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Events to watch this week

• IMF questions Greek debt sustainability
• Trump promises “big league” tax reform
• France’s Le Pen calls for return of the franc
• China’s FX reserves extend drop
• Brexit bill clears UK House of Commons
• DOL rule survives court challenge

The Week ahead:

• Japan reports Q4 preliminary gross domestic product on Monday, 13 February
• The eurozone reports preliminary Q4 GDP on Tuesday, 14 February
• The United Kingdom releases consumer price data on Tuesday, 14 February
• The United States reports retail sales, industrial production and consumer price data on Wednesday, 15 February
• The UK releases January employment data on Friday 17, February

For the week,Global equities extended gains this week as reflationary hopes were rekindled by talk of US tax cuts. Major US indices all reached record highs late in the week while yields on 10-year US Treasury notes, at 2.43%, changed little. Oil prices were steady too, with West Texas Intermediate crude holding at $54.10 per barrel and global Brent dipping to $56.66 per barrel from $57.10 a week ago. Volatility, as measured by the Chicago Board Options Exchange Volatility Index (VIX) fell to 10.9 from 11.15 last week.

NIFTY- 8,793.55
CRUDE OIL-Rs 3,608barrel
GOLD-Rs 29,198 gram
Rs/$-Rs 66.88

MARKET ROUND UP

The market rose last week on firm global stocks. Buying ahead of December IIP data due on Friday, 10 February 2017, and optimism about corporate earnings steered the domestic market higher. A positive trend in Asia and Europe also boosted sentiment in the domestic market.

The Reserve Bank of India (RBI) after its sixth bi-monthly monetary policy meeting on Wednesday, 8 February 2017, decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.25%. Consequently, the reverse repo rate under the LAF remains unchanged at 5.75%, and the marginal standing facility (MSF) rate and the bank rate at 6.75%.

In the week ended Friday, 10 February 2017, the Sensex rose 93.73 points or 0.33% to settle at 28,334.25. The Nifty 50 index rose 52.60 points or 0.60% to settle at 8,793.55.

The BSE Mid-Cap index gained 183 points or 1.38% to settle at 13,468.41. The BSE Small-Cap index rose 179.21 points or 1.34% to settle at 13601.31. Both these indices outperformed the Sensex.

Macro Economic Front:

On the Economic Front,The Reserve Bank of India (RBI) after its sixth bi-monthly monetary policy meeting on Wednesday, 8 February 2017, decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.25%. Consequently, the reverse repo rate under the LAF remains unchanged at 5.75%, and the marginal standing facility (MSF) rate and the bank rate at 6.75%.

Major Action &Announcement:

Dr Reddy's Laboratories was the top Sensex loser last week. The stock fell 5.30% to Rs 2,975.20. The company's consolidated net profit fell 15.95% to Rs 492.30 crore on 5.43% fall in total income to Rs 3763.50 crore in Q3 December 2016 over Q3 December 2015. The result was announced on Saturday, 4 February 2017.Dr Reddy's Laboratories (DRL's) consolidated earnings before interest, taxation, depreciation and amortization (EBITDA) declined 13.07% to Rs 8793 crore in Q3 December 2016 over Q3 December 2015. EBITDA margin contracted to 23.7% in Q3 December 2016, from 25.5% in Q3 December 2015.

Cipla fell 4.77% to Rs 579.35. The company's Q3 net profit was boosted by other income on account of gain on sale of investment. Cipla's consolidated net profit rose 43.85% to Rs 374.83 crore on 18.08% rise in total income to Rs 3800.70 crore in Q3 December 2016 over Q3 December 2015. Cipla had divested its 16.7% stake in Chase Pharmaceutical Corporation to Allergan Plc. The Q3 December 2016 result includes gain on sale of investment of Rs 121 crore. The result was announced after market hours on Wednesday, 8 February 2017.

Lupin fell 1.75% to Rs 1,464.60. The company's consolidated net profit rose 20.69% to Rs 633.11 crore on 26.91% increase in total income to Rs 4586.45 crore in Q3 December 2016 over Q3 December 2015. The result was announced during hours on Thursday, 9 February 2017.

Consolidated net sales rose 31.5% to Rs 4404.90 crore in Q3 December 2016 over Q3 December 2015. US formulation sales increased by 53.4% to $316 million in Q3 December 2016 over Q3 December 2015. Japan sales increased by 20.3% to Rs 449.20 crore in Q3 December 2016 over Q3 December 2015.

Power Grid Corporation of India fell 0.92% to Rs 199.85. The company's net profit rose 20.16% to Rs 1930.02 crore on 23.94% increase in total income to Rs 6787.51 crore in Q3 December 2016 over Q3 December 2015. The result was announced after market hours on Thursday, 9 February 2017.

NTPC fell 0.90% to Rs 170.40. The company's net profit fell 7.49% to Rs 2468.72 crore on 10.84% rise in total income to Rs 19646.09 crore in Q3 December 2016 over Q3 December 2015. The result was announced during market hours on Wednesday, 8 February 2017.

Tata Steel fell 0.89% to Rs 467.75. The company reported consolidated net profit of Rs 231.90 crore in Q3 December 2016 as compared with net loss of Rs 2747.72 crore in Q3 December 2015. The result was announced after market hours on Tuesday, 7 February 2017. Total income rose 13.64% to Rs 28143.51 crore in Q3 December 2016 over Q3 December 2015.

