Week ahead, the most important events will be the release of FOMC minutes and US inflation. In domestic market, the government will be releasing IIP & CPI inflation data (on 11th October). Indian companies will start reporting Q2Fy17 results in the upcoming week. This quarter earnings data will be crucial for investors since GST impact has started fading and gives clarity on future growth forecast.
Indian Energy Exchange and General Insurance Corporation of India will open their issue for the market. Click here to read our IPO note on Indian Energy Exchange.
FIIs/FPIs have sold Indian equity shares worth Rs. 113 billion in the month of September 2017 and have sold shares worth Rs. 5 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 33% and 141% for October 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 unemployment rate unexpectedly fell to 4.2% in September 2017 from 4.4% in the previous month and below market expectation of 4.4%. It was the lowest jobless rate since February 2001, as the number of unemployed persons declined by 331,000 to 6.8 million.
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.
ECB’s September policy meeting minutes showed that policymakers agreed to a decision of central bank’s policy of asset purchase program will be continued till end of this year and started to discuss some trade-off between the size and duration of the net asset purchases. Also, policymakers have continued to show concerns about the stronger Euro.
The Nikkei Services PMI in Japan fell to 51 levels in September 2017 from 51.6 levels in August 2017. It was the 12-straight month of expansion in services activity, but the weakest since October 2016.
Services PMI In the Euro Area increased to 55.80 levels in September from 54.70 levels in August 2017.
Stocks of crude oil in the US fell by 6 million barrels in the week ended 29th September 2017, following a 1.846 million decline in the previous period. It is the biggest drop in eight weeks and much more than market expectations of a 0.756 million fall.
Global Market
Wall Street closed mixed on Friday and 3 major indices closed at fresh record highs during previous session as market participants remain optimistic about the tax reform. 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 FTSE 100 increased to an 8-week high of 7,515 levels on Friday, as a weaker pound and a surge in oil prices boosted sentiment.
Crude oil price increased by 2% to USD 50.92 a barrel around 4:00 PM London time on 05th October 2010 after Saudi Arabia King Salman bin Abdulaziz said the country will continue working with Russia in order to achieve stability in the world oil markets. Also, Brent crude oil price jumped 2% to USD 56.81 a barrel.
Indian Market
The Sensex and Nifty gained by 1.70% and 1.95% respectively in the last week.
The Reserve Bank of India kept its benchmark interest rate steady at 6% on 4th October 2017 policy meeting, following a 25bps cut in August 2017 and in line with market expectations. The central bank also increased its inflation forecasts for October-March to a range of 4.2% to 4.6% while the gross value added (GVA) projection was cut to 6.7% from 7.3%. Also, RBI reduced the Statutory Liquidity Ratio by 0.5% to 19.5%.
Click here to read our analysis on “10 year Gsec Yield can rise to 7% on policy – RBI October 2017 Policy Review”.
The Nikkei Services PMI in India jumped to 50.7 levels in September 2017 from 47.5 in the preceding month. It was the first expansion in services sector since June 2017 after the sector was impacted by the goods and services tax (GST) introduced in July 2017. Output and new orders increased for the first time in three months while employment grew the most since June 2011.
Portfolio Performance
Our model Twelve Stock “Strong Core” Portfolio has given a one-year return of 36% and has outperformed the benchmark Sensex by 23%.
On a weekly basis, Twelve Stock “Strong Core” Portfolio has gained by 3% in value and the Benchmark BSE Sensex has gained by 1.70%. The Portfolio outperformed the benchmark by 1.57%.
The Nineteen Stock “Strong Core” Portfolio has given a one-year return of 35% and has outperformed the benchmark BSE 500 by 18%.
On a weekly basis, the Nineteen Stock “Strong Core” Portfolio has gained 4% in value and the Benchmark BSE 500 has gained 3%. The Portfolio outperformed the benchmark by 1%.
Our Shariah Twelve Stock “Strong Core” Portfolio has given one-year return of 42% and has outperformed the benchmark by 30%.
On a weekly basis, Shariah Twelve Stock “Strong Core” Portfolio has gained 4% in value and the Benchmark Sensex has gained by 1.70%. The Portfolio outperformed the benchmark by 2.27%.
On a weekly basis, Ten Stock “Strong Core” Growth Portfolio has gained 5% in value and the Benchmark Sensex has gained by 1.70%. The Portfolio outperformed the benchmark marginally by 4.3%.
Our Global Ten Stock “Strong Core” Portfolio has given one-year return of 30% and has outperformed the benchmark S&P 500 index by 12%.
On a weekly basis, Global Ten Stock “Strong Core” Portfolio has gained 1.25% in value and the Benchmark S&P 500 has gained by 1.19%. The Portfolio outperformed the benchmark by 0.06%.
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 0.68%, 2.40%, 0.84%, 1.64% and 0.66% 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 33% and 141% for October 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 fell by 6% in last week. Tata Steel has reported 15% (Y-o-Y) rise in sales to 6.5 million tonnes for Q2Fy17 and for the H1Fy17 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.
Currency
Indian rupee appreciated by 0.09% against USD, USD/INR pair closed at 65.22.
