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Bulls resume control on Dalal Street during the passing week
Apr-18-2019

Indian equity benchmarks resumed their northward journey and settled with a gain of around a percentage point during the passing week, surpassing their crucial 39100 (Sensex) and 11,750 (Nifty) levels. Key gauges started the holiday truncated week on an optimistic note despite weak macro-economic data. The Ministry of Statistics and Programme Implementation data has showed that industrial growth fell to its lowest in 20 months in February. The index of industrial production (IIP) rose 0.1%, the slowest since a 0.3% contraction in July 2017. Besides, the Central Statistics Office (CSO) data showed that India's retail inflation saw a marginal rise of 2.86% in March on account of increase in prices of food articles and fuel. The inflation based on Consumer Price Index (CPI) was 2.57% in February this year. On yearly basis, it was 4.28% in March 2018. Meanwhile, India’s Wholesale price index (WPI) inflation has come in at 3.18% in the month of March as compared to 2.93% (provisional) for the previous month. Markets extended their northward journey after the India Meteorological Department (IMD) in Long Range Forecast for 2019 southwest monsoon rainfall stated that the country is likely to have 'near normal' monsoon this year with a well distributed rainfall which could be beneficial for the agriculture sector. Adding enthusiasm among traders, India’s merchandise exports rose to a five-month high of 11.02 percent in March 2019 as compared to same period of last year, on account of higher growth mainly in pharma, chemicals and engineering sectors. However, markets trimmed some of their gains on last trading day of the week as traders turned anxious with private report indicating that unemployment rate in India has doubled in eight years to 2018 as 50 lakh lost jobs in last two years beginning with demonetisation in November 2016.

BSE movement for the week

The Bombay Stock Exchange (BSE) Sensex surged 373.17 points or 0.96% to 39,140.28 during the week ended April 18, 2019. The BSE Midcap index losses 43.88 points or 0.28% to 15,382.57 and Small Cap index slipped 0.98 points or 0.01% to 15,021.20. On the sectoral front, S&P BSE Auto was up by 415.89 points or 2.10% to 20201.09, S&P BSE Oil & Gas was up by 180.70 points or 1.22% to 15008.46, S&P BSE Metal was up by 134.09 points or 1.17% to 11601.42, S&P BSE Consumer Durables was up by 262.61 points or 1.12% to 23616.28 and S&P BSE BANKEX was up by 341.83 points or 1.01% to 34020.46 were the top gainers on the BSE sectoral front, while S&P BSE Realty was down by 35.23 points or 1.65% to 2097.55, S&P BSE Power was down by 18.05 points or 0.88% to 2033.35, S&P BSE PSU was down by 24.27 points or 0.32% to 7511.80,S&P BSE Capital Goods was down by 30.12 points or 0.16% to 18340.35 and S&P BSE Healthcare was down by 1.13 points or 0.01% to 14480.77 were the top losers on the BSE sectoral front.

NSE movement for the week

The Nifty surged 109.35 or 0.94% to 11,752.80. On the National Stock Exchange (NSE), Nifty Next 50 gained 148.45 points or 0.53% to 28,419.55, Bank Nifty up by 284.85 points or 0.95% to 30,223.40 and Nifty IT was up by 168.20 points or 1.06% to 16,079.30. On the other side, Nifty Mid Cap 100 was down by 90.05 points or 0.50% to 18,077.85.

FII transactions during the week

Foreign Institutional Investors (FIIs) were net buyers in equity segment in the week, with gross purchases of Rs 13338.22 crore and gross sales of Rs 11335.44 crore, leading to a net inflow of Rs 2002.78 crore. They also stood as net sellers in the debt segment with gross purchases of Rs 1615.30 crore against gross sales of Rs 2353.17 crore, resulting in a net outflow of Rs 737.87 crore. In hybrid segment, FIIs stood as net sellers, with gross purchases of Rs 10.16 crore and gross sales of Rs 11.25 crore, leading to a net outflow of Rs 1.09 crore.

Industry and Economy

The government is targeting public procurement worth Rs 50,000 crore through the commerce ministry's online marketplace--Government e-Marketplace (GeM)--during the current financial year (2019-20). In FY19, GeM touched Rs 17,325 crore mark in terms of value of transactions as compared to Rs 5,885 crore in the previous financial year and Rs 422 crore in 2016-17. The commerce ministry has indicated that 2018-19 witnessed a four-fold increase in total value of transactions on the portal and a two-fold increase in the number of sellers on GeM.

Outlook for the coming week

In the passing week, Indian markets displayed a strong performance with Nifty and Sensex ending above their respective psychological levels of 11,750 and 39,100. The coming week is expected to be a volatile one for domestic benchmarks on account of F&O expiry, which is scheduled to take place on Thursday, April 25, 2019.

In the next week, traders will keep an eye on the third phase of election in 14 states for 115 seats which is schedule to be held on April 23. Meanwhile, trend in investment by foreign institutional investors and the movement of rupee against the dollar will be also be closely watched by the market-participants.

In the ongoing earning season, market-participants would be majorly looking for earnings from industry’s big-wigs such as AU Small Finance Bank, Goa Carbon, Coromandel International, Indiabulls Housing Finance, ICICI Prudential Life Insurance Company, Mahindra & Mahindra Financial Services, Tata Elxsi, Ultratech Cement, Axis Bank, Aditya Birla Money, Cyient, SBI Life Insurance Company, HDFC Asset Management Company, HDFC Life Insurance Company, Hero Motocorp, Yes Bank etc.

On the global front from the US, traders will be eyeing important macro-economic data, starting with Redbook, New Home Sales on April 23, followed by Durable Goods Orders, Jobless Claims, Fed Balance Sheet, Money Supply on April 25 and finally GDP, Consumer Sentiment and Baker-Hughes Rig Count on April 26.

Top Gainers

  • Tata Motors up by 14.74% was the top gainer on Nifty for the week - Tata Motors gained traction amid reports that it is planning to expand its electric vehicles segment in the passenger vehicle space by widening its portfolio. The company is planning to add Altroz EV, a premium hatchback, and H2X or Hornbill Small SUV, a small SUV, which will be in league with Tiago and Tigor EV. The offerings will address the different price points and buyer profiles in the sub-Rs 15-lakh bracket. Tata Motors also grabbed over 60% of the electric bus contract from the ministry of heavy industries.
  • Cipla up by 5.55% was another top gainer on Nifty for the week - Cipla gained with report that its South Africa-based subsidiary - Cipla Medpro will acquire 30% stake in the connected healthcare firm Brandmed (Pty) for an upfront cash consideration of ZAR 65 million (nearly Rs 32 crore). In separate development, Cipla’s subsidiary - Cipla Technologies LLC and Pulmatrix, Inc. entered into a definitive agreement for the co-development and commercialization of Pulmazole (PUR1900) - an inhaled iSPERSE formulation of the antifungal drug itraconazole for the treatment of ABPA in patients with asthma.

Top Losers

  • Infosys down by 5.73% was the top loser of the week on Nifty - Infosys came under pressure after reporting a mixed bag of fourth quarter numbers, with margins coming in below expectations even as revenues came in-line. The company has reported rise of 10.51% in its consolidated net profit at Rs 4,078 crore for the quarter ended March 31, 2019 as compared to Rs 3,690 crore for the corresponding quarter in the FY18. Total consolidated income of the company rose 18.52% at Rs 22,204 crore for quarter under review as compared to Rs 18,735 crore for the same quarter ended previous year.
  • Yes Bank down by 5.47% was another top loser of the week on Nifty - Yes Bank witnessed selling pressure ahead of fourth quarter and year result for financial year 2018-19 (FY19). The Bank is schedule to release its results on April 26, 2019. As per a report, the banking sector, which was reeling under mounting bad loans and liquidity crunch, is likely to stabilize in the January-March quarter of FY19. Besides, RBI told the NCLAT that banks had an obligation to mark bad loans as non-performing asset (NPA) after the default of 90 days and that the lenders could not be relieved of the same.

Technical viewpoints

During the week, CNX Nifty touched the highest level of 11,856.15 on April 18 and lowest level of 11,648.25 on April 15. On the last trading day, the Nifty closed at 11,752.80 with weekly gain of 109.35 points or 0.94 percent. For the coming week, 11,648.65 followed by 11,544.50 are likely to be good support levels for the Nifty, while the index may face resistance at 11,856.55 and further at 11,960.30 levels.

US Market

The US markets ended mostly higher during the passing week following a better than expected corporate earnings. UnitedHealth reported better than expected first quarter results and raised its full-year earnings guidance. Johnson & Johnson reported first quarter results that exceeded street estimates and boosting its forecast for full-year sales growth. PepsiCo (PEP), Morgan Stanley (MS) reported their quarterly results that exceeded street estimates on both the top and bottom lines. Further, some support came in after the Federal Reserve Bank of New York released a report showing growth picked up somewhat in April. The New York Fed said its headline general business conditions index climbed to 10.1 in April after falling to 3.7 in March, with a positive reading indicating growth in regional manufacturing activity. Street had expected the index to rise to 6.0. The bigger than expected increase by the headline index came as the new orders index rose to 7.5 in April from 3.0 in March. The shipments index also inched up to 8.6 from 7.7.

