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 | | In This Issue: | | • Market View | • Sectoral Outlook | • Technical Outlook | | | Market View | - Indian market ended in the green during the week. Nifty and Sensex up this week by 6.48% and 6.44% respectively.
- In terms of sectors Metals, Construction and Banks were the winners of the week.
- World Bank has been approached to set up Railway Infra Fund: The World Bank has been approached to explore the possibility of setting up of a Railway Infrastructure Development Fund, Railway Minister Suresh Prabhu said. "The World Bank has taken up a detailed scoping and options study for creating such a fund," he said in Lok Sabha during Question Hour.
- IMF sees India growth picking up, inflation behaving: India's economic growth rate should pick up to 7.5 percent in the 2016/17 fiscal year, the International Monetary Fund said on Wednesday, aided by a collapse in oil prices and relatively low exposure to current global financial turbulence. Summing up its latest review of Asia's third-largest economy, the Fund forecasts that economic growth would pick up from 7.3 percent in the 2015/16 fiscal year that ends on March 31.
- India-China trade deficit at $44.7 bn in Apr-Jan: Trade deficit between India and China has increased to USD 44.7 billion during April-January period of 2015-16, Parliament was informed on Wednesday. India's exports to China stood at USD 7.56 billion during the period whereas the import has jumped to USD 52.26 billion in April-January. In 2014-15, the deficit was aggregated at USD 48.48 billion.
- Government earmarks Rs 1,400 cr for DMIC project in 2016-17 Budget: The government has earmarked Rs 1,400 crore for development of the Delhi-Mumbai Industrial Corridor (DMIC) in the Budget for 2016-17. However, in case of Amritsar-Kolkata Industrial Corridor (AKIC) project, a token amount of Rs 3 crore has been set aside by Finance Minister Arun Jaitley. The project envisaged to provide modern infrastructure through smart futuristic and sustainable industrial cities across six states including Haryana, Uttar Pradesh and Rajasthan.
- Government hopeful of energizing unelectrified villages by 2017-end: After a little over 5,930 villages getting electrified so far in this fiscal, the government has expressed hope that all the unelectrified villages in the country will be energized by 2017-end. Coal and Power Minister Piyush Goyal has expressed hope that all the unelectrified villages will be electrified by the end of 2017 and every home will get power by 2018.
- Government hikes import tariff value on gold, silver: The government on Monday hiked import tariff value on gold and silver to USD 399 per 10 grams and USD 495 per kg, respectively, taking cues from global market. For the first fortnight of this month, the import tariff value on gold was fixed at USD 388 per 10 grams and on silver was USD 487 per kg.
| | | Sectoral Outlook | 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 H1FY17.
| Pharmaceuticals
We continue to remain neutral on the pharma sector, though we continue to prefer players present in niche and specialized product portfolio with focus on regulated markets.
| | 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. We are bullish on the Road and Transmission & Distribution sector.
| Cement
With greenshoots of revival in the demand from infrastructure, we are positive on the sector. Within the sector, we prefer south based cement companies given that the region accounts for maximum incremental demand triggers.
| | Consumption
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.
| 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.
| | Information Technology
Demand dynamics of the IT industry changing drastically more towards discretionary spending backed by disruptive technology and digital innovation. Leadership in the industry will change towards a company having higher revenue from discretionary related services. Investment in the sector should be stock specific. INR USD movement will help the companies to report better operating margins in a period when topline growth is challenged by cross currency volatility.
| BFSI
We are positive on select Private Banks. Earnings trajectory is expected to pick up over the next two years as utilization of excess capacity and pent up demand will boost corporate capex, reviving credit demand in FY17 and reduction in interest rates will drive improvement in asset quality.
| | | Technical Outlook | - Nifty hits fresh 52 weeks low of 6,825 on Union Budget day and rallied by 6.5% to close the week at 7,485 regaining 7,500 levels. Indian markets were underperforming global markets in the recovery phase which we had discussed in our last week article and this week we witnessed a sharp rally to cope the pace of recovery. Index posted the highest gain of more than 6% on weekly basis after 222 weeks. On global indices, Nikkei rallied by 5%, Hang Seng by 4.2%, Shanghai by 4%, Dow Jones by 1.5% and DAX by 2.8% for the week. On commodities front, Gold boosted by 4% to $1275 while volatility settles in crude basket and trading in a range of 6-7% for the week. India Rupee appreciated 2.15% for the week against Dollar; the highest in the week after 95 weeks.
- Nifty ends the week at 7,485 gaining 6.5%; the highest gain after 222 weeks.
- Index bounced from support line of falling channel and inching towards the resistance line at 7,535-7,570.
- Index has ended near 13WMA (Weekly Moving Average) placed at 7,495.
- On short term chart, the bearish shark harmonic pattern with reversal level in the range of 7,500-7,535.
- Stochastic has entered in the overbought territory on daily chart suggests some a dip on cards.
- We expect index to consolidate in the range of 7,300-7,600 for the week. The support for the week are 7,378-7,280 and resistance at 7,550-7,620.
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CA. Rajesh Desai
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March 04, 2016
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