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Market mood to remain cautious on the last trading day of week

The Indian markets showing a lackluster trade ended marginally in red in the last session. Today, the start is likely to remain cautious and traders will be eyeing the major global developments following the mixed cues after an exit poll suggested British Prime Minister Theresa May’s Conservative party not getting majority. On the domestic front traders will be getting some support with UN trade report that despite stagnant foreign direct investment (FDI) inflow of $ 44 billion in 2016, India will most likely remain most favoured destination due to its attractiveness among MNCs for cross-border mergers and acquisitions. Meanwhile, Chief Economic Adviser Arvind Subramanian has expressed concern over growing protectionism in global markets and felt that India needs open markets to grow at 8-10%. He said that the biggest beneficiaries of the open market policy or globalisation have been middle income countries and the continuation of this is in their interest. There will be some buzz in the power and coal stocks on report that India’s coal imports in May declined 6 per cent due to lacklustre demand from the power sector and sufficient supply of domestic fuel.

Indian benchmarks settle with moderate losses; Nifty ends below 9650 mark

It turned out to be a lethargic performance from Indian benchmark indices on Thursday, as they failed to snap the session in the green territory and settled marginally below the neutral line. Today’s session largely remained characterized by choppiness, as the aimless indices moved only sideways in a tight band for most part of the day, as investors and foreign funds were adopting a cautious approach, ahead of key political and economic events in the U.S. and Europe. Sentiments remained subdued after Reserve Bank of India (RBI) raised concerns over the possibility of fiscal slippages due to the farm loan waivers. RBI Governor Urjit Patel said unless that state governments' budgets allow that fiscal space to go in for a loan waiver, it would be risky to tread on that path. RBI also cut the economic growth projection to 7.3% for the current fiscal from 7.4% earlier. The central bank, however, used a less hawkish tone and reduced the Statutory Liquidity Ratio (SLR) in its second bimonthly momany liquor stocks gained traction after Karnataka state government decided to send a proposal to the union government seeking to denotify the national highways (NH) pass through urban local bodies in Karnataka as local roads. Likewise, shares of steel companies were trading higher in an otherwise subdued market on the expectations of a revival in consumption during the current financial year 2017-18. The market breadth remained pessimistic, as there were 1328 shares on the gaining side against 1351 shares on the losing side, while 177 shares remained unchanged.netary policy for financial year 2017-18.

Traders turned anxious after chief economic adviser Arvind Subramanian expressed his unhappiness over the Reserve Bank's inflexibility on interest rates. He warned that real policy rates are becoming tighter and rising at a time of low inflation and slowing growth. However, losses remained capped with UNCTAD’s latest report that India would be the top prospective foreign direct investment (FDI) destination globally after the US and China. It also said that an improved economic outlook in major Asian economies such as India, China is likely to lift investor confidence and help boost FDI inflows by about 15 percent in 2017

Asian markets end mixed on Thursday

Asian equity markets made a mixed closing on Thursday as investors awaited directional cues from three big upcoming events today and next week's Federal Reserve meeting. The European Central Bank (ECB) will announce its latest interest rate decision later today, with traders on the lookout for any hints of policy changes on rate and stimulus outlook. Polls have opened in the UK with the latest polls predicting a narrow victory for Theresa May's party over the main opposition Labour Party. Former FBI Director James Comey's testimony before the Senate Intelligence Committee also remained in the spotlight after he confirmed media reports that President Donald Trump demanded his loyalty and asked him to drop at least part of the bureau's investigation of former National Security Adviser Mike Flyn. Japanese shares ended lower as the yen edged higher in late Asian deals on a report that the Bank of Japan was re-calibrating its communications to acknowledge it is thinking about how to handle a withdrawal from its monetary stimulus. Meanwhile, Chinese shares ended higher after Chinese exports and imports data topped expectations. Exports advanced 8.7 percent year-on-year in dollar terms in May, faster than the 7.2 percent increase economists had forecast. Imports climbed 14.8 percent, much above expectations for 8.3 percent growth.

