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RBI meet, Q1 results to dictate market trends

Monday, July 31, 2017
By Dominic Rebello

Last week the benchmark BSE Sensex gained 280.99 points to close at 32,309.88, while the broader Nifty closed above the psychological 10,000-level.

Better-than-expected Q1 results of blue chip companies and bullish GDP forecast for India by International Monetary Fund (IMF), along with stock-specific actions in index heavyweights like Reliance industries issuing bonus share enthused investors minds.

A major development on the political front with Bihar CM Nitish Kumar deciding to discontinue his alliance with RJD and join hands with the NDA. This was perceived positively by the market as it weakens the opposition strategy of entering into a grand alliance against the NDA in the 2019 elections.

“The main event during the week was of Fed meeting and as anticipated, the Fed kept monetary policy steady. The central bank, however, laid the groundwork for winding down its massive stimulus program in September. They said they plan to start the unwinding "relatively soon," which is the crux of the statement. Fed watchers had been looking for the language to change from "this year," as indicated following the June meeting, to something more immediate,” said Sanjeev Zarbade, Vice President - PCG Research, Kotak Securities.

“After an almost 650-point rally in the past four weeks, markets are indeed showing signs of fatigue around the 10000 mark. Although, it has managed to sustain above the 10,000 level for three consecutive sessions, we expect markets are likely to see further consolidation or even some more profit booking around the milestone,” said Vijay Singhania, Founder-Director, Trade Smart Online.

This week among the prominent companies that will announce their earning in the coming week include Reliance Power, Shree Cement, JSW Steel, Marico, Piramal Enterprises, Power Grid Corporation of India and Tech Mahindra, Bata India, Godrej Properties, Lupin, Punjab National Bank, Colgate-Palmolive (India), Indian Oil Corporation, Titan, Dabur India and Mahindra & Mahindra (M&M) will announce April-June 2017 earnings.

The RBI's monