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Buying in final day of trade help markets to end in green for the week
Mar-01-2019

Buying which emerged in final day of trade, helped markets to end in green terrain during the passing week with frontline gauges recapturing their crucial 36,000 (Sensex) and 10,850 (Nifty) levels. Markets started the session on an optimistic note with Commerce and industry minister Suresh Prabhu’s statement that the government is making a strategy to make India a $5 trillion economy and simultaneously fine tuning the plan to take it to $10 trillion. However, geo-political tensions between India and Pakistan take toll on equity markets and dragged key gauges lower. Traders also turned pessimistic with domestic ratings agency ICRA’s report that India Inc witnessed a dip in both revenue growth as well as margins in the December quarter compared to the preceding three months. Markets extended losses as sentiments remain dampened with the government data showing that fiscal deficit touched 121.5 percent of the full-year revised target of Rs 6.34 lakh crore at the end of January on account of lower revenue collections. The fiscal deficit, or the gap between the government's expenditure and revenue, stood at Rs 7.70 lakh crore during April-January of the current financial year ending March. Buying in final day of trade mainly helped markets to garner gains for the week after the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) rose to 54.3 in February, up from 53.9 in January. Markets participants shrugged off the Central Statistics Office’s (CSO) data stating that India’s economic growth slowed to a 5-quarter low of 6.6% in October-December period of this fiscal on the back of lower farm and manufacturing growth and weaker consumer demand. Traders also ignored the government’s data showing that eight core industries grew at the slowest pace in 19 months in January as the production of crude oil, refinery products and electricity contracted.

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex surged 192.33 points or 0.54% to 36,063.81 during the week ended March 01, 2019. The BSE Midcap index gained 333.08 points or 2.35% to 14,502.82 and Smallcap index surged 464.02 points or 3.43% to 13,981.73. On the sectoral front, S&P BSE Capital Goods was up by 506.41 points or 3.01% to 17321.48, S&P BSE PSU was up by 191.11 points or 2.87% to 6861.36, S&P BSE Metal was up by 265.26 points or 2.49% to 10935.23, S&P BSE Oil & Gas was up by 302.89 points or 2.22% to 13937.45 and S&P BSE Healthcare was up by 301.36 points or 2.22% to 13887.16 were the top gainers on the BSE sectoral front while, S&P BSE Realty was down by 21.67 points or 1.19% to 1796.11 was the only loser on the BSE sectoral front.

NSE movement for the week

The Nifty surged 71.85 or 0.67% to 10,863.50. On the National Stock Exchange (NSE), Bank Nifty was up by 176.35 points or 0.66% to 27,043.90, Nifty IT gained 163.60 points or 1.04% to 15,848.30, Nifty Mid Cap 100 increased 419.30 points or 2.53% to 16,962.45 and Nifty Next 50 was up by 750.35 points or 2.88% to 26,847.90.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net buyers in equity segment in the week, with gross purchases of Rs 48355.75 crore and gross sales of Rs 32310.73 crore, leading to a net inflow of Rs 16045.02 crore. They also stood as net sellers in the debt segment with gross purchases of Rs 3983.35 crore against gross sales of Rs 11421.29 crore, resulting in a net outflow of Rs 7437.94 crore. In hybrid segment, FIIs stood as net buyers, with gross purchases of Rs 872.13 crore and gross sales of Rs 11.46 crore, leading to a net inflow of Rs 860.67 crore.

Industry and Economy

The Commerce and Industry Minister Suresh Prabhu has said that India’s goods and services exports, which are recording healthy growth so far, would surpass $500 billion in fiscal 2018-19, despite challenges being faced on the global trade front. Prabhu has stated that the ministry is working on identifying new products and new markets to further push the shipments. For the period between April 2018 and January 2019, exports (merchandise) grew 9.52 percent to $271.8 billion. India export services worth about $130-150 billion per year. 

Outlook for the coming week

In the passing week Indian equity markets ended in positive terrain with gains of over half a percent each with Sensex and Nifty setline above their crucial 36,000 and 10,850 levels, respectively.

On the economy front, traders will be keeping an eye on Nikkei Services PMI data for the month of February which is scheduled to be released on March 5, 2019. Nikkei India Services PMI dropped to a three-month low of 52.20 in January 2019 from 53.20, leading to softer upturn in business activity.