Global Front:

In Overseas Markets,an official gauge of China's factory activity edged lower in January, though it stayed in expansionary territory, official data showed on Wednesday, 1 February 2017. China's official manufacturing purchasing managers' index fell to 51.3 in January from 51.4 in the previous month, pointing to a slight slowing of momentum.UK manufacturing PMI was reported at 55.9 in January 2017 compared with 56.1 in December 2016. Eurozone manufacturing PMI was reported at 55.2 in January 2017, highest since 2011.

Global Economic News:

Greek debt drama rekindled
Once again Greece faces a deadline to receive much-needed bailout funds from its international backers, but so far it has not fulfilled the terms of its prior commitments. With heavy debts coming due in April and July, Greece hopes to strike a deal at the last EU summit before the European election calendar kicks off in March. Finance ministers meet on 20 February, with Greece near the top of their to-do list. There is mounting concern that several European partners will not participate in the bailout any longer if the International Monetary Fund doesn't. The IMF this week called Greece’s debt burden unsustainable and called for debt forgiveness.

Le Pen lays out economic vision
Populist French presidential candidate Marine Le Pen formally kicked off her campaign this week, laying out her economic agenda. Le Pen called for pulling France out of the eurozone, reintroducing the franc and drastically curbing immigration. Le Pen has consistently led the polling in the first round of France’s two-round system but trails a variety of centrist challengers in the second round.

China’s reserves slip
Having peaked in 2015 at over $4 trillion, China’s foreign exchange reserves slipped below $3 trillion in January, according to government data. Beijing has been selling down reserve assets for the past 18 months to try to stem capital outflows from the Chinese mainland.

Commons backs Brexit
The UK House of Commons voted on Wednesday to allow the government to begin negotiations with the European Union. The bill now goes before the House of Lords, which can delay but not halt the triggering of Article 50.

Euro too low for Germany
German finance minister Wolfgang Schaüble this week acknowledged that the euro’s exchange rate with the US dollar is too low for Germany’s competitive condition but said that the European Central Bank must make policy for all of Europe, not just Germany. Tensions were inflamed both inside and outside the eurozone as Germany posted a record annual trade surplus, in excess of €250 billion. US president Donald Trump’s principal trade advisor commented recently that Germany has been manipulating the euro exchange rate in order to gain competitive advantage.

GLOBAL CORPORATE NEWS

Trump consults with Asian leaders
US president Donald Trump spoke by phone for the first time with Chinese president Xi Jinping and reaffirmed the US commitment to the One China policy. That policy was called into question during the presidential transition, when Trump had direct contact with Taiwanese president Tsai Ing-wen, an apparent breach of protocol. Trump urged closer US–China ties in the call, according to the White House.

US earnings rebound
As of 7 February, Thomson Reuters reports that fourth-quarter earnings for the S&P 500 Index are expected to increase 8.2% from the fourth quarter of 2015. Of the 300 companies in the S&P 500 that have reported to date for the fourth quarter of 2016, 68% have reported earnings above analyst expectations. The Q4 2016 blended revenue growth estimate is 4.3%. The forward four-quarter (1Q17– 4Q17) P/E ratio for the S&P 500 is 17.4.

NEW 52-WEEK HIGH BSE (A):

NEW 52-WEEK LOWS BSE (A):

MAJOR WEEKLY GAINERS IN BSE A CATEGORY:

MAJOR WEEKLY LOSERS IN BSE A CATEGORY:

Eyes will be set on the certain US economic data releases are:

Monday (13 Feb)
Month Bill Auction

Tuesday (14 Feb)
NFIB Small Business

Wednesday (15 Feb)
Retail Sales & MBA Mortgage Applications

Thursday (16 Feb)
Jobless Claims

Friday (17 Feb)
E-Commerece Retail Sales

Fundamental Pick of the week:

Derivative Ideas LIC Housing Finance Ltd For Target Rs.590.00

LICHSGFIN added around 1% of open interest as fresh long positions along with some delivery based buying in previous sessions. On charts it is holding strong above its long term as well as short term moving averages on daily charts. We suggest doing a covered call as per levels given below.

Recommendation

BUY LICHSGFIN FEB FUTS BETWEEN 557-559 SL 549, TARGET 590.

Indian Market Outlook:

The Nifty traded in a narrow range throughout the day and was unable to close above 8800. However, it did manage to close in the positive territory for the day as well as for the week. On the lower side, the immediate support is at 8770, whereas the resistance is pegged at 8830, ie the trend line joining the recent highs. The overall trend in the short-term remains positive, as the Nifty is still trading above its crucial support levels. The Bank Nifty looks weaker in the short term compared to the Nifty, but if it manages to surpass the swing high of 20407, then it will gain further upward momentum. The momentum indicator KST has gone into a ‘sell’ mode for both the Indices, which is the only concern in the short term.

TECHNICAL VIEW:

Conclusion:

we are still holding 8681 suggesting bulls are still having upper hand eventhough we are not able to cross the gann arc, as shown in below chart. Bearish only on close below 8681 and bullish above 8840 in between choppy move continue.  High made today was 8822 and low made was 8771 so we did not break 8840 on Upside and 8681 on downside forming an inside day pattern suggesting choppy move to continue, Bulls should protect 8681 and till its protected move towards 8969 and above is quiet possible. Once the Gann arc as shown below is broken bulls will shown an impulsive move on upside.