The Sensex and the Nifty gained by 3.14% and 3.50% respectively in the last week. The markets would take cues after the announcement of the Budget in the next week. FIIs, DIIs and Retail Investors are expected to remain cautious ahead of the Budget Day (01st February 2017) and markets are likely to witness increase in volatility in the next week. The Sensex and Nifty are expected to continue rallying post the announcement of the Budget as the Government is expected to make up for lost ground post the demonetization move.
Last week Indian equity indices witnessed sharp gains due to December quarter earning numbers reported to be stable and even better than expected in some cases. Implied volatility(IV) rose for put and call options in the last week. Rise in IV for call and put option shows very marginal support for Nifty at present levels.
The US economy increased at an annualized 1.9% during Q4Fy16, lower than a 3.5% expansion in the previous period and below market expectations of 2.2%. The deceleration in real GDP in the fourth quarter reflected a downturn in exports, an acceleration in imports, and a downturn in federal government spending.
The number of Americans filing for unemployment benefits increased by 22,000 to 259,000 in the week ended 20th January 2017, its highest level in one month and above market expectations of 247,000.
Inventory of crude oil in the US rose by 2.84 million barrels in the week ended 20th January 2017, following a 2.347 million increase in the previous week and compared with market expectations of a 2.815 million rise. On a weekly basis, the price of brent crude rose by 0.13%.
The trade surplus in Japan widened 361.6% (Y-o-Y) to JPY 641.4 billion in December 2016, beating market expectations of a JPY 270 billion surplus. Exports jumped 5.4% (Y-o-Y), amid improving global demand and a surge in sales to China while imports slumped at a rate of 2.6% (Y-o-Y).
Consumer prices in Japan increased 0.3% (Y-o-Y) in December 2016, easing from a 0.5% rise in November 2016 but above market expectations of 0.2%. Prices rose tepidly for food and continued to fall for housing, utilities and transport.
The UK economy advanced 0.6% during Q4Fy16, the same pace as in the previous period and better than market expectations of a 0.5% expansion. Services industries were the main drivers of growth.
The Wall street indices closed at record highs on 25th January 2017, led by financial and bank shares. Dow Jones Industrial Average closed at a record high 20,068, Nasdaq closed at 5656, S&P 500 closed at 2298. Dow crossed the 20,000 level for the first time even, which is highly positive for market sentiment. On a weekly basis, Dow Jones gained by 1.34%, Nasdaq gained by 1.89%, S&P gained by 1.03%.
Click here to read our analysis on “Dow 20,000 equals Sensex 30,000?”
European equity indices, most shares declined, with autos and banks among the worst performers after US President Trump comments on trade tariffs. In addition, investors were cautious ahead of the planned meeting between Trump and May. On weekly basis, FTSE lost by 0.20% and DAX gained by 1.58%.
Foxxcon, the global leader in contract based electronic manufacturer, is planning to set up a display making unit in US with an investment of USD 7 billion. Share price of Foxxcon rose by 3% in last week.
The Sensex and the Nifty gained by 3.14% and 3.50% respectively in the last week.
PVR plans to invest RS 2500 – 3000 million in next fiscal year to launch a action web-platform called VKAAO. By FY17 end, company would add 25-30 screens to reach its target of 600 screens. Company is expecting to add 70-80 screens in Fy18. Stock price of PVR fell by 1% in last week.
Mahindra & Mahindra buys majority stake in Turkey based company Hisarlar for USD 19 million, this association will help Mahindra & Mahindra in growing its farm equipment business in markets including Europe & Turkey. Hisarlar has 49% market share in agriculture machinery in Turkey. Stock price of Mahindra & Mahindra rose by 3% in last week.
Indraprastha Gas aims to sell 0.1 million cubic metres a day of gas to factories in Rewari, where the company is about to launch its services and 0.2 million cubic metres a day to housing complexes in Delhi in a span of 3 years. Stock price of Indraprastha Gas rose by 3% in last week.
L&T reported Q3Fy17 results, Consolidated net profit increased by 39% (Y-o-Y) to Rs. 9724 million, topline saw a tepid growth of 1.4% (Y-o-Y) to Rs.262860 million. Company management slashed its full year revenue growth guidance of 10% from 12%-15% due to challenging business conditions. Stock price of L&T rose by 0.03% in last week.
Just Dial reported Q3Fy17 results, net profit increased by 6%(Y-o-Y) to Rs. 274 million, income from operations increased by 8.5% (Y-o-Y) to Rs.1802 million. Stock price of Just Dial rose by 2% in last week.
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Industry and Stock Specific trends
The sectoral indices closed in the positive territory last week. The S&P Bankex, Auto, PSU, Oil & Gas and IT indices have gained by 4.76%, 4.48%, 5.48%, 4.87% and 0.53% respectively.
The Nifty Index futures saw rise in open interest by 402% for the February series. There was a rise in open interest by 85% for March series in the last week. Implied volatility(IV) rose for put and call options in the last week. Rise in IV for call and put option shows unsteady support for Nifty at present levels.
ICICI Bank witnesses rise in turnover and Open Interest in Stock Derivatives
ICICI Bank has witnessed significant rise in open interest in the stock future segment in the last week, open interest increased by 4105% on weekly basis. Stock price of Axis Bank rose by 2% in last week.
On 27th January 2017, ICICI Bank stock price rose by 5% its maximum gain in last three months ahead of Q3FY17 results which will reported by ICICI Bank management on 31st January 2017. Markets are expecting a net profit of Rs. 22010 million and loan book growth of 13% (Y-o-Y).
Foreign Institutional Investors (FIIs) Derivative Statistics have shown fall in the open interest across Index Options, Index Futures, Stock Options and Stock Futures on a week on week basis.
Indian rupee depreciated by 0.17% against USD, USD/INR pair is trading at 68.2043.