The Sensex and the Nifty ended marginally positive in the last week. Sensex and Nifty are expected to rally in the week ahead as the rate cut announcement from Peoples Bank of China came after the trading hours on the last day of the week. Increase in the ECB stimulus would also help support global equity markets in the week ahead. Cheaper liquidity in the global financial markets is expected to stimulate sluggish global growth. Cheaper liquidity although positive in the short term for equity markets may fuel inflation to higher levels in the long term for economies.
China’s economy grew at its slowest rate in six years in the third quarter of the calendar year 2015. The world’s second largest economy expanded by 6.9% in Q3 September 2015, slowing from a 7% increase in the previous quarter.
The People’s Bank of China cut its benchmark one-year lending rate by 25bps to 4.35% in the last week aiming to bolster the economy. Policymakers also decided to lower reserve requirements for banks. The one-year deposit rate was lowered by 25 basis points to 1.5%, effective from October 24th. The reserve requirement ratio for all commercial banks was cut by 50bps with an additional 50 bps reduction for some institutions.
European Central Bank (ECB) in its monetary policy meeting in the last week indicated that the central bank could move next month to expand stimulus measures in the face of sluggish global growth that is exacerbating worries about persistently low inflation in the Eurozone. The ECB embarked on a massive bond-buying program in March this year. The ECB kept interest rates steady after the latest monetary policy review.
Global Credit rating agency Standard & Poor’s Ratings Services (S&P) has affirmed its ‘BBB-‘ long-term and ‘A-3’ short-term sovereign credit rating on India with stable outlook on the rating. S&P said in a statement on 19 October 2015 that its current ratings on India reflect the country’s sound external profile and improved monetary credibility. However, India’s low per capita income and weak public finances are two major constraints on India’s sovereign ratings according to S&P. S&P further said that based on its current assessment, the rating agency is unlikely to change its current sovereign ratings on India till at least 2016.
Portfolio and Sector Performance
Our model Twelve Stock Retirement Portfolio has given one-year returns of 24.89% and has outperformed the benchmark Sensex by 22.7%.
On a weekly basis, twelve stock portfolio has gained 1.9% in value and the Benchmark BSE Sensex has gained by 0.94%. The Portfolio has outperformed the benchmark by 0.96%.
The Nineteen Stock Portfolio has given one-year returns of 18.95% and has outperformed the benchmark BSE 500 by 12.38%.
On a weekly basis, nineteen stock portfolio has gained 1.19% in value and the Benchmark BSE 500 has gained 0.58%. The Portfolio has outperformed the benchmark by 0.61%.
The Global Ten Stock Model Retirement Portfolio has given a return of 14.64% and has outperformed the benchmark S&P 500 index by 14.96% since inception on 8th April 2015.
On a weekly basis, Global Ten Stock Model Retirement Portfolio has gained 3.09% in value and the Benchmark S&P 500 has gained by 2.07%. The Portfolio has outperformed the benchmark by 1.02%.
Industry and Stock Specific trends
The sectoral indices closed in marginally positive territory last week. The S&P BSE Bankex, IT and Oil and Gas indices rose 0.09%, 2.92% and 0.62% respectively in the last week. S&P BSE Auto and PSU index declined 0.52% and 0.37% respectively in the last week.
Stock Gainers and Losers
TCS stock rose 2.43% in the last week. The company in the last week announced a global alliance partnership with Tableau Software, a global leader in rapid-fire, easy-to-use business analytics software.
Infosys stock rose 5% in the last week The Company announced signing a definitive agreement to acquire Noah Consulting, LLC, a leading provider of advanced information management consulting services for the oil and gas industry.
Wipro stock declined 2% in the last week. The company’s consolidated net profit rose 7% to Rs 22.40 billion with a 7% growth in gross revenue to Rs 125.10 billion in Q2 September 2015 over Q2 September 2014.
The derivative market saw fall in open interest in Nifty futures by 8.84%. Nifty at the money call and put option volatility declined last week.
The Rupee depreciated marginally in the last week against the USD. FIIs were net equity buyers to the tune of USD 300 million in the fourth week of October 2015.