Furthermore, rupee and Foreign Institutional Investors (FII’s) momentum will be keenly observed by the market-men during the next week. Traders will also be eyeing on the stand-off between India and Pakistan.

On the global front from the US, traders will be eyeing important macro-economic data, starting with PMI Manufacturing Index, Baker-Hughes Rig Count on March 1, followed by Redbook, PMI Services Index, Treasury Budget on March 5, International Trade on March 6, Jobless Claims, Consumer Credit, Fed Balance Sheet, Money Supply on March 7 and finally Baker-Hughes Rig Count on March 8.

Top Gainers

  • Indian Oil Corporation (IOC) up by 12.93% was the top gainer on Nifty for the week - IOC gained traction after winning licenses to retail gas in 10 cities in the tenth city gas bid round. The company has won city gas distribution licences for nine cities, most of them in Bihar and Jharkhand, on its own and one in a joint venture with Adani Gas. This is the second auction in a row that IOC has dominated.  In a separate development, the company has entered into a Memorandum of Understanding (MoU) with Inland Waterways Authority of India (IWAI).
  • Yes Bank up by 10.43% was another top gainer on Nifty for the week - Yes Bank gained as the concerns over top management decreased after Ravneet Gill taken a charge as Managing Director and CEO of the Bank. His tenure as approved by Reserve Bank of India (RBI) is 3 years from the date of his joining, i.e. March 1, 2019 to February 28, 2022. Gill is not related to any of the Directors of the Bank and he has affirmed that he is not debarred from holding office of Director by virtue of any order of Securities and Exchange Board of India or any other such authority.

Top Losers

  • Kotak Mahindra Bank down by 4.90% was the top loser of the week on Nifty - Kotak Mahindra Bank came under pressure after ING Group exits the Bank by selling its 3.06% stake in the Bank. ING Mauritius Investments held about 3.06% stake, or 58,453,476 shares in the Bank as of December 31, 2018. Bulk deal data on NSE showed that ING Mauritius sold 5.84 crore shares at Rs 1,225.14-1,228.51 per share. Subsequent to the stake sale, Mark Newman, a non-executive non-independent director at Kotak Bank has resigned with immediate effect.
  • Eicher Motors down by 2.44% was another top loser of the week on Nifty - Eicher Motors witnessed selling pressure after its motorcycle division reported 14% fall in sales at 62630 units in February 2019 as compared to 73077 motorcycles sold in February 2018. During February 2019, export of number of motorcycles increased by 49% to 2564 units from 1723 units in February 2018. Besides, Eicher Motors and Volvo Group’s joint venture - VE Commercial Vehicles reported 6.7% fall in total sales to 6,428 units in February 2019, as compared to 6,889 units in February 2018.

Technical viewpoints

During the week, CNX Nifty touched the highest level of 10,939.70 on February 27 and lowest level of 10,729.30 on February 26. On the last trading day, the Nifty closed at 10,863.50 with weekly gain of 71.85 points or 0.67 percent. For the coming week, 10,748.63 followed by 10,633.77 are likely to be good support levels for the Nifty, while the index may face resistance at 10,959.03 and further at 11,054.57 levels.

US Market

The US markets ended mostly lower during the passing week after the summit between President Donald Trump and North Korean leader Kim Jong Un ended abruptly without an agreement on the denuclearization of the Korean peninsula. Trump said the North Korean wanted the US to lift all sanctions without having to give up all of its weapons of mass destruction. Besides, the weakness on markets came as comments from U.S. Trade Representative Robert Lighthizer partly offset recent optimism about the U.S.-China trade talks. Lighthizer, who is described as hawkish on trade, told members of the House Ways and Means Committee that China needs to go beyond pledging to buy more U.S. goods to reach to a long-term trade agreement. Lighthizer said ‘We can compete with anyone in the world, but we must have rule, enforced rules, that make sure market outcomes and not state capitalism and technology theft determine winners’. The reaction to Lighthizer's remarks reflected the lingering uncertainty about a potential U.S.-China trade deal even after President Donald Trump decided to postpone an increase in tariffs on Chinese imports.

On the economic front, Economic growth in the U.S. slowed in the fourth quarter of 2018, according to a report released by the Commerce Department, although the pace of growth still exceeded street estimates. The Commerce Department said real gross domestic product (GDP) climbed by 2.6 percent in the fourth quarter compared to the 3.4 percent jump in the third quarter. Street had expected GDP to increase by 2.3 percent. The bigger than expected increase in GDP came as consumer spending growth slowed but continued to make a strong contribution to the economy. Consumer spending jumped by 2.8 percent in the fourth quarter after surging up by 3.5 percent in the third quarter. The report also showed positive contributions from non-residential fixed investment, exports, private inventory investment, and federal government spending.

