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Events to watch this week
- US adds
156,000 jobs, wages up most since 2009
volatility causes concern amid tight liquidity
- Global growth
uptick persisted in December
- 2016 US auto
sales set record
The Week ahead:
- The eurozone
releases unemployment figures on Monday, 9 January
- The minutes
of the December meeting of the ECB Governing Council are released on
Thursday, 12 January
releases December trade figures on Friday, 13 January
- US retail
sales figures for December are reported on Friday, 13 January
the week,Global equities extended gains this week
amid upbeat economic data and continued hopes for US fiscal stimulus. So far,
US markets continue to hold just below record levels, with the 20,000 mark in
the Dow Jones Industrial Average yet to be breached as of this writing, though
the FTSE 100 set all-time highs this week. Ten-year US Treasury note yields
fell to 2.40% from a pre-Christmas level of 2.53%. Oil prices firmed modestly,
with West Texas Intermediate crude rising to $53.90 from $53.25 before the
holidays. Global Brent rose to $56.90 from $55.80. The Chicago Board Options
Exchange Volatility Index (VIX) was little changed at 11.45.
CRUDE OIL-Rs 3,678barrel
GOLD-Rs 27,875/10 gram
MARKET ROUND UP
Key benchmark indices logged small gains in first week of calendar year
2017. Key indices edged lower in three out of five trading sessions during the
week. Gains were triggered as buying of equities by domestic institutional
investors outpaced selling by foreign portfolio investors. The S&P BSE
Small and Mid-Cap indices outperformed the Sensex during the week.
In the week ended Friday, 6 January 2017, the Sensex rose 132.77 points
or 0.5% to settle at 26,759.23. The Nifty 50 index rose 58 points or 0.71% to
settle at 8,243.80.
The BSE Mid-Cap index gained 290.38 points or 2.41% to settle at
12,321.72. The BSE Small-Cap index gained 394.20 points or 3.27% to settle at
12,440.33. Both these indices outperformed the Sensex.
the Economic Front,manufacturing PMI in India fell
to 49.60 in December 2016 from 52.30 in November. A reading above 50 indicates
economic expansion, while a reading below 50 points toward contraction. The
reading pointed to the first contraction since December 2015, as output, new
orders and new export orders fell amid cash shortages in the economy. Data was
announced during trading hours on Monday, 2 January 2017.
Major Action &Announcement:
Wipro fell 0.86%. The company
announced that its Digital TV Middleware solution has successfully enabled
Hisense 4K TVs in Japan. Hisense Co. is a multinational white goods, brown
goods and electronics manufacturer. The Wipro solution supports Hisense 4k TV
product features ISDB-T/S Broadcast and HD-PVR to enable a premium viewing
experience for customers. The announcement was made before market hours on
Thursday, 5 January 2017.
reports, the new bill would require workers on the H-1B visa pay a minimum of $100,000, up
from $60,000 currently. The bill also removes the Master's degree exemption to
the cap on the number of visas available, as per reports. The bill comes after
companies such as Disney and Southern California Edison have come under fire
for outsourcing their IT operations to Indian companies.
Industriesrose 1.78%. The company announced successful phase 3 confirmatory clinical
trial results for Seciera (cyclosporine A, 0.09% ophthalmic solution), for the
treatment of dry eye disease. Seciera is a patented, novel, proprietary
nanomicellar formulation of cyclosporine A 0.09%. It is a clear, preservative-free,
aqueous solution. Seciera is being developed by Ocular Technologies, a company
recently acquired by Sun Pharma. Following this acquisition, Sun Pharma owns
exclusive, worldwide rights to Secier and is developing it to commercialize for
global markets including US, Europe, and Japan, as well as several emerging
Tata Motors gained 5.61%. The company's British luxury unit Jaguar
Land Rover (JLR) reported a 30% jump in retail sales in US in December 2016.
JLR on Wednesday, 4 January 2017, announced its US retail sales for the month
of December 2016. JLR's US sales rose 30% to 12,573 units in December 2016 over
December 2015. Jaguar sales jumped 259% to 4,294 units in December 2016 over
December 2015. Land Rover sales declined 2% to 8,279 units in December 2016
over December 2015.
India rose 5.45%. The company said its total sales fell 1% to 1.17 lakh units in
December 2016 over December 2015. The company announced the monthly sales
volume on Sunday, 1 January 2017.
Mahindra & Mahindra
(M&M) rose 3.49%. The company said its total tractor sales rose 9% to 14,047
units in December 2016 over December 2015. The company's total auto sales
declined 4% to 36,363 units in December 2016 over December 2015. The company
announced the monthly sales volume during market hours on Monday, 2 January
Overseas Markets,China's Caixin Manufacturing Purchasing Managers' index (PMI) rose 51.9,
compared to 50.9 in November on the back of increased demand. A reading above
50 represents expansion in a sector, whereas a reading below 50 represents
contraction. The private manufacturing survey results come after figures at the
weekend showed China's official PMI fell to 51.4 in December.