US markets closed higher following Comey's testimony

The US markets closed higher on Thursday, with the Nasdaq Composite Index finishing at a record, marking its 38th all-time closing high in 2017. The former FBI Director James Comey’s appearance in front of the US Senate Intelligence Committee concluded without any significant revelations. The street had signaled that above events don’t appear to threaten the stock market’s extended push into record territory, which has been driven by President Donald Trump’s promises of tax cuts, infrastructure spending and deregulation.

The Dow Jones added 8.84 points or 0.04 percent to 21,182.53, Nasdaq was up 24.38 points or 0.39 percent to 6,321.76, while S&P 500 edged higher by 0.65 points or 0.03 percent to 2,433.79

Indiato be one of the top prospective FDI destination: UNCTAD

The United Nations Conference on Trade and Development (UNCTAD), in its latest report ‘World Investment Report 2017’ has saidthat India would be the top prospective foreign direct investment (FDI) destination globally after the U.S. and China. The report however noted that although new liberalization efforts continue to improve the investment climate in India, tax-related concerns remain a deterrent for some foreign investors.

UNCTAD report said that an improved economic outlook in major Asian economies such as India, China is likely to lift investor confidence and help boost FDI inflows by about 15 per cent in 2017. Besides, it has said that the country’s renewed policy efforts to attract FDI may also contribute to higher inflows in 2017, adding that foreign multinational enterprises (MNEs) are increasingly relying on cross-border M&As (mergers and acquisitions) to penetrate the rapidly growing Indian market.

It said that in major recipients such as China, India and Indonesia, renewed policy efforts to attract FDI could contribute to an increase of inflows in 2017. However, the report found that FDI in India remained almost flat in year 2016 at about $44 billion, up only 1 per cent from 2015. At the same time India's outward FDI declined by about third from $7.572 billion in 2015 to $5.12 billion in 2016. UNCTAD has also reported that FDI inflows to developing Asia shrank by 15 per cent to $443 billion in 2016, the first decline since 2012.

Record jumpin FDI from $34,487 billion to $61,724 billion since 2013: Modi

Giving an overview of his three-year-old government, Prime Minister NarendraModi has said that there has been a record jump in Foreign Direct Investment (FDI) from $34,487 billion to $61,724billion since 2013. Terming India a bright spot in the cloudy global

economy, he said that doing business here has been made easier and the tax regime is more predictable and stable. He pointed out that the goods and services tax (GST) regime is also going to have long standing benefits for the nation.

Talking about his 'guiding tenet-reform to transform', Modi said that the reform agenda of government is comprehensive and inclusive, covering all sections of society, all regions of India and all aspects needing attention. He also said that it was a matter of immense happiness that a friendly spirit of competition has developed among the states for accelerating reforms and getting more investment.

On matters related to next-gen infrastructure for a new India, PM said that they are giving the added push to infrastructure projects with a special emphasis on timely completion. Adding further, he said that the government’s goal is a new India, powered by the skills and talent of the youth. He also said that substantial ground has been covered in the last three years and India is poised to scale newer heights of progress.

Farm loan waivers may harm country’s fiscal health, spur inflation: RBI

Raising concerns over the recent spate of farm loan waivers across the country, the Reserve Bank of India (RBI) Governor Urjit Patel has said that rush for such actions may harm the country’s fiscal health and may have inflationary spillovers. He said that past episodes have shown when there are significant fiscal slippages they do permeate through inflation sooner or later.

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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:

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):

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 (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:

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.

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Events to watch this week

• US nonfarm payrolls rose 138,000; March/April revised down
• Merkel: We have to fight for our own future ourselves
• Draghi suggests no immediate policy shift ahead
• UK polls show narrower lead for Conservatives
• US quits Paris agreement

The Week ahead:

For the week,Led by the United States, global equities extended gains this week amid moderate global growth and restrained inflation data. All three major US indices set all-time highs. After disappointing US employment data, the yield on the 10-year Treasury note slipped to 2.17% compared with 2.24% last Friday. Oil continued its drop as well, with West Texas Intermediate crude falling to $47.35 a barrel from $48.95 a week ago. Volatility, as measured by the Chicago Board Options Exchange Volatility Index (VIX), remained historically muted, falling to 9.9 from 10.8 last week.

