USD 28.61 billion.
Cochin Shipyard Ltd has emerged as the lowest bidder for a project of the Indian Navy and the Rs. 54 billion contract for eight vessels is likely to be concluded after due process. Share price of Cochin Shipyard rose by 10% in last week.
Bharti Airtel is buying the telecom arm of the Tata group virtually for free as it would be only required to pay a part of the unpaid spectrum charges of Tata Teleservices amounting to Rs.20 billion.
Click here to read our article on Tata Teleservices Succumbs to the Pressure for Survival in the Telecom Industry – How Many More to Go?
Portfolio Performance
Our model Twelve Stock “Strong Core” Portfolio has given a one-year return of 41% and has outperformed the benchmark Sensex by 25%.
On a weekly basis, Twelve Stock “Strong Core” Portfolio has gained by 5% in value and the Benchmark BSE Sensex has gained by 2%. The Portfolio outperformed the benchmark by 3%.
The Nineteen Stock “Strong Core” Portfolio has given a one-year return of 39% and has outperformed the benchmark BSE 500 by 18%.
On a weekly basis, the Nineteen Stock “Strong Core” Portfolio has gained 3.5% in value and the Benchmark BSE 500 has gained 1.7%. The Portfolio outperformed the benchmark by 1.8%.
Our Shariah Twelve Stock “Strong Core” Portfolio has given one-year return of 51% and has outperformed the benchmark by 33%.
On a weekly basis, Shariah Twelve Stock “Strong Core” Portfolio has gained 5.3% in value and the Benchmark Sensex has gained by 1%. The Portfolio outperformed the benchmark by 3.3%.
On a weekly basis, Ten Stock “Strong Core” Growth Portfolio has gained 5.3% in value and the Benchmark Sensex has gained by 2%. The Portfolio outperformed the benchmark marginally by 3.3%.
Our Global Ten Stock “Strong Core” Portfolio has given one-year return of 34% and has outperformed the benchmark S&P 500 index by 14%.
On a weekly basis, Global Ten Stock “Strong Core” Portfolio has gained 1% in value and the Benchmark S&P 500 has gained by 0.15%. The Portfolio outperformed the benchmark by 0.71%.
Industry and Stock Specific trends
The sectoral indices closed in positive territory last week. The S&P Bankex, PSU, Auto, IT and Oil & Gas indices rose by 2%, 0.01%, 0.67%, 2.59% and 1.02% respectively in last week.
Tata Steel witnesses highest rise in turnover in Stock Derivatives
The Nifty Index futures witnessed rise in open interest by 14% for the October series. There was a rise in open interest by 17% and 153% for November and December series respectively in the last week. Implied volatility(IV) rose for call option and fell for put option in the last week. Rise in IV for call and fall in IV for put option shows unsteady support for Nifty at present levels.
Tata Steel witnesses rise in turnover in Stock Derivatives
Tata Steel has witnessed rise in open interest in the stock future segment in the last week. Share price of Tata Steel rose by 2% in last week. Tata Steel has reported 15% (Y-o-Y) rise in sales to 6.5 million tonnes for Q2Fy18 and for the H1Fy18 company reported 12% (Y-o-Y) growth. Tata Steel management has announced JV with Thyssenkrupp on 20th September 2017. ThyssenKrupp, which has also suffered from headwinds in the European steel industry, will now partner with Tata Steel in a new company which will be the second-largest steelmaker in Europe. The topline for this JV is expected to around 15 billion Euros and also saves cost of 500 million Euros for the both firms together.
Reliance Industries also witnessed rise in open interest in the stock future segment in the last week. Share price of Reliance Industries rose by 6% in last week. Reliance Industries reported Q2Fy18 results, net profit for Q2FY18 rose by 12% (Y-o-Y) to Rs. 81 billion. Reliance Jio reported a EBITDA of Rs. 14 billion and with an average revenue per user (ARPU)of Rs. 156.4 per month.
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.
Currency
Indian rupee appreciated by 0.445% against USD, USD/INR pair closed at 64.93.
The Mexican peso appreciated by 1.2% to 18.912 per USD on 12th October 2017 as speculation regarding NAFTA talks intensified ahead of US made content negotiations in the car industry.
