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Weekly Nifty Trading View for the
Week May 29, 2017–June04, 2017
Events to watch this week
- US Q1 GDP revised up to 1.2% from 0.7%
- China downgraded by Moody’s
- UK on highest alert after Manchester attack
- US stocks set fresh records
- EU says UK must honor commitments
The Week ahead:
- G7 leaders meet in Sicily on Saturday, 27 May
- Markets in the US and UK are closed for Memorial Day
and the spring bank holiday on Monday, 29 May
- ECB president Mario Draghi testifies before the
European Parliament on Monday, 29 May
- China reports purchasing managers’ indices on
Wednesday, 31 May
- Eurozone unemployment data are reported on Wednesday,
31 May
- Manufacturing PMIs are released globally on Thursday, 1
June
- The May US employment report is released on Friday, 2
June
For the week,Global
equities continued to rally this week, led by the United States, where record
highs were recorded. The yield on the 10-year US Treasury note remained
essentially unchanged at 2.24% while oil prices dipped. West Texas Intermediate
crude fell to $48.95 a barrel from $50.30 a week ago as OPEC extended its
output cap for another nine months. Volatility, as measured by the Chicago
Board Options Exchange Volatility Index (VIX), slipped to 10.30 from 10.80 last
Friday.
NIFTY- 9,595.10
CRUDE OIL-Rs 3,216barrel
GOLD-Rs 28,884 gram
Rs/$-Rs 64.45
MARKET
ROUND UP
Domestic stocks logged strong gains in the week ended Friday, 26 May
2017 led by steady buying in index heavyweights ITC, ICICI Bank and Infosys.
The barometer index, the S&P BSE Sensex, scaled record high above the
psychological 31,000 mark. The Sensex and the Nifty, both, hit record closing
high. However, the BSE Mid-Cap and the S&P BSE Small-Cap indices
underperformed the Sensex during the week.
In the week ended Friday, 26 May 2017, the Sensex jumped 563.29 points
or 1.85% to settle at 31,028.21, a record closing high. The index hit record
high of 31,074.07 in intraday trade on Friday, 26 May 2017.
The Nifty 50 index surged 167.20 points or 1.77% to settle at 9,595.10,
a record closing high. The index rose 95.15 points, or 1% at the day's high of
9,604.90 in intraday trade on Friday, 26 May 2017.
The S&P BSE Mid-Cap index fell 124.10 points or 0.85% to settle at
14,519.90. The S&P BSE Small-Cap index fell 140.81 points or 0.92% to
settle at 15,086.26. Both these indices underperformed the Sensex.
Macro
Economic Front:
On the Economic Front,Economic
data on Tuesday, 23 May 2017 showed that the eurozone kept up a strong growth
rate. The May flash composite PMI stood at 56.8, matching the six-year high
registered in the previous month. In particular, the French private sector rose
to a six-year high in May supported by the election of President Emmanuel
Macron.
The Office for National Statistics said on Thursday, 25 May 2017 its
latest data suggest the economy expanded at a quarterly rate of 0.2% in the
first quarter, a weaker pace of growth than the 0.3% preliminary estimate
published last month and much weaker than the 0.7% pace notched up in the final
three months of 2016. On an annualized basis, the economy grew 0.7%, compared
to an earlier estimate of 1.2%.
Major
Action &Announcement:
GAIL (India) rose
0.06%. The company's net profit dropped 68.74% to Rs 260.16 crore on 15.86%
rise in total income to Rs 13674.09 crore in Q4 March 2017 over Q4 March 2016.
The fall in bottomline was due to accounting of impairment of investments in
Ratnagiri Gas and Power (RGPPL) of Rs 783 crore in Q4 March 2017. The net
profit without the impact of impairment rose 25% to Rs 1043 crore in Q4 March
2017 over in Q4 March 2016. The result was announced after market hours on
Monday, 22 May 2017.
Maruti Suzuki
India advanced 4.21% toRs 7,073.35 on reports a foreign
brokerage has maintained buy rating on the stock for a target price of Rs
8,100. The global brokerage house reportedly said that the company's retail
passenger vehicle (PV) demand trends are showing a big improvement. The
brokerage sees FY 2018 to be the first double digit growth year for the Indian
PV industry since FY 2011. If demand improvement sustains, waiting lists for
Maruti's models will grow, the brokerage added.
Mahindra &
Mahindra (M&M) rose 0.58%. M&M announced on
Sunday, 21 May 2017, that it has plans to invest directly and/or through its
subsidiaries in high-end electric powertrain technology as part of its plan for
the future of mobility; and electrification of some of its existing and future
products. The investments will also be utilised towards increasing the capacity
for electric powertrains and electric vehicles. The high end electric
powertrains will be used for the Group's future line up of electric vehicles.
