Week ahead, the most important data in US include trade balance and consumer credit change. Market participants will also be watching for Bank of England monetary policy decision and trade balance data of China. In domestic market, market participants will watch for RBI monetary policy decision and Q3Fy18 earning figures of Tata Motors, Lupin, ONGC, SBI, HPCL and Eicher Motors. Sensex & Nifty would witness spurt in volatility in this week.
FIIs/FPIs have bought Indian equity shares worth Rs. 137 billion in the month of January 2018 and bought shares worth Rs. 9 billion till now in this month.
The Nifty Index futures witnessed fall in open interest by 9% for the February series. There was no rise in open interest for March series in the last week. Implied volatility(IV) fell for put option and call option in the last week. Fall in IV for put and call option shows steady support for Nifty at present levels. But markets are expected to remain volatile in this week.
The Federal Reserve kept its target range for the federal funds rate unchanged at 1.25% -1.5% on 31st January 2018 but signalled a rate hike in March 2018 is on the table. The decision came in line with market forecasts. Policymakers said inflation is seen rising this year and economic conditions are expected to evolve in a manner that will warrant further gradual increases in the federal funds rate.
US unemployment rate stood at a 17-year low of 4.1% in January 2018, unchanged from the previous month and in line with market consensus. The number of unemployed increased by 108,000 to 6.68 million.
Non-farm payrolls in the US increased by 200,000 in January 2018, following an upwardly revised 160,000 in December and beating market expectations of a 180,000. Employment continued to trend up in construction, food services, health care, and manufacturing.
The Eurozone economy expanded at 0.6% (Y-o-Y) during Q4Fy17, in line with market expectations and following an upwardly revised 0.7% expansion in the previous period.
Russia’s economy expanded at 1.8% (Y-o-Y) during Q3Fy17, following a 2.5% expansion reported in the previous period. In 2017, the economy expanded by 1.5%, compared with a 0.2% contraction in 2016.
The IHS Markit US Manufacturing PMI was confirmed at 55.5 levels in January 2018, the same as in the preliminary estimate and above 55.1 levels in December 2017.
The IHS Markit Eurozone Manufacturing PMI fell to 59.6 levels in January 2018 from a record high levels of 60.6 in December 2017 and below market expectations of 60.6 levels, preliminary figures showed.
The IHS Markit UK Manufacturing PMI fell to 55.3 levels in January 2018 from December 2017 final reading of 56.2 level and below market expectations of 56.5 level.
The Nikkei Japan Manufacturing PMI rose to 54.8 levels in January 2018 from December 2017- 54 levels and greater than market consensus of 54.4 level.
The number of Americans filing for unemployment benefits dropped by 1,000 to 230,000 in the week ended 27th January 2018, from the previous week’s downwardly revised level of 231,000 and compared with market expectations of 238,000.
Stocks of crude oil in the US rose by 6.776 million barrels in the week ended 26th January 2018, following a 1.071 million drop in the previous period and compared with market expectations of a 0.126 million increase. It marked the first weekly increase in two-and-a-half months.
Wall Street plummeted to book their worst week in two years on Friday amid a jump in yields after the jobs report showed the US economy added a better than expected 200,000 jobs in January 2018 and the annual rise in wages was the strongest in more than 8 years, with the US jobless rate standing at a 17-year low of 4.1% in January 2018. On Friday, Dow Jones plunged 2.5% to 25521, S&P 500 lost 2.1% to 2762, Nasdaq retreated 2% to 7242. During the week, Dow Jones declined by 4.12%, Nasdaq plunged by 3.5% and S&P 500 lost by 3.85%.
The DAX 30 lost 1.7% to close at 12785 on Friday, the lowest since 28th September 2017 after Deutsche Bank reported a pre-tax loss of 1.3 billion Euros for the Q4Fy17 and its third consecutive full-year loss. Deutsche Bank shares plunge 6.2%.
The Sensex and Nifty plunged by 2.73% and 2.79% respectively in the last week.
