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Events to watch this week
- UK vote
muddles Brexit process
- ECB drops
possibility of lower rates
- Comey
testifies on Russia probe
- Eurozone
maintains faster growth
The Week ahead:
Date
|
Country/Area
|
Release/Event
|
Sun, 11 Jun
|
France
|
Parliamentary
elections, round one
|
Tue, 13 Jun
|
United Kingdom
|
Consumer price
index
|
Tue, 13 June
|
eurozone
|
ZEW economic sentiment
index
|
Tue, 13 June
|
United States
|
Producer price
index
|
Wed, 14 Jun
|
China
|
Retail sales and
industrial production
|
Wed, 14 Jun
|
eurozone
|
Industrial
production
|
Wed, 14 Jun
|
United States
|
Retail sales and
Consumer Price Index
|
Wed, 14 Jun
|
United States
|
FOMC meeting,
Yellen press conference
|
Thu, 15 Jun
|
Switzerland
|
SNB interest rate
decision
|
For the week,The day began with the European Central Bank meeting, followed by
ex-FBI director Comey’s testimony later in the day. It wound up with the Conservative
Party losing its majority in the House of Commons. Prior to the news from the
United Kingdom, the Dow Jones Industrial Average closed at a record high
Thursday, despite Comey’s unsettling testimony regarding private meetings with
US president Donald Trump. Despite increased uncertainty surrounding the Brexit
process, global equities have shown little net change on the week. The yield on
the US 10-year Treasury note rose three basis points to 2.20% while West Texas
Intermediate crude extended its drop to $45.50 from $47.35 a week ago after a
forecast from the Energy Information Agency projected that US domestic oil
output will top 10 million barrels a day in 2018. Equity volatility, as
measured by the Chicago Board Options Exchange Volatility Index (VIX), remained
historically muted, virtually unchanged at 10.
NIFTY- 9,668.25
CRUDE OIL-Rs 2963barrel
GOLD-Rs 29,009 gram
Rs/$-Rs 64.25
MARKET ROUND UP
Key benchmark indices settled with modest gains in a volatile session
of trade on Wednesday, 7 June 2017, after the RBI decided to keep the policy
repo rate unchanged after a policy review meet on Wednesday, 7 June 2017. The
Sensex had risen 80.72 points or 0.26% to settle at 31,271.28, its highest
closing level since 5 June 2017.
Key indices settled with small losses after range-bound trade on
Thursday, 8 June 2017, as caution prevailed in global markets ahead of key
global events of outcome of elections in the UK and the European Central Bank's
(ECB) monetary policy review. The Sensex shed 57.92 points or 0.19% to settle
at 31,213.36, its lowest closing level since 6 June 2017.
Key benchmark indices settled with small gains after a lacklustre
session of trade on Friday, 9 June 2017, as most global stocks rose after the
surprise UK general election result left the country facing a “hung
parliament,” where no single party has a majority. The Sensex had risen 48.70
points or 0.16% to settle at 31,262.06, its highest closing level since 7 June
2017.
Both the Sensex, and the Nifty, had hit record high in intraday trade
on Tuesday, 6 June 2017. The Sensex fell 11.23 points or 0.03% to settle at
31,262.06. The Nifty advanced 14.75 points or 0.15% to settle at 9,668.25.
Broad market depicted strength. The S&P BSE Mid-Cap index rose 0.49%. The
S&P BSE Small-Cap index advanced 1.55%. Both these indices outperformed the
Sensex.
Macro
Economic Front:
On the Economic Front,the RBI's Monetary
Policy Committee (MPC) in its meeting held on Wednesday, 7 June 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
at 6%, and the marginal standing facility (MSF) rate and the Bank Rate at 6.5%.
A private business survey showed activity in India's services industry
accelerated in May as domestic and foreign orders rose. The Nikkei/IHS Markit
Services Purchasing Managers' Index rose to a seven-month high of 52.2 in May,
from April's 50.2.
Major Action &Announcement:
State Bank of India (SBI) advanced 0.38%. The bank said that it has
successfully concluded India's largest ever qualified institutional placement
(QIP) of Rs 15000 crore which was launched on 5 June 2017. The QIP book was
oversubscribed and demand exceeded Rs 27000 crore. Post issue, the Government
of India's (GoI) shareholding in the merged entity will be at 57.07%. The
announcement was made during market hours on Friday, 9 June 2017.
