Indian markets Outlook for the week - 05 to 09.May.2014

Indian markets Outlook for the week - 05 to 09.May.2014

(Sectorwise Weekly Outlook, View on www.rupeedesk.in )

     Benchmark indices are seen trading in a range next week but volatility is set to spike as well as market participants prepare themselves for May 16, when results of the general elections will be announced. The Street will also take cues from overseas markets and Jan-Mar earnings announcements from companies.

     Amid the expected increase in volatility, market players suggest investing in stocks depending on respective risk profiles. Many participants advise investing in defensive shares as volatility is expected to increase in the market.

     Others advise buying capital goods stocks as the sector is seen as one of the key beneficiaries if Bharatiya Janata Party wins the general elections with a strong majority. Infrastructure, real estate and banking sectors are also seen benefiting from a stable government at the Centre after the elections. Over the medium-to-long term, the formation of a stable government will likely put the infrastructure and industrial sector back on track as well as ease concerns on fiscal deficit thus, providing an upward bias to the current valuations.

     On the political front, phase eight of Lok Sabha polls will be held on Wednesday, covering 64 seats in seven states. Polling for 175 Assembly seats in Andhra Pradesh, two in Uttar Pradesh and one each in Bihar and West Bengal will also be held. Market participants see National Stock Exchange's 50-share Nifty trading in the 6600-6800-point range in the coming week.

     The 50-stock Nifty ended flat at 6694.80, down 1.60 points from close Wednesday, after moving between 6689.50 and 6737.65 intraday. The S&P BSE's 30-share Sensex ended at 22403.89, down 13.91 points or 0.1%. Intraday, it touched a low of 22386.95 and a high of 22575.62 points.

     Companies detailing earnings for the quarter ended March next week include Canara Bank, Housing Development Finance Corp, Titan Co, Allahabad Bank, United Bank of India, GlaxoSmithKline Consumer Healthcare, Piramal Enterprises, Corporation Bank, Torrent Pharmaceuticals and Magma FinCorp.

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Indian Markets Outlook for the week - 27.01.2014 - 31.01.2014

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Reserve Bank of India's third-quarter review of monetary policy and Oct-Dec earnings of companies will set the trend for equities next week. The RBI will detail its policy review as well as the macroeconomic and monetary developments report on Tuesday. Most market traders expect the central bank to leave policy rates unchanged even as core inflation remains high, given the continued deceleration in economic growth.

Although Consumer Price Index-based inflation eased to a three-month low of 9.87% in December from a lifetime high of 11.16% in November, it is still uncomfortably above 8%. Moreover, industrial output hit a seven-month low of (-)2.1% in November, contracting further from (-)1.6% in October. In its last monetary policy statement in December, RBI had said that it would take appropriate policy action if headline inflation did not decline significantly, or if core inflation did not fall.

The recent data does indicate there is limited room for a cut in interest rates, but experts remain divided over a hike in interest rates. If the RBI were to strictly adhere to its forward guidance it would, therefore, hike rates on January 28. However, we believe it will remain on hold, hanging its hat on the decline in headline inflation and the weakening growth momentum.

The S&P BSE 30-share Sensex ended at 21133.56, down 240.10 points or 1.1%. National Stock Exchange's 50-share Nifty fell 78.90 points or 1.2% to close at 6266.75. MCX Stock Exchange's SX40 ended at 12594.82, down 142.01 points or 1.1%. Considering Friday's (yesterday's) decline, we might not see any major directional move in index on Monday, but any bounce would further attract selling pressure. After the RBI's policy meet, focus will shift to US Federal Reserve Open Market Committee's two-day policy meet that will begin on Tuesday.

Bias for the market is cautious in light of the above-mentioned events, with participants expecting volatility to persist as the January derivatives contracts will expire next week. Crucial support for Nifty is seen at 6150-6180 points, while on the upside, resistance is pegged at 6350 points. Besides the monetary policies, the market will also see several companies releasing Oct-Dec earnings, which may further increase volatility.

The index majors reporting earnings next week are Hindustan Unilever, Jindal Steel & Power, Maruti Suzuki India, NTPC, Sesa Sterlite, Bharti Airtel, GAIL (India), ICICI Bank, Hero MotoCorp, Siemens, IDFC, and Punjab National Bank

Indian Markets Outlook for the week - 13.01.2014 - 17.01.2014 www.rupeedesk.in India's industrial production data, wholesale price index-based inflation, Oct-Dec earnings of companies, and overseas markets will set the tone for local stock indices next week. Industrial production growth data for November will be released by the Central Statistics Office later yesterday and WPI inflation rate for December will be released by commerce ministry on Tuesday. India's industrial production is likely to have expanded 0.9% in November primarily due to a low base effect and improved manufacturing activities. Coal India, YES Bank, Axis Bank, Bajaj Auto, HCL Technologies, Tata Consultancy Services, HDFC Bank, ITC, Reliance Industries, and Wipro are among the major Nifty companies reporting earnings next week. Overall, we expect indices to trade in a narrow band, but the bias is seen negative after correction witnessed this week. After multiple attempts of making a new high, the markets failed to sustain at higher levels. The pattern formed over the last three months is of a rising wedge which is a negative reversal pattern. The break of the rising trend line support near 6200 level (on Nifty) has confirmed the breakdown of this pattern. Minimum targets to the downside for this move lie at the 5970 mark, below which we can see this fall extend to levels of 5700 as well. Yesterday, National Stock Exchange's Nifty ended at 6171.45, up 3.10 points from Thursday. The S&P BSE's Sensex closed at 20758.49, up 45.12 points or 0.2%. MCX Stock Exchange's SX40 ended at 12423.34, up 56.51 points or 0.5%. Information technology stocks may trade positive next week, but could witness bouts of profit booking after the recent rally. Banking stocks may see some selling pressure, while trade in telecom stocks is likely to be rangebound. However, we see scope for further gains in Bharti Airtel.