NIFTY- 9,653.50
CRUDE OIL-Rs 3,080barrel
GOLD-Rs 28,905 gram
Rs/$-Rs 64.44

MARKET ROUND UP

Market jumped on hopes of timely arrival of southwest monsoon rains. Global markets remained mixed following a better-than-expected employment data in the US, which triggered concerns that the US Federal Reserve may soon hike rates this year. While commentary by foreign brokerages on India and benchmark indices lifted investors' sentiment.

India's key reforms, including the impending Goods and Services Tax (GST) and sticky loan resolution, may improve the country's credit profile, Moody's Investors Service said on Thursday, 1 June 2017. A foreign broker, meanwhile, rolled forward its Sensex target to 32,200 by March 2018 as against the earlier target of 31,500 for December 2017. The broker said that implementation of the GST, strong flows from domestic mutual funds and foreign investors are positives, but a lot seems to be getting priced in with valuations at 18 times estimated FY18 earnings.

In the week ended Friday, 2 June 2017, the Sensex jumped 245.08 points or 0.79% to settle at 31,273.29, a record closing high. The index hit record high of 31,332.56 in intraday trade on Friday, 2 June 2017. The Nifty 50 index surged 58.40 points or 0.61% to settle at 9,653.50, a record closing high. The index hit record high of 9,673.50 in intraday trade on Friday, 2 June 2017.

The S&P BSE Mid-Cap index rose 281.58 points or 1.94% to settle at 14,801.48. The S&P BSE Small-Cap index rose 224.91 points or 1.49% to settle at 15,311.17. Both these indices outperformed the Sensex.

Macro Economic Front:

On the Economic Front,data released by Markit Economics during market hours on Thursday, 1 June 2017, showed that Indian manufacturing sector stayed in expansion mode in May as a further upturn in new business supported output growth. That said, the headline Nikkei India Manufacturing Purchasing Managers' Index (PMI) dropped to a 3-month low of 51.6 in May from 52.5 in April.

India's Gross Domestic Product (GDP) rose at moderated pace of 6.1% in Q4 March 2017, which is the lowest pace of growth in last nine quarters. The GDP growth decelerated sharply from 7% growth recorded in the preceding last quarter and 8.7% surge posted in the corresponding quarter last year. The data was released by the government after market hours on Wednesday, 31 May 2017.

The Eight core infrastructure industries have showed 2.5% growth in output for April 2017 over April 2016. Its cumulative output growth had stood at 4.8% in FY 2017. The Base Year of the Index of Eight Core Industries has been revised from the year 2004-05 to 2011-12 from April 2017. The shift is in line with the new base year of Index of Industrial Production (IIP). The data was released by the government after market hours on Wednesday, 31 May 2017.

Major Action &Announcement:

Mahindra & Mahindra (M&M) rose 6.13% to Rs 1,423. The company's total tractor sales rose 11% to 25,599 units in May 2017 over May 2016. M&M's total auto sales rose 3% to 41,895 units in May 2017 over May 2016. Total domestic sales grew by 11% to 40,602 units in May 2017 over May 2016. Exports fell 68% to 1,293 units in May 2017 over May 2016. The announcement was made during market hours on Friday, 1 June 2017.

Bajaj Auto rose 1.06% to Rs 2,846.10. The company's total sales declined 10% to 3.13 lakh units in May 2017 over May 2016. Domestic sales fell 15% to 1.74 lakh units. Exports declined 3% to 1.39 lakh units. The announcement was made during market hours today, 2 June 2017.

Maruti Suzuki India rose 0.58% to Rs 7,114.25. The company's total sales rose 11.3% to 1.36 lakh units in May 2017 over May 2016. Domestic sales grew by 15.5% to 1.30 lakh units in May 2017 over May 2016. Export sales declined 36.3% to 6,286 units in May 2017 over May 2016. The announcement was made during market hours on Thursday, 1 June 2017.