Activity in China's service sector expanded at a faster pace in
December, a private gauge showed on Thursday, 5 January 2016, adding to recent
signs of firmness in China's economy. The Caixin China services purchasing
managers' index rose to 53.4 in December from 53.1 in November, Caixin Media
Co. and research firm Markit said. A reading above 50 indicates a
month-to-month expansion, while a reading below that points to a contraction.
Global Economic News:
payrolls solid but unspectacular
The United States added 156,000 new jobs in December while the
unemployment rate edged up to 4.7%. A 2.9% annual rise in average hourly
earnings was the most attention-grabbing aspect of Friday’s report. It was the
largest yearly gain in wages since 2009. Rising wages, unless offset by gains
in worker productivity, could negatively impact corporate earnings down the
road. Wage increases may also keep the US Federal Reserve on guard for
additional rate hikes in the months ahead. The US reported a wider trade
deficit on Friday, with a fall in exports likely to trim economic growth
estimates for the fourth quarter. The deficit expanded to $45.2 billion in
November, a nine-month high, from $42.4 billion in October.
Global growth rebound continues
Solid purchasing managers’ surveys from December were reported early
this week, suggesting that the uptick in global growth seen in recent months
continued through year-end. The US reported its 91st consecutive month of
manufacturing growth, with the Institute for Supply management index rising to
54.7 from 53.2. The United Kingdom’s manufacturing purchasing managers' index
rose to 56.1, the highest in two and a half years, despite the looming specter
of Article 50 being invoked later this year.
US auto sales set record
Global auto manufacturers sold a record-setting 17.55 million new cars
and light trucks in the US in 2016, according to research firm Autodata. Sixty
percent of the sales were classified as light trucks since SUVs fall into that
category. In 2015, 17.48 million units were sold, 56% of them light trucks.
Australian trade returns to surplus
For the first time in nearly three years, Australia recorded a trade
surplus in November. Rebounding commodity prices helped lift the trade account
into the black, and the data suggest that the economy might avoid a technical
recession after shrinking by 0.5% in Q3.
Unhappy holidays for many US retailers
Many US retailers struggled this holiday season as sales continued to
migrate to the Internet. Two notable cases were Macy’s and Sears, traditional
anchor tenants of US shopping malls, which each announced the closure of more
than 100 stores. Additionally, Sears announced the sale of its iconic Craftsman
tool brand to Stanley Black & Decker for $900 million.
GLOBAL CORPORATE NEWS
China forced to defend yuan amid outflows
It was a wild week for China’s
yuan. On Thursday, overnight offshore deposit rates were ratcheted up to 80% in
an attempt to squeeze out speculative short positions in the currency. That
move set off a frantic short-covering rally, but the rally was largely reversed
on Friday. In a further attempt to keep funds from leaving China, the
government introduced additional capital controls effective 1 January and
encouraged state-owned enterprises to sell foreign currencies. China is
believed to be trying to stabilize the currency in advance of US
president-elect Donald Trump’s inauguration on 20 January.
52-WEEK HIGH BSE (A):
52-WEEK LOWS BSE (A):
GAINERS IN BSE A CATEGORY:
LOSERS IN BSE A CATEGORY:
Eyes will be set on the certain US economic data
Business & Wholesale Trade
Pick of the week:
Tata Motors Ltd For Target Rs. 600.00
TATAMOTORS is a well know Indian MNC and a flagship company
of the Tata Group. After acquiring Jaguar Land Rover, it gained global
recognition as well.Technically, it is a sound stock and is on recovery mode
after retracing 50% as per Fibonacci levels of the rise 265-598 levels.
We firmly believe; it has potential to outperform its peers
as well as broader markets. Hence, we advocate buying this stock in range
480-490 with 440 stop loss for 600 targets.
Buy Tata Motors Ltd @ 480-490
Stoploss 440 Target 600 CMP 498
Nifty ended marginally lower in the passing month, tracking mixed
global cues and not so favorable domestic factors. After marginal bounce in the
first week, it maintained its negative tone for most part of the month; however,
recovery in final week of the calendar year significantly trimmed the losses.
Finally, it settled at 8185.80; down by nearly half a percent.
It rebounded after retesting the crucial support mark of 7900, raising
hope of sustainable recovery in January month.
Technically, charts are in the favor of rebound but a lot
depends upon the upcoming earning season. On the daily chart, the Nifty is trading
above the 20- day moving average (DMA) and the 40-DMA, ie 8121 and 8195,
respectively. The momentum indicator is positive on the daily chart.
On the hourly chart, the Nifty is trading between the 20-hour moving
averages (HMA) and the 40-HMA, ie 8246 and 8208, respectively. The hourly
momentum indicator has turned positive. The market breadth was negative, with
639 advances and 962 declines on the National Stock Exchange.
immediate hurdle at 8300 and requires participation from the banking space for
further recovery. Meanwhile, stock specific movement, especially in the cash
segment, is offering ample trading opportunities and we expect this trend to
continue ahead also. So, traders should plan their positions keeping in mind
the above factors.