The Sensex and the Nifty rose 1% and 1.22% respectively in the last week as global markets rallied given that the Fed is expected to be on track to raise interest rates for the US economy in the month of December 2015.The minutes from last month’s US Federal Reserve meeting showed most officials anticipated economic conditions could be strong enough for a December interest-rate increase. The Fed has kept its benchmark for short-term rates near zero since late 2008. A strong and sustained recovery in the US economy is giving confidence to emerging markets such as India as economic growth may pick up in the time to come.
Macroeconomic data was not so encouraging for the Indian economy with exports declining and inflation nudging up marginally as compared to the previous month. Read our report on trade deficit and inflation.
The Seventh Central Pay Commission has proposed a 23.55% hike in salary, allowances and pension for 4.8 million government employees and 5.5 million pensioners. The total financial impact would be Rs 1.02 trillion during FY 2016-17. Of the total financial impact of Rs.1.02 trillion, Rs.736.50 billion would be borne by the General Budget and Rs.284.50 billion by the Railway Budget. Read our analysis on 7th Pay Commission Report and its impact on Government Finances.
Portfolio and Sector Performance
Our model Twelve Stock Retirement Portfolio has given one-year returns of 21.46% and has outperformed the benchmark Sensex by 30.33%.
On a weekly basis, twelve stock portfolio has gained 6.14% in value and the Benchmark BSE Sensex has gained by 1%. The Portfolio has outperformed the benchmark by 5.14%.
The Nineteen Stock Portfolio has given one-year returns of 12.17% and has outperformed the benchmark BSE 500 by 15.13%.
On a weekly basis, nineteen stock portfolio has gained 3.31% in value and the Benchmark BSE 500 has gained 1.38%. The Portfolio has outperformed the benchmark by 1.92%.
The Global Ten Stock Model Retirement Portfolio has given a return of 23.95% and has outperformed the benchmark S&P 500 index by 23.6% since inception on 8th April 2015.
On a weekly basis, Global Ten Stock Model Retirement Portfolio has gained 7.22% in value and the Benchmark S&P 500 has gained by 3.27%. The Portfolio has outperformed the benchmark by 3.95%.
Industry and Stock Specific trends
The sectoral indices closed in mixed territory last week. The S&P BSE Bankex, Auto, PSU and Oil and Gas indices rose 0.56%, 2.02%, 1.75% and 4.28% respectively in the last week.
Stock Gainers and Losers
Gas Authority of India Ltd. stock rose 24% in the last week. The surge in the price of Gas Distribution companies was on account of the new draft hydrocarbon policy announced in the last week.
The Oil Ministry in the last week issued a paper on new fiscal and contractual regime for award of hydrocarbon acreages with a view to revive investor interest in oil and gas exploration by simplifying rules. It proposed to free natural gas pricing as well as replace the controversial Production Sharing Contract (PSC) with simpler revenue-sharing regime for all future field auctions.
Intellect Design Arena stock rose 7% in the last week. The insurance software division of Intellect Design Arena announced the launch of its Digital Distribution Suite for the UK Life and Pension markets in the last week. The Digital Distribution suite is designed to strengthen the customer relationship throughout all touch points of the sales and service process, delivering consistent, high quality customer experience irrespective of channel or device. Intellect Design Arena is a Polaris group company – a global leader in financial technology for banking, insurance and other financial services. A uniquely focused products business, Intellect addresses the needs of financial institutions in varying stages of technology adoption.
Tata Steel stock rose 3% in the last week. The Company announced that it has taken a step towards beginning a new chapter by dedicating its Kalinganagar steel plant to Odisha. The Kalinganagar steel plant is the largest single-location Greenfield steel project in India. The first phase of 3 million tonnes per annum (MnTPA) of 6 MnTPA will produce world-class flat, lighter, high-tensile strength steel.
Reliance Industries stock rose 2% in the last week. The Union Cabinet has given its approval for determination of marketing margin for supply of domestic gas to urea and LPG producers in the last week. Marketing margin is the charge levied by gas marketing company on its consumers over and above the cost or basic price of gas for taking on the additional risk and cost associated with marketing gas. Currently, different transporters are charging different marketing margins for supply of natural gas.
The derivative market saw fall in open interest in Nifty futures by 10%. Nifty at the money call and put option volatility declined last week.
The Rupee marginally depreciated in the last week against the USD. FIIs were net equity sellers to the tune of USD 425 million in the third week of November 2015.