Housing finance major HDFC rose 4.02% to Rs 1,610.10. The company said that HDFC Investments, a wholly owned subsidiary of the company subscribed 3.27 crore shares or 15% of share capital of First Housing Finance (Tanzania), Tanzania's first housing finance company. Cost of acquisition is equivalent to $1.5 million. The announcement was made after market hours on Thursday, 1 June 2017.

Coal India rose 0.17% to Rs 268.80. The company's consolidated net profit declined 38.25% to Rs 2716.09 crore on 8.01% increase in total income to Rs 25027.35 crore in Q4 March 2017 over Q4 March 2016. The result was announced after market hours on Monday, 29 May 2017.

ONGC fell 1.08% to Rs 173.90 after net profit declined 6.14% to Rs 4340.18 crore on 26.81% rise in total income to Rs 26233.56 crore in Q4 March 2017 over Q4 March 2016. The result was announced after market hours on Friday, 26 May 2017.

Global Front:

In Overseas Markets,data released by the private payroll firm ADP on Thursday, 1 June 2017, showed that private US companies hired at a blistering pace in May, accelerating from the pause in April. Non-farm private employment surged 253,000 in May. An improving labor market will likely support investors' expectations that the Federal Reserve will raise interest rates further in the coming months.

Global Economic News:

US adds fewer jobs than forecast
The May employment report was a disappointment save for a continued drop in the unemployment rate. 138,000 new jobs were added last month, while revisions to March and April data trimmed 66,000 from pervious totals. Economists had expected a rise of 184,000 nonfarm payrolls. Wage gains were steady at 2.5% versus a year ago. The bright spot in the report was the continued fall in the unemployment rate, which edged down to a 16 year low of 4.3%. While weaker than expected, the data likely won’t dissuade the US Federal Reserve from hiking rates later this month.

Merkel downplays past partnerships
Speaking at a campaign event inside a Bavarian beer tent shortly after the Nato and G7 summits, German chancellor Angela Merkel said the times when Europe could rely on others were over. She said while friendly relations with the US and UK are needed, she added that “we have to fight for our own future ourselves”. The German federal election takes place on 24 September.

Draghi: Not ready to unwind stimulus
Appearing before the European Parliament’s committee on economic affairs this week, European Central Bank president Mario Draghi downplayed the odds of any shift in policy at next week’s rate-setting meeting. Economic growth is improving but inflation remains subdued, the central banker said, adding that the economy still requires substantial stimulus. Some analysts had expected the ECB to signal that it will begin tapering bond purchases later this year. Very subdued eurozone inflation data (+1.4% year over year) released later in the week further tamped down expectations of a policy shift.

UK polls tighten
Opinion polls ahead of next week’s UK general election have been all over the map, with some showing the Conservatives with a lead as small as 3% and others indicating a lead as wide as 15%. What is not in doubt is that the race has tightened. Recall that the Conservatives held a 22% advantage on the day the election was called back in April. Not helping the Conservatives, Prime Minister Theresa May was criticized for skipping a BBC-sponsored debate, choosing instead to send a surrogate. Labour Party leader Jeremy Corbyn pounced on the decision. May tried to keep the focus on Brexit, saying Corbyn is ill suited to lead those negotiations with the European Union.

US pulls out of Paris Agreement
Saying he was elected to represent the voters of Pittsburgh, not Paris, US president Donald Trump this week announced that the United States would pull out of the Paris climate deal. The agreement put the US at a disadvantage, Trump said, highlighting its lack of enforcement mechanisms. Trump offered to renegotiate the deal, though Germany, France and Italy balked at the notion.

Italy moving closer to early elections
Elections could come as early as this autumn if the Italian parliament adopts a new election law resembling German’s proportional system, with a 5% cutoff for smaller parties. If the law is approved in the coming weeks, as expected, Italians could go back to the polls around the same time as Germany votes on 24 September. The ruling Democratic Party and the eurosceptic Five Star Movement are nearly tied atop the polls.

