Bears make comeback on Dalal Street after two weeks break and key gauges settled with a cut of around one percentage point amid signs of slowing global growth and an unsettled Sino-US trade dispute. Markets started the week on an optimistic note with RBI’s report showing that the forex reserves continued its upward march and increased by $1.267 billion to $397.351 billion in the week to January 11, 2019, aided by a rise in core currency assets and value of gold. On the very next day, traders turned pessimistic after India Ratings’ report warning that with populist decisions like farm loan waivers and other financial support schemes likely to gain significance in the run-up to the forthcoming next general elections, aggregate fiscal deficit of the states is expected to reach 3.2 per cent in FY20. It expects the states’ revenue account on aggregate to clock a deficit of 0.5 per cent of Gross Domestic Product (GDP) in FY20 due to a higher growth in revenue spends than revenue receipt. Key gauges extended losses with private report showing that India's industrial activity is expected to remain subdued in the near term, owing to muted domestic demand, weak global economic outlook and uncertainty among businesses over the outcome of Lok Sabha elections, 2019. Sentiments also remained dampened on report that the goods and services tax (GST) collected in January (for December) is seen to be the lowest in the current fiscal. While the average collections during April-December were Rs 96,800 crore a month, the collections in January are around Rs 93,000 crore. Selling in final day of the week, takes keg gauges below their crucial 36,100 (Sensex) and 10,800 (Nifty) levels, as Global rating agency Moody’s said that the government policies to support the incomes of small enterprises and low-income households ahead of Lok Sabha elections will make fiscal consolidation harder. BSE movement for the week The Bombay Stock Exchange (BSE) Sensex slipped 361.07 points or 0.99% to 36,025.54 during the week ended January 25, 2019. The BSE Midcap index losses 341.57 points or 2.27% to 14,681.82, while Smallcap index slipped 504.4 points or 3.48% to 14,000.20. On the sectoral front, S&P BSE Auto was down by 1293.14 points or 6.49% to 18624.17, S&P BSE Consumer Discretionary Goods & Services was down by 173.95 points or 4.76% to 3480.06, S&P BSE Power was down by 71.24 points or 3.64% to 1883.29, S&P BSE Metal was down by 344.81 points or 3.11% to 10735.51 and S&P BSE Realty was down by 56.85 points or 3.08% to 1790.41 were the top losers on the BSE sectoral front, while S&P BSE Oil & Gas was up by 186.41 points or 1.37% to 13765.00, S&P BSE Healthcare was up by 146.71 points or 1.06% to 13948.31, S&P BSE Information Technology was up by 113.50 points or 0.77% to 14784.37 and S&P BSE Consumer Durables was up by 1.45 points or 0.01% to 20951.27 were the top gainers on the BSE sectoral front. NSE movement for the week The Nifty slipped 126.40 or 1.16% to 10,780.55. On the National Stock Exchange (NSE), Bank Nifty was down by 341.40 points or 1.24% to 27,115.30, Nifty Mid Cap 100 decreased 504.70 points or 2.88% to 17,012.50 and Nifty Next 50 was down by 542.25 points or 1.98% to 26,868.30. On the other side, Nifty IT was up by 146.30 points or 0.98% to 15,039.25. FII transactions during the week Foreign Institutional Investors (FIIs) were net sellers in equity segment in the week, with gross purchases of Rs 20268.84 crore and gross sales of Rs 22160.85 crore, leading to a net outflow of Rs 1892.01 crore. They also stood as net buyers in the debt segment with gross purchases of Rs 5186.10 crore against gross sales of Rs 4970.47 crore, resulting in a net inflow of Rs 215.63 crore. In hybrid segment, FIIs stood as net buyers, with gross purchases of Rs 4.61 crore and gross sales of Rs 0.89 crore, leading to a net inflow of Rs 3.72 crore. Industry and Economy Global rating agency Moody’s Investors Service in its latest report has said that Indian insurance and reinsurance industry will register strong growth on the back of robust Gross domestic product (GDP) expansion and evolving regulatory regime. It indicated that during fiscal 2018, total gross premiums for the non-life and life insurance sectors grew 11.5 percent to Rs 6.1 trillion, bringing the five-year compound annual growth rate (CAGR) to 11 per cent. Outlook for the coming week In the passing week, Indian equity markets