A report released by the Labor Department showed first-time claims for U.S. unemployment benefits rose by more than expected in the week ended February 23rd. The report said initial jobless claims climbed to 225,000, an increase of 8,000 from the previous week's revised level of 217,000. Street had expected jobless claims to edge up to 220,000 from the 216,000 originally reported for the previous week. Meanwhile, a government shutdown-delayed report released by the Commerce Department showed new orders for U.S. manufactured goods rose by much less than anticipated in the month of December. The Commerce Department said factory orders inched up by 0.1 percent in December after falling by a revised 0.5 percent in November. Street had expected orders to climb by 0.5 percent compared to the 0.6 percent decrease originally reported for the previous month. The uptick in factory orders came as a jump in orders for durable goods was largely offset by a steep drop in orders for non-durable goods.

European Market

European markets ended the passing week mostly higher, despite geopolitical concerns and uncertainty about US-China trade talks. The start of the week was positive, as German exporters' business confidence improved modestly in February, after weakening in the previous four months, despite a difficult global economic environment. The survey results from the Munich-based Ifo Institue showed that the ifo Export Expectations in manufacturing for the next three months climbed to 7.2 balance points in February, from 6.0 balance points in January. Traders also got support, after France consumer confidence rose for the second straight month in February to a four-month high, as households' opinion on their personal finances, saving capacity and future standard of living improved, while unemployment fears declined. The data from the statistical office Insee showed that the consumer confidence index rose to 95 in February from 92 in January.
 
However, some volatility witnessed during the week, after Austria's manufacturing growth slowed in February to its lowest level in over three years, driven by a sharp fall in new export orders and slower growth in output and employment. As per survey data from IHS Markit, the headline UniCredit Bank Austria Manufacturing purchasing managers' index, or PMI, fell to 51.8 in February from 52.7 in January. Adding some anxiety, a measure of Switzerland's future economic performance declined for a fifth consecutive month in February and at a sharp rate, suggesting that the economy is set for some slowdown in the coming months. The figures from the Zurich-based KOF Swiss Economic Institute showed that the KOF Economic Barometer fell to 92.4 from January's 96.2, which was revised from 95 reported initially.

On the inflation front, Spain producer price inflation rose in January after easing in the previous three months. The data from the statistical office INE showed that producer prices rose 1.8 percent year-on-year in January, after a 1.7 percent increase in December. In November, inflation was 2.9 percent. Separately, Germany's consumer price inflation accelerated for the first time in four months in February and at a faster than expected pace. The preliminary data from the Federal Statistical Office showed that the consumer price index rose 1.6 percent year-on-year following a 1.4 percent increase in January. Energy inflation rose slightly to 2.9 percent from 2.3 percent. Food inflation climbed to 1.5 percent from 0.8 percent.

Asian market

The Asian equity indices made a mixed closing during the passing week, after fourth-quarter US GDP data topped expectations and White House economic advisor Larry Kudlow said the US and China are making ‘fantastic’ progress in their trade negotiations. Malaysia's KLSE Composite index ended lower after a report showed the country's manufacturing sector contracted at a faster pace in February. 

Chinese Shanghai remained the top gainer in the region, higher by over six and half percent, after global index provider MSCI said it would quadruple the weighting of Chinese mainland shares in its global benchmarks later this year. Investors overlooked weak data reinforced fears that the world's second-largest economy is losing momentum. Activity in China's vast manufacturing sector continued to contract in February, and at a faster rate, with a manufacturing PMI score of 49.2. That missed expectations for a score of 49.5, which would have been unchanged from the previous month.

Japanese Nikkei too edged higher by around a percent, as the yen's fall against the dollar lifted export-oriented shares. Traders took support with data indicating that capital spending in Japan climbed 5.7 percent sequentially in the fourth quarter of 2018 to beat forecasts. However, gains were limited with report that Japan’s factory output posted the biggest decline in a year in January in a sign slowing Chinese demand and the Sino-U.S. trade war were taking a toll on the country’s manufacturing sector. Also, the total value of retail sales in Japan was down a seasonally adjusted 2.3 percent on month in January.

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