Tata Motors gained
8.53%.after the company reported better than expected Q4 results. Tata
Motors' consolidated net profit fell 16.79% to Rs 4336 crore on 2.86% fall in
revenues to Rs 77272 crore in Q4 March 2017 over Q4 March 2016. Consolidated
profit and revenue in Q4 was lower due to translation impact from Pound to
Indian Rupee. Consolidated profit before tax shed 12.26% to Rs 5166 crore in Q4
March 2017 over Q4 March 2016. This broadly reflects strong retail sales in
Jaguar Land Rover business on continued strong demand for the product and also
higher wholesale volumes partially offset by overall higher marketing expenses
and higher depreciation and amortization, company said. The result was declared
after market hours on Tuesday, 23 May 2017.
Pharma major Lupin
lost 15.44% after consolidated net profit fell 49.16% to Rs
380.21 crore on 1.33% growth in total revenue from operations to Rs 4253.30
crore in Q4 March 2017 over Q4 March 2016. The result was announced during
market hours on Wednesday, 24 May 2017. During Q4 March 2017, the company made
a provision for liability towards its Australian subsidiary amounting to Rs
155.90 crore in respect of compensation for patent litigation towards its
Isabelle generic launch in Australia.
Global Front:
In Overseas Markets,Japanese
exports rose 7.5% in April, buoyed by strong demand in Asia for semiconductors,
semiconductor-making equipment and steel. It was the fifth consecutive month of
increase for exports, data from Japan's Ministry of Finance showed on Monday,
22 May 2017.
Moody's Investors Service on Wednesday, 24 May 2017 downgraded China's
credit rating to A1 from Aa3, changing its outlook to stable from negative,
citing concerns efforts to support growth will spur debt growth across the
economy.
Global
Economic News:
US growth revised up
The second look at first-quarter growth in the United States was somewhat
brighter than the first. Gross domestic product expanded at an annual rate of
1.2%, according to the Bureau of Economic Analysis, up from an initial 0.7%
reading. After revisions, consumer spending was a bit stronger than the initial
report, though capital expenditures were less robust.
China’s credit rating cut
For the first time in nearly three decades, Moody’s has downgraded China’s
sovereign credit rating. The rating now stands at A1, with a stable outlook.
Moody’s cited rising liabilities and weakening financial strength as reasons
for the cut. China’s finance ministry dismissed the move as “groundless.”
UK terror threat level raised
Following an attack outside an arena in Manchester that killed 22 and
injured scores more Monday, British prime minister Theresa May put the country
on its highest alert level, warning of the potential for an imminent follow-on
attack. The general election campaign was suspended, but was expected to resume
on 26 May. In the wake of the attack the prime minister will cut short her
participation in the G7 summit in Sicily this weekend.
US equities set fresh records
Upbeat corporate earnings and positive economic data helped underpin a
continued rally in US equities, with both the S&P 500 Index and the Nasdaq
Composite Index hitting fresh all-time highs on Thursday.
War of words heats up ahead of Brexit talks
Officials from the European Union and the United Kingdom are scheduled on
19 June to commence negotiations on the UK's exit from the European Union. Both
sides are setting out fairly extreme positions in advance of the talks. The EU
continues to float exit bill figures as large as €100 billion while the UK has
said it may owe nothing.
GLOBAL CORPORATE NEWS
Fed outlines proposed plan to shrink balance sheet
In the minutes of the May Federal Open Market Committee meeting, the US
Federal Reserve began to lay out the methodology it could use to shrink the
central bank’s $4.5-trillion balance sheet. Under the proposed approach, the
Fed would set a gradually increasing cap on the dollar amounts of Treasury and
agency securities it would allow to run off each month. The caps would be set
at low levels and then raised every three months, to their fully phased-in
levels. The final values of the caps would then be maintained until the size of
the balance sheet was normalized.
NEW 52-WEEK HIGH BSE (A):
|
ADANITRANS
|
115.20
|
|
CGOPOWER
|
97.30
|
|
GODREJIND
|
596.55
|
NEW
52-WEEK LOWS BSE (A):
|
GLAXO
|
2352.90
|
|
LUPIN
|
1099.00
|
|
PFIZER
|
1651.00
|
|
SANOFI
|
3990.00
|
MAJOR WEEKLY
GAINERS IN BSE A CATEGORY(%):
|
VOLTAS
|
19.96
|
|
JINDAL ST& pWR
|
11.54
|
|
RELIGARE
|
10.34
|
MAJOR WEEKLY
LOSERS IN BSE A CATEGORY:
|
SINTEX
|
-73.17
|
|
VIDEOCON
INDUSTRIES
|
-52.91
|
|
BANK OF
iNDIA
|
-16.72
|
Eyes
will be set on the certain US economic data releases are:
Monday (29May)
US
Market Closed
Tuesday (30 May)
Consumer Confidence
Wednesday (31May)
MBA
Mortgage Applications&Pending Home
Sales Index
Thursday (01 June)
Natural Gas Report& Jobless Claims
Friday (02 June)
Employment Situation
Fundamental
Pick of the week:
Accumulate HSIL Ltd For Target Rs.410.00
Technical Outlook
* HSIL has been maintaining long term uptrend since 2001 and
garnered exponential returns for the investors in last 15 years.