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India's industrial production data, wholesale price index-based inflation, Oct-Dec earnings of companies, and overseas markets will set the tone for local stock indices next week. Industrial production growth data for November will be released by the Central Statistics Office later yesterday and WPI inflation rate for December will be released by commerce ministry on Tuesday. India's industrial production is likely to have expanded 0.9% in November primarily due to a low base effect and improved manufacturing activities. Coal India, YES Bank, Axis Bank, Bajaj Auto, HCL Technologies, Tata Consultancy Services, HDFC Bank, ITC, Reliance Industries, and Wipro are among the major Nifty companies reporting earnings next week. Overall, we expect indices to trade in a narrow band, but the bias is seen negative after correction witnessed this week. After multiple attempts of making a new high, the markets failed to sustain at higher levels. The pattern formed over the last three months is of a rising wedge which is a negative reversal pattern. The break of the rising trend line support near 6200 level (on Nifty) has confirmed the breakdown of this pattern. Minimum targets to the downside for this move lie at the 5970 mark, below which we can see this fall extend to levels of 5700 as well. Yesterday, National Stock Exchange's Nifty ended at 6171.45, up 3.10 points from Thursday. The S&P BSE's Sensex closed at 20758.49, up 45.12 points or 0.2%. MCX Stock Exchange's SX40 ended at 12423.34, up 56.51 points or 0.5%. Information technology stocks may trade positive next week, but could witness bouts of profit booking after the recent rally. Banking stocks may see some selling pressure, while trade in telecom stocks is likely to be rangebound. However, we see scope for further gains in Bharti Airtel.

Indian Markets Outlook for the week - 09 to 13.12.2013

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The results of the state assembly polls will set the trend for local share indices next week. Exit polls indicate a strong showing by the Bharatiya Janata Party in Madhya Pradesh, Chhattisgarh, and Rajasthan, and this is largely factored in by the market. If BJP wins in Delhi as well then it would be a major positive, and indices could scale lifetime highs. If BJP wins in four states, it is perceived that it will put the party's prime ministerial candidate Narendra Modi in a better position to win the general elections in 2014, thereby giving a push to stalled reforms and large- scale investments in the country. The National Stock Exchange's 50-share Nifty may top 6500 points while the S&P BSE 30-share Sensex may top 22000 points. Yesterday, the Nifty ended at 6259.90, up 18.80 points or 0.3% from Thursday, and the Sensex closed at 20996.53, up 38.72 points or 0.2%. The MCX Stock Exchange's SX40 ended at 12454.12, up 26.98 points or 0.2%.

Announcement of state election results on Sunday is likely to trigger a gap opening on Monday. Short covering may continue among banking stocks if results come in line with the exit poll estimates. Nifty 6400 call option has the seen the highest net open interest build- up, which may act as an intermediate resistance in the run up to our earlier stated target of 6500. If BJP fails to win Delhi assembly election, then profit booking would emerge and Nifty can drift lower to 6100 points. Rate-sensitive sectors such as banks, automobiles, capital goods, and realty will lead gains in indices. Among specific stocks, Strides Arcolab will be in focus as its board will meet on Tuesday to mull a special dividend.

Indian Markets Outlook for the week - 18 -11.2013 - 22.11.2013

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In the absence of any major domestic or global triggers, local share indices are likely to remain rangebound next week. The bias though remains positive as the National Stock Exchange's 50-share Nifty ended above the psychologically crucial 6000 point-mark. The Nifty snapped its seven-session losing streak, ending at 6056.15, up 66.55 points or 1.1%. The S&P BSE Sensex ended at 20399.42, up 205.02 points or 1% and the MCX Stock Exchange's SX40 ended at 12199.39, up 117.27 points or 1%. On Friday, share indices will be closed on account of Muharram. Next week, Nifty is seen facing resistance at 6200 points. On the lower side, if the index is unable to sustain the 6000-mark, it may test 5800 points. Market participants will also eye the minutes of US Federal Open Market Committee's meeting held on Oct 29-30 for cues as to when the Federal Reserve is likely to start tapering its $85 bln monthly bond purchase programme. Part of the rise in indices was driven by comments from US Federal Reserve Chairman nominee Janet Yellen, who suggested that the central bank may continue its monetary stimulus programme. The Reserve Bank of India Governor Raghuram Rajan on the macro economic situation and Yellen's comments may keep sentiments positive in the short term. For the growth rate to pick up noticeably, further reforms and effective implementation of reforms are a pre-requisite. Next week, bank shares are likely to succumb to profit booking after rising. Bank Nifty ended at 10811.20, up 2.7%. Next week, Bank Nifty is seen trading in the 9000-11200 point range. Pharmaceutical and information technology stocks, which ended lower, may see buying at lower levels next week.