ended in negative terrain with Sensex and Nifty posting losses of around one percent each. Indian equity markets are likely to witness choppiness as traders will adjust their position on ahead of expiry of F&O series on January 31. Also, the coming week will be a data heavy week with the start of a new month, traders will be first reacting to the core sector data and the monthly sales numbers of auto companies. The next week will be an important one, as Union Budget 2019 will be presented on February 1, 2019 by Piyush Goyal as he gets additional charge of Finance Ministry. This year being an election year, it will be an interim budget. The parliament will meet from January 31 to February 13 for the budget session. Investors will also be eyeing Piyush Goyal meet with the heads of public sector banks on January 28, to discuss a host of issues including credit offtake and bad loan position of lenders. Traders also look forward to the Nikkei Manufacturing PMI data for the month of January which will be announced on February 1. In a result heavy season lots of major companies like, Canara Bank, Ceat, Escorts, RBL Bank, Shalby, Shoppers Stop, Tata Power, Axis Bank, Bajaj Finserv, Bajaj Finance, Bank of Baroda, Godrej Consumer Products, Granules India, HCL Technologies, HDFC, Mahanagar Gas, Info Edge (INDIA), Ramco Cements, Tata Steel Bsl, Bajaj Auto, Castrol India, ICICI Bank, JSW Energy, NTPC, Tata Communications, Bharti Airtel, Dabur, Hero Motocorp, Power Grid, Vedanta, Berger Paints, Dr Reddy's Laboratories, E.I.D.Parry (INDIA), State Bank Of India, Titan and Unichem Laboratories. On the global front from the US, traders will first be eyeing International Trade in Goods, Redbook, S&P Corelogic Case-Shiller HPI, and Consumer Confidence on January 29, followed by ADP Employment Report, GDP, Pending Home Sales Index, FOMC Meeting Announcement and Fed Chair Press Conference on January 30, Challenger Job-Cut Report, Jobless Claims, Personal Income and Outlays, Employment Cost Index, Chicago PMI, Farm Prices, Fed Balance Sheet and Money Supply on January 31 and finally Motor Vehicle Sales, Construction Spending, Consumer Sentiment and Baker-Hughes Rig Count on 1 February. Top Gainers Reliance Industries up by 9.83% was the top gainer on Nifty for the week - Reliance Industries and its group companies come up with an open offer to acquire an additional 26% stake in Hathway Cable and Datacom. Jio Content Distribution, Jio Internet Distribution Holdings along with Reliance Industries and a clutch of group companies have announced an open offer for acquisition of up to 46,02,27,170 fully paid up equity shares of face value of Rs 2 each from public shareholders of Hathway Cable and Datacom, at a price of Rs 32.35 per equity share for consideration of Rs 1,488.83 crore, payable in cash.
Yes Bank up by 8.98% was another top gainer on Nifty for the week - Yes Bank gained traction after receiving the Reserve Bank of India’s (RBI) approval to name Ravneet Singh Gill as its new chief executive officer. Besides, the Bank joined hands with the Maharashtra government to onboard fair price shops (FPS) as Business Correspondent Agents. Meanwhile, the bank posted a 7% fall in third-quarter net profit as it set aside higher provisions. Net profit stood at Rs 1001.85 crore for Q3FY19 as compared to Rs 1076.87 crore for the same quarter in the previous year.
Top Losers Zee Entertainment down by 27.78% was the top loser of the week on Nifty - Zee Entertainment Enterprises came under selling pressure on media report that its controlling shareholder Essel Group’s name had emerged in a probe linked to large deposits made after demonetisation. Besides, there were news reports that the company was in talks with firms including Sony Pictures to sell half of their holding in the entity. It is learned that ZEE promoter Subhash Chandra, who is also chairman of the company, had discussions on the proposed stake sale in the UK and the US.
Maruti Suzuki down by 11.22% was another top loser of the week on Nifty - Stocks of Maruti Suzuki edged lower after the company reported a fall of 17.22% in its net profit at Rs 1489.30 crore for the quarter under review as compared to Rs 1799.00 crore for the same quarter in the previous year. However, total income of the company increased by 5.42% at Rs 20585.60 crore for Q3FY19 as compared Rs 19528.10 crore for the corresponding quarter previous year.