ICICI Bank rose 1.41%. The bank said its board of directors on Monday,
5 June 2017, approved the sale of a part of its shareholding in ICICI Lombard
General Insurance Company in an initial public offering by the company, subject
to requisite approvals and market conditions. The size and other details of the
offer would be determined in due course, the bank said. The announcement was
made at the fag end of market hours on Monday, 5 June 2017.
Wipro fell 2.75%. The company issued clarification to the stock
exchanges regarding media news item titled “Wipro promoters in early stage of
evaluating sale of part or whole business”. The company said that the news
article is baseless and malicious. There is no truth to these unsubstantiated
rumors, it added. The announcement was made after market hours on Monday, 5
June 2017.
Infosys was down 2.15%. The company clarified after market hours on
Wednesday, 7 June 2017 that the news reports on pricing cuts seen by the IT
industry being attributed to the Infosys chief operating officer (COO) are
incorrect.
Dr Reddy's Laboratories rose 3.03%. The company announced the launch of
Bivalirudin for injection, 250 mg/vial, a therapeutic equivalent generic
version of Anglomax (Bivalirudin) for injection in the US market. The
announcement was made during market hours on Tuesday, 6 June 2017. Anglomax
brand and generic had annual US sales of around $198 million MAT for the most
recent twelve months ending in March 2017, according to IMS Health.
Tata Motors was down 2.37%. Jaguar Land Rover retail sales rose 1% to
45,487 vehicles in May 2017 over May 2016 with continued strong demand for the
Jaguar F-PACE, since sales began 12 months ago, and solid sales growth of the
long wheel base Jaguar XFL from our China joint venture. The announcement was
made during market hours on Wednesday, 7 June 2017.
TCS lost 2.01%. The company announced that the company and Siemens
unveiled a new collaboration around Internet of Things (IoT) innovation.
Focused on customers in the manufacturing, energy, building technology,
healthcare and railway industries the partnership will enable customers to
benefit from new data insights and services based on MindSphere, the
cloud-based, open IoT operating system from Siemens. The announcement was made
after market hours on Tuesday, 6 June 2017.
Global Front:
In Overseas Markets,British Prime
Minister Theresa May's Conservative party has fallen short of an outright
majority in the UK's general election held on Thursday, 8 June 2017. May had
unexpectedly called the snap election seven weeks ago, confident of sharply
increasing the slim majority she had inherited from predecessor David Cameron
before launching into the Brexit talks.
The ECB on Thursday, 8 June 2017, as expected, left interest rates
unchanged but said it continued to expect interest rates “to remain at present
levels for an extended period of time, and well past the horizon” of its
asset-buying program, which is set to run at least through December. In
previous statements, the ECB had said it expected rates “to remain at present
or lower levels for an extended period of time.”
US non farm payrolls increased 138,000 in May, missing the forecast,
suggesting the labour market was losing momentum despite the unemployment rate
falling to a 16-year low of 4.3%. Also, the number of jobs created in March and
April was reduced by 66,000 from what was previously reported.
Global Economic News:
ECB drops rate-cut
reference
With the economy on the upswing, European Central Bank president Mario
Draghi announced on Thursday that the bank is dropping its bias toward cutting
interest rates, but it retained its bias toward increasing quantitative easing,
if necessary. The bank raised its growth forecast while at the same time
cutting its inflation outlook. Risks to the economy are now broadly balanced,
he said. The overall tone of Draghi’s press conference was decidedly dovish.
Former FBI chief testifies
Former Federal Bureau of Investigation director James Comey testified
before the Senate Intelligence Committee regarding the FBI’s investigation into
Russia’s interference in the 2016 US presidential election and President Donald
Trump’s desire that the Bureau end its investigation of his former national
security advisor Michael Flynn. Comey said he would leave it to Special Counsel
Robert Mueller to decide whether the president’s conduct rose to the level of
obstruction of justice. With Mueller’s investigation in an early phase, there will
likely be many months of continued policy paralysis in Washington.
Eurozone economy leads the pack
Purchasing managers’ indices released this week show that the eurozone
continues to outperform other developed economies. The eurozone composite PMI,
which measures both manufacturing and services, stood at 56.8, unchanged from
April. Meanwhile, the United States clocked in at 53.6 and the UK at 56.7, just
below April’s 56.8 three-year high. Japan’s composite PMI registered 52.6 and
China’s 51.5.
Catalonia schedules referendum
The president of the Spanish region of Catalonia, CarlesPuigdemont,
announced on Friday that an independence referendum will be held on 1 October.