Meanwhile, a report released by the Commerce Department showed the U.S. trade deficit unexpectedly narrowed in the month of February amid a jump in the value of exports. The Commerce Department said the trade deficit narrowed to $49.4 billion in February from $51.1 billion in January, while Street had expected the deficit to widen to $53.5 billion. The narrower deficit came as the value of exports surged up by 1.1 percent to $209.7 billion in February from $207.4 billion in January. Exports in the volatile civilian aircraft category soared, while exports of automotive vehicles, parts and engines also rose. The report also showed a more modest increase in the value of imports, which edged up by 0.2 percent to $259.1 billion in February from $258.5 billion in the previous month. A spike in imports of cell phones and other household goods was partly offset by a steep drop in imports of industrial supplies and materials.

Besides, a report released by the Federal Reserve said U.S. economic activity expanded at a slight-to-moderate pace in March and early April. The report, known as the Beige Book, is a compilation of anecdotal evidence on economic conditions in the twelve Fed districts. While most districts reported that growth continued at a similar pace as the previous report, the Fed said a few districts reported some strengthening. The Beige Book showed reports from the Fed districts indicated generally positive conditions in various sectors but noted some caveats. For instance, the report said reports on manufacturing activity were favorable, although contacts in many districts noted trade-related uncertainty. Reports of stronger home sales in most districts were similarly tempered by indications of low demand for higher-priced homes. The Fed also said employment continued to increase nationwide, with nine districts reporting modest or moderate growth and the other three reporting slight growth.

European Market

European markets ended the passing week on cheerful note, supported by upbeat German investor confidence and UK employment data. The markets made a cautious start of the week, as Eurozone's industrial production fell in February after rising in the previous month. The figures from the statistical office showed that industrial production fell 0.2 percent month-on-month in February, reversing a 1.9 percent rise in January. The latest decline was driven by 3.0 percent fall in energy production, followed by a 0.4 percent decline in the output of durable consumer goods and capital goods each and a 0.1 percent drop in manufacture of intermediate goods. Some worries came after Finland's national economic output growth slowed in February, after improving in the previous two months. As per preliminary data from Statistics Finland, Gross domestic product grew a working day adjusted 1.7 percent year-on-year after a 2.13 percent increase in January, which was revised from 1.5 percent.

However, major of the regional indices gained momentum during the week, after Germany's investor confidence rose sharply in April, raising hopes of a rebound in the biggest euro area economy, but a sharp deterioration in the current assessment suggest that the outlook is set to remain greatly subdued in the near term. The survey data from the ZEW-Leibniz Centre for European Economic Research showed that the ZEW investor confidence index climbed to 3.1 from -3.6 in March.  Adding optimism among traders, Eurozone trade surplus increased in February to its highest level in nearly a year. The figures from Eurostat showed that the seasonally adjusted trade surplus rose to EUR 19.5 billion from EUR 17.4 billion in January. The surplus was the biggest since March 2018, when it was EUR 20.4 billion.

On the inflation front, Eurozone headline inflation slowed in March and core price growth eased to its lowest level in a year, as initially estimated. As per the latest data from Eurostat, headline inflation slowed to 1.4 percent from 1.5 percent in February. In January, price growth was 1.4 percent. However, UK consumer price inflation was unchanged in March, defying expectations for a modest acceleration. The preliminary data from the Office for National Statistics showed that the consumer price index rose 1.9 percent year-on-year, same as in February.  The core inflation rate was also unchanged in March, at 1.8 percent. Inflation based on the CPI including owner occupiers' housing costs, or CPIH, was steady at 1.8 percent. On a month-on-month basis, the CPI rose 0.2 percent in March, in line with the street expectations.

Asian market

Asian equity indices ended the weekly trade mostly in green terrain, as upbeat Chinese economic data helped ease worries about a global economic slowdown. Some support also came as the US and Japan kicked off their first round of trade talks in Washington aimed at creating a bilateral trade framework. However, gains remain capped as investors adopted a cautious stance ahead of the Good Friday and Easter holidays.

Chinese Shanghai remained the top gainer in the region, higher by around two percent, after data showed China’s economic growth, industrial production and retail sales all better-than-expected. China's GDP grew an annual 6.4 percent in the first quarter of 2019 - unchanged from Q4 and beating forecasts for 6.3 percent. Retail sales climbed 8.7 percent year-on-year in March - beating expectations for an increase of 8.4 percent and up from 8.2 percent in February. Fixed asset investment rose 6.3 percent, in line with expectations and up from 6.1 percent in the previous month. Some optimism also came in with data indicating that housing prices in 70 major Chinese cities increased an average of 10.6 percent year-on-year in March, signaling an economic rebound.

Japanese Nikkei too edged higher by a percent, with sentiment lifted by a weaker yen and positive cues from global markets. Traders overlooked Nikkei Asian Review reported that Canon is expected to lower its earnings outlook for fiscal 2019, with operating profit for the year likely to decline about 20 percent from the current forecast. Traders also took a note of a government report showed that Japanese exports fell an annual 2.4 percent in March, beating expectations for a decline of 2.6 percent following the 1.2 percent drop in the previous month.
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