* It has had corrective phases also in between but the recovery
was equally swift and even stronger in some cases, indicating strengthen. For
instance, it made a new record high of 474.40 in April, 2015 from roughly 70 in
last up surge and that too in less than two years.
* It has been consolidating in a broader range for last two years
and currently hovering around the upper band of the same. The indications from
the price chart and indicators are in the favor of breakout in near future.
Traders shouldn’t miss this opportunity and accumulate in the range of 340-344
with close below stop loss of 315 for the target of 410.
Recommendation
Accumulate HSIL
Ltd @ 340-344 Stoploss 315 Target 410
Domestic Market Overview
Market witnessed strong upside
momentum last week reaching new all time highs as bulls took Sensex above 31000
and Nifty to record high above 9600 on the closing session of the week. A
strong hammer candle formation seen on the weekly charts hinting more buying
will likely to remain intact for the coming week as well. On the daily charts
also latest two candles build up is showing very strong formation with a fresh
upside breakout above 9532 Nifty Spot. Upper levels are very well supported by
20DMA along with the momentum indicators e.g. RSI and a fresh crossover in
MACD.
GST rates led the indices to began the week on positive note. But,
street sentiments turned shower following the geo political tension on the
borders, pushing the indices to trade in red level. However, Benchmark indices
again showcase tremendous buying after US fed Janet yellen in may policy
meeting signalled to wait for some more data for further interest rate hike.
This sent a strong signal on the street, pushing humongous buying in the large
caps as well as mid caps. Apart from that, big corporates Q4 quarterly results
also stood better than expected barring few pharma companies. Most importantly,
may month expiry remained full of positivity and again pushed the sensex and
Nifty to close at the record high. Overall, week ended on the jubilant mood
following huge buying in mutual funds.
Though, next week could remain traded on the sideways since market is
already at high and further movement only could come on the back of early
arrival of pre-monsoon shower along with better GDP number for Q4. Next week
quarterly GDP data is pending, which is likely to throw some colour on the
Indian economy. Also, manufacturing PMI data is Schedule, which will also show
manufacturing growth post demonetisation. Apart from that, corporate results
for Q4 will be also keenly watched. Still, we will be cautious for any news
related to geo political news, which could bring heavy selling on the street.
Overall, market looks positive from here on. We advise investors to look to
enter in fertilizer, agriculture and rural focus sector like auto and fmcg.
TECHNICAL VIEW:
|
S3
|
S2
|
S1
|
NIFTY
|
R1
|
R2
|
R3
|
|
9,370
|
9,480
|
9,565
|
9,595.10
|
9,648
|
9,720
|
9,800
|
As expected Nifty saw a sharp
recovery from the value zone near 9360 as the 'Resistance becoming Support'
theory remained valid yet another time. The sharp rebound near the value zone
resulted into a fresh impulse move which could see an extension towards 9740 on
an immediate basis. With no signs of a negative divergence on RSI and its
placement below its overbought zone compliments the ongoing bullish setup.
Momentum traders could retain their longs with a stop below 9360 from here on
as the range gets elevated to 9740-9400 for the month of June. Aggressive bets
/leverage longs near the extremes of the range should be avoided during the
week.
Bank Nifty:Low made today was
22570 and as soon as 2274o was broken the big move started with leap and bounds
and did the both target 22900/23110.From June Series perceptive bank nifty
bulls need a close above 23300 for the next move towards 24100. Bearish below
22900 for a move towards 22500. Bank Nifty closed above 23300 suggesting
bulls are having upper hand and can push bank nifty all the way till
23600/23800/24000. Bearish below 22900 only.
Conclusion:
Nifty
regained its momentum in the passing week and made a new record high at
9604.90, thanks to recovery in the global markets and supportive local cues. We
expect the uptrend to continue ahead as well and any intermediate pause or
decline should be seen as buying opportunity.
At the
same time, maintain caution in stock selection as rebound in the midcap and
small cap would be gradual as compared to the index majors. We suggest keeping
a close eye on the last leg of the earning season and also on global events for
further cues.
Happy Investing…..