The Spanish government strongly opposes the referendum on constitutional
grounds, as it did in 2014 when the country’s constitutional court ruled a
previous vote invalid. Under the Spanish constitution, Madrid could resort to
suspending the region’s autonomy to thwart the plebiscite.
GLOBAL CORPORATE
NEWS
May severely weakened in UK vote; Tories lose majority
Prime Minister Theresa May’s gambit to improve her Brexit bargaining
position by calling a snap election did exactly the opposite, increasing the
uncertainty around the Brexit process. The Conservative Party lost its outright
majority in the House of Commons but will be able to form a government with the
backing of the 10 members of Northern Ireland’s Democratic Unionist Party.
Politically, May is seen as living on borrowed time, and could be replaced as
party leader in the near future. Early indications are that May’s failure to
secure a larger parliamentary majority undermines the case for a “hard” Brexit,
which the Tories campaigned for. That is one reason — along with a weaker pound
— that markets have taken the election outcome in stride so far. A softer
Brexit is seen as less disruptive to UK business interests. One side note: A
very poor showing by the Scottish National Party is seen as halting momentum
toward a second referendum on Scottish independence.
NEW 52-WEEK HIGH BSE (A):
BAJAJFINANCE
|
1380.00
|
CADILAHC
|
548.00
|
EDELWEISS
|
209.40
|
NEW 52-WEEK LOWS BSE (A):
VIDEOIND
|
28.55
|
IDBI
|
58.75
|
MAJOR WEEKLY GAINERS IN BSE A
CATEGORY(%):
IIFL HOLDINGS
|
14.25
|
INFO EDGE
|
13.97
|
PAGE INDS
|
13.90
|
MAJOR WEEKLY LOSERS IN BSE A
CATEGORY:
ADANI
TRANSMISSION
|
-13.37
|
VIDEOCON
INDUSTRIES
|
-22.31
|
RELAINCE
COMM
|
-10.90
|
Eyes will be set on the certain US economic
data releases are:
Monday (12June)
Month Bill Auction
Tuesday (13 June)
Week Bill Auction& FOMC Meeting Begins
Wednesday (14 June)
Consumer Price Index
Thursday (15 June)
Hosing
Market Index& Jobless Claims
Friday (16 June)
Consumer
Sentiment
Fundamental
Pick of the week:
Derivative
Ideas Federal Bank Ltd For Target Rs.120.00
Derivative
Ideas
FEDERALBNK added around 2.5% of open interest as long positions along with some
delivery based buying in previous trading session. On charts, it is trading
above important moving averages in higher highs—higher lows formation on daily
charts. Hence, we recommend buying FEDERALBNK June futures as per levels
mentioned below.
Strategy:
BUY FEDERALBNK
JUNE FUTS BETWEEN 114-115, SL 112, TARGET 120.
TECHNICAL VIEW:
S3
|
S2
|
S1
|
NIFTY
|
R1
|
R2
|
R3
|
9,520
|
9,590
|
9,630
|
9,668.25
|
9,710
|
9,770
|
9,820
|
Nifty saw small
correction on friday and closed just near the gann angle also also near the
lower end of range at 9640, bulls need to hold the gann angle for upmove to
continue towards 9750/9790. Bearish below 9610 for a move towards
9530/9480. As per Geometric
Time Cycle big move can
be seen in market in next 2 days.Low made today was again 9608 near the gann
angle, as shown in below chart and we saw a good bounce back. As per time cycle
if today’s low is not broken we can see an up move towards 9720/9800. Bearish
below 9610 for a move towards 9530/9480.
Conclusion:
Markets
extended their winning streak to the fifth consecutive week as the index yet
again closed at a fresh life time high thanks to late buying on Friday.
However, throughout the week, traders and investors remained jittery amid
multiple global events like ECB meet and UK elections. Even upgrades in monsoon
estimates and RBI’s decision of keeping repo rate and reverse repo rate
unchanged at 6.25% and 6%, respectively didn’t bring any cheer to the market.
Start of
this week witnessed ITC and HUL lead the main indices as the FMCG companies
helped five of the top 10 most valued Indian firms raise their market cap by
more than Rs 37,000 crore. The PSU Banking stocks were in action after media
reports stated that the government was examining the possibility of further
consolidation in the public sector banking space without waiting for their
finances to improve. OMCs like BPCL, HPCL and IOC were in action after reports
stated that petrol and diesel prices will be revised every day across the
country from June 16.