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 | | In This Issue: | | • Market View | • Sectoral Outlook | • Technical Outlook | | | Market View | - Indian market closed in the red during the week. Nifty and Sensex down this week by 2.15% and 1.92% respectively.
- In terms of sectors Petrochemicals and Paints were the winners of the week. Construction, Metals and Telecom were the notable losers this week.
- December WPI seen at -1.07% versus -1.9% for Nov: The wholesale price index (WPI) for the month of December is likely to come in at -1.07 percent versus -1.99 percent seen for the month of November. Food inflation and manufacturing inflation to a degree will lead to WPI hardening in December. The manufacturing inflation is 65 percent of WPI. Core WPI is likely to be around -1.7 percent versus -1.9 percent seen in November. The range is likely to be between -1.1-1.4 percent.
- Government working to boost exports of chemicals, plastics: The Centre is working with manufacturers of chemicals, plastics and allied products to boost their shipments as it expects the segment to play a major role in achieving its vision of USD 900 billion exports by 2020, a senior official said Wednesday.
- November IIP comes in at -3.2%, Dec CPI rises to 5.6%: India's Index of Industrial Production (IIP) for the month of November has contracted 3.2 percent versus 9.8 percent in October, while the consumer price index (CPI) for the month of December has risen to come in at 5.6 percent compared with 5.41 percent reported for the month of November. The CPI data has been consecutively hardening for the past four months and December is the fifth month. It has risen from levels of around 3.7 percent in July of 2015.
- Government to spend Rs 11,000 cr on road infra to check road accidents: Concerned over alarmingly high number of road accidents in the country, Union Minister Nitin Gadkari on Monday said the government will spend Rs 11,000 crore over the next five years to improve the road infrastructure. Stating that road accidents cause an annual loss of around Rs 60,000 crore, or 3 percent of the GDP, to the country, the Road Transport and Highways Minister said the Centre has initiated a slew of steps aimed at minimising such mishaps.
- Government to review status of 32 coal blocks next week: Coal Ministry will next week review the status of auctioned and alloted coal blocks to companies like SAIL, Adani Power, Hindalco, NTPC and JSW Steel amid the government eyeing an ambitious one billion tonnes of production by 2020.
| | | Sectoral Outlook | BFSI
We are positive on select Private Banks. But, we remain bullish on selective PSU banks as we expect concerns on the asset quality to prevail for some more time in the sector
| Pharmaceuticals
Considering the recent rally in pharma stocks, we turn neutral on pharma sector, though we continue to prefer players present in niche and specialized product portfolio with focus on regulated markets | | Capital Goods
We are bullish on this sector in the medium to long-term as we are near the bottom of the economic cycle and expect revival in capex in H2 FY16 | Cement
On the back of low traction in demand and run-up in the stock prices of the cement companies we turn cautious on the sector
| | Consumption
Although sticky CPI inflation and muted income growth has hurt consumer demand in the past few months, there could be some revival if CPI inflation eases | Infrastructure
We are bullish on this sector from a long-term perspective, as a stable and decisive Government at the Centre would bring investment cycle back on track | | IT
We remain positive on this sector, as the US economy continues to recover gradually. INR volatility is a cause for concern | Real Estate
We are neutral on this sector. Slow demand environment in most markets (except South India) has impacted sales. Faster project approvals could result in increased new launches in the southern market | | | Technical Outlook | - Nifty slides for consecutive weeks ending at 18 months low of 7,438 losing 2.2. The selling pressure is continuing in line with gloomy global markets and week Chinese sentiments. Shanghai has lost 9% in this week followed by 10% last week whereas NIKKEI and Hang Seng has lost 3.1% and 4.5% respectively this week. The concern for major countries is Crudeoil which is declining consistently and trading below 12 years low at $30. Rupee has depreciated significantly against Dollar and trading at September 2009 levels of 67.70.
- Nifty fell by 2.2% this week to end at 7,438.
- The crucial support is placed at 7,400 at 12 years rising trendline.
- Index has taken support at 34MEMA (Monthly Exponential Moving Average) placed at 7,445.
- The positive divergence is visible on RSI.
- We expect bearish trend to take a pause around 7,400 levels.
- The crucial support are placed at 7,400-7,360 while reversal would confirm on a break above 7,630.
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CA. Rajesh Desai
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January 15, 2016
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