Technical viewpoints During the week, CNX Nifty touched the highest level of 10,987.45 on January 21 and lowest level of 10,756.45 on January 25. On the last trading day, the Nifty closed at 10,780.55 with weekly loss of 126.40 points or 1.16 percent. For the coming week, 10,695.52 followed by 10,610.48 are likely to be good support levels for the Nifty, while the index may face resistance at 10,926.52 and further at 11,072.48 levels. US Market The US markets ended lower during the passing week on renewed concerns about global growth and the US-China trade war. The International Monetary Fund (IMF) said the global expansion is weakening at a rate that is somewhat faster than expected. The IMF lowered its forecasts for global economic growth to 3.5 percent in 2019 and 3.6 percent in 2020, 0.2 and 0.1 percentage points below last October's projections. The IMF said an escalation of trade tensions and a worsening of financial conditions are key sources of risk to the outlook. The IMF also expressed concerns about a bigger than expected slowdown in Chinese growth, the Brexit cliffhanger, and the ongoing US government shutdown. Further, there was some cautiousness too as traders expressed uncertainty about the economic impact of the ongoing US government shutdown. On the economic front, a report released by the Labor Department showed first-time claims for U.S. unemployment benefits unexpectedly fell to their lowest level in almost fifty years in the week ended January 19th. The report said initial jobless claims slid to 199,000, a decrease of 13,000 from the previous week's revised level of 212,000. The drop surprised participants, who had expected jobless claims to rise to 220,000 from the 213,000 originally reported for the previous week. With the unexpected decrease, jobless claims fell to their lowest level since hitting 197,000 in November of 1969. The Labor Department said the less volatile four-week moving average also dipped to 215,000, a decrease of 5,500 from the previous week's revised average of 220,500. Continuing claims, a reading on the number of people receiving ongoing unemployment assistance, also dropped by 24,000 to 1.713 million in the week ended January 12th. The Conference Board released a report showing a modest decrease by its index of leading U.S. economic indicators in the month of December. The Conference Board said its leading economic index edged down by 0.1 percent in December after rising by 0.2 percent in November. The slight drop by the index matched street estimates. The modest decrease by the leading index reflected negative contributions from stock prices, the ISM New Orders Index and building permits. Meanwhile, Partly reflecting higher interest rates during much of 2018, the National Association of Realtors (NAR) released a report on Tuesday showing a much steeper than expected drop in U.S. existing home sales in the month of December. European Market European markets ended the passing week on higher note, after the European Central Bank left its key interest rates and forward guidance unchanged, in the first policy session since the end of its four-year long EUR 2.6 trillion asset purchase programme in December, as several risks including the persistent slowing of the economy, global trade tensions and the Brexit chaos cloud the outlook for Eurozone growth. The start of week was lackluster, as Dutch consumer confidence eased for a sixth month running in January to its lowest level in over four years and the fall was the worst in more than seven years. The preliminary data from the Central Bureau of Statistics showed that the consumer confidence index dropped to 1 from 9 in December. Sentiments also got hit after Turkey's consumer confidence eases for the second straight month in January. As per figures from the Turkish Statistical Institute, the consumer confidence index declined to 58.2 in January from 58.7 in December. The reading was the lowest in three months. However, towards end of the week, the most of the European markets recovered their losses, amid reports that Germany's investor confidence improved further at the start of the year to its highest level in four months, defying expectations for a weakening. The survey data from the ZEW - Leibniz Centre for European Economic Research showed that the ZEW Indicator of Economic Sentiment for Germany rose to -15.0 points from -17.5 in December. The ZEW investor confidence measure for Eurozone edged up 0.1 point to -20.9. The street overlooked reports that Eurozone private sector expanded at the weakest pace in five-and-a-half years at the start of the year, led by weaker pace of growth in both manufacturing and services. The flash Composite PMI dropped to 66-month low of 50.7 from 51.1 in December. The flash manufacturing PMI fell to a 50-month low of 50.5 while the services PMI eased to a 65-month low of 50.8. On the inflation front, Germany's producer price inflation eased to a seven-month low in December. The figures from Destatis showed that producer prices climbed 2.7% year-on-year in December, slower than the 3.3% increase seen in November. This was the lowest rate since May, when prices rose 2.5%. On a monthly basis, producer prices dropped for the first time in ten months in December, falling 0.4%, in contrast to November's 0.1% increase. Asian market All the Asian equity indices, barring Straits Times, ended in the green terrain during the passing week, following positive trend from Wall Street after US Treasury Secretary Steven Mnuchin said the United States and China were ‘making a lot of progress’ in talks and he looked forward to discussions with Chinese Vice Premier Liu He, with currency issues also on the agenda. Besides, upbeat corporate earnings results too supported sentiment. Japanese Nikkei edged higher by over half a percent, as the yen's fall against the dollar lifted export-oriented shares. Investors paid no heed towards data showing the manufacturing sector in Japan slipped into stagnation in January. The manufacturing PMI stood at 50.0, down from 52.6 in December. Meanwhile, the Bank of Japan kept monetary policy steady, as widely expected, and cut its price projections. The Bank of Japan kept its monetary policy unchanged today but downgraded the inflation forecast for this year primarily driven by a sharp fall in oil prices. Chinese Shanghai too edged marginally higher, helped by strength in banking shares, after regulators unveiled measures to help lenders replenish capital. Some support also came as GDP figures came in line with expectations and reports on industrial production and retail sales topped forecasts. China's GDP grew a seasonally adjusted 1.5 percent sequentially in the fourth quarter of 2018, in line with expectations and down from 1.6 percent in the third quarter. On an annualized basis, GDP expanded 6.4 percent - again matching forecasts and down from 6.5 percent in the three months prior. Separately, industrial production climbed 5.7 percent on year in December, topping forecasts for 5.3 percent and up from 5.4 percent in November. Retail sales were up an annual 8.2 percent - topping expectations for 8.1 percent, which would have been unchanged.
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