The Finance Minister has mentioned “India can achieve double digit growth rates under two conditions — if the revenue levels rise, pushing up spending capacity, and if there is a sustained global boom.” Ministry is also Indian economy’s growth can canter into an 8% plus growth track if crude oil prices stay within manageable limits and the monsoon rains turn out to be normal this year. (Source-Moneycontrol)
India’s fiscal deficit widened to Rs. 6.21 trillion in April-December 2017 from Rs. 5.01 trillion in the same period of the previous fiscal year. The budget gap was equivalent to 113.6% of the government’s target for the whole financial year, compared with 94% last year.
The Nikkei Manufacturing PMI in India fell to 52.4 levels in January 2018 from 54.7 levels in the prior month and far below market consensus of 54.5 levels. PMI fell due to weakest expansion in manufacturing sector since October 2017, as both output and new orders expanded the least in three months.
The markets are correcting due to 5 primary reasons including reasons such as expected rise in bond yields in the US, global risk aversion, introduction of the long term capital gains tax in the 2018-19 Budget, rise in the volatility associated with equities and the benchmark indices rallying ahead of fundamentals over the last one year.
Click here to read our analysis on “5 factors for Fall in Sensex & Nifty & What Should You Do?”
Our model Twelve Stock “Strong Core” Portfolio has given a one-year return of 45% and has outperformed the benchmark Sensex by 21%.
On a weekly basis, Twelve Stock “Strong Core” Portfolio has declined by 4.24% in value and the Benchmark BSE Sensex has declined by 2.73%. The Portfolio underperformed the benchmark by 1.51%.
The Nineteen Stock “Strong Core” Portfolio has given a one-year return of 43% and has outperformed the benchmark BSE 500 by 19%.
On a weekly basis, the Nineteen Stock “Strong Core” Portfolio has declined by 4.23% in value and the Benchmark BSE 500 has declined 4.18%. The Portfolio underperformed the benchmark marginally by 0.05%.
Our Shariah Twelve Stock “Strong Core” Portfolio has given one-year return of 54% and has outperformed the benchmark by 30%.
On a weekly basis, Shariah Twelve Stock “Strong Core” Portfolio has declined by 4.82% in value and the Benchmark Sensex has declined by 2.73%. The Portfolio underperformed the benchmark by 2.09%.
On a weekly basis, Ten Stock “Strong Core” Growth Portfolio has declined by 4.63% in value and the Benchmark Sensex has declined by 2.73%. The Portfolio underperformed the benchmark by 1.90%.
Our Global Ten Stock “Strong Core” Portfolio has given one-year return of 44% and has outperformed the benchmark S&P 500 index by 24%.
On a weekly basis, Global Ten Stock “Strong Core” Portfolio has declined by 2.69% in value and the Benchmark S&P 500 has declined by 3.85%. The Portfolio outperformed the benchmark by 1.16%.
Industry and Stock Specific trends
The sectoral indices closed in negative territory last week. The S&P IT, Auto, PSU, Oil & Gas index and Bankex indices declined by 1.53%, 1.78%, 5.25%, 3.53% and 3.77% respectively in last week.
PC Jewellers highest rise in turnover in Stock Derivatives
The Nifty Index futures witnessed fall in open interest by 9% for the February series during expiry week. There was no rise in open interest for March series in the last week. Implied volatility(IV) fell for put option and call option in the last week. Fall in IV for put and call option shows steady support for Nifty at present levels. But markets are expected to remain volatile in this week.
PC Jewellers witnesses rise in turnover in Stock Derivatives
PC Jewellers has witnessed rise in open interest in the stock future segment in the last week. Share price of PC Jewellers fell by 35% in last week. Shares of PC Jeweller slumped 60% on Friday’s trade on panic selling by investors on speculations that the promoters might have business relationship with IT firm Vakrangee. In a clarification to exchanges PC Jeweller management said that none of its promoters had diluted stake in the company and none of their shares are pledged as collateral with any institution.
Titan also witnessed rise in open interest in the stock future segment in the last week. Share price of Titan fell by 7% in last week. Company has reported a 21.26% jump in net profit to Rs2816 million for the Q3Fy18 as all three key business segments were buoyed by festive season sales.
Foreign Institutional Investors (FIIs) Derivative Statistics have shown rise in the open interest across Index Options, Stock futures, Index futures and Stock Options on a week on week basis.
Indian rupee depreciated by 0.914% against USD, USD/INR pair closed at 64.07.