Europe continues to hog the growth spotlight
While manufacturing in the US and China moderated slightly in May, Europe continues to show strength. The eurozone manufacturing purchasing managers’ index firmed to 57.0 from 56.7 in April, the highest in six years. UK PMI stayed robust at 56.7, down from April’s 57.3, while the US ISM Manufacturing Index saw slight improvement to 54.9 In May from 54.8 in saw slight improvement to 54.9 In May from 54.8 in April. China’s official PMI stood unchanged at 51.2, though the Caixin PMI dipped to 49.6 from 50.3.

GLOBAL CORPORATE NEWS

Beige Book less upbeat
Optimism waned in a few districts, the Fed reported this week in its Beige Book. Seven of the 12 Fed districts reported growth as “modest” since the last report on 19 April, while four reported “moderate” growth and one district — New York— was flat. Markets still expect the Fed to hike rates later this month, but with inflation pressures moderating, future rate hikes are less certain than they were earlier in the year.

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 (05June)

PMI Services Index & Factory Orders

Tuesday (06 June)

Week Bill Auction

Wednesday (07 June)

Consumer Credit

Thursday (08 June)

Fed Balance Sheet& Jobless Claims

Friday (09 June)

Wholesale Trade

Fundamental Pick of the week:

Buy Emami Ltd For Target Rs.1,260.00

Investment Rationale

* Emami is one of the leading players in the personal & healthcare consumer products industry in India, with portfolio of household brand names such as BoroPlus, Navratna, Fair &Handsome, Zandu Balm, MenthoPlus Balm and Fast Relief. It has a portfolio of over 300 products with presence across 40lac plus retails outlets through a network of 2,900 distributors.

* For FY18, the company is targeting double digit volume growth, likely to be driven by revival in urban and rural consumption and launches in new categories and brands extensions. Focus will remain on power brands. New products are likely to contribute 2-3% of overall sales.

* After a subdued performance in FY17, the company expects its overseas business to grow in double digits, led by ramp-up of demand in Middle East.

GST rates of 18% for personal care and 12% for Ayurveda will benefit the company. Further the company expects its debt to be re-paid by FY18.

Recommendation

Buy Emami Ltd @1135-1145 Stoploss 1065 CMP 1139.10  Target 1260

Domestic Market Overview

The Indian markets showing a lackluster trade ended marginally in red again in last session, as slew of disappointing economic reports on GDP, core sector output and manufacturing stirred concerns about the state of the economy. Today, the start is likely to see some recovery on positive global cues. Traders will be getting some support with NITI Aayog Vice Chairman ArvindPanagariya’s statement that India will regain the crown of the fastest growing major economy, overtaking China, as early as the first quarter of 2017- 18. He said that India, on an annual basis, is ahead of China and will regain the growth momentum soon on the back of host of reforms initiated by the Modi government in the last three years. Meanwhile, Finance Minister ArunJaitley while maintaining that the decline in fourth quarter GDP print cannot be attributed to demonetisation alone has said that India growing at 7-8 percent is 'fairly reasonable' in the current global context. Also, the Moody’s Investors Service has said that India’s key reforms, including the impending goods and services tax and resolution of sticky loans may improve the country’s credit profile. Realty sector may see some action, as the government has set a target of constructing 51 lakh houses by March 2018 to reach halfway towards its goal of building 1crore houses by 2019.

TECHNICAL VIEW:

Till we are above 9610 we can move towards 9669/9700/9767. Bearish below 9570 for a move towards 9500. Prices cannot stay near gann angles for so long so brace for a trending move. Nifty closed above 9610 on Friday and we finally had a gap up opening which did the first target of 9669 now as long as bulls held on to 9610 we can march for higher target of 9700/9779. Bearish below 9580 for a move towards 9520/9470. 

Conclusion:

Jubilation continues in the passing week as Nifty gained nearly half a percent and made a new record high above 9650.Encouraging Q4 earnings along with positive global cues and early arrival of monsoon helped the index to maintain its momentum for the sixth consecutive week.The coming week will be again a crucial week wherein RBI monetary policy is scheduled on 7th June.

Technically speaking, we‘re in a bull run and we expect the prevailing momentum to extend further. So, any intermediate dip should be considered as buying opportunity but do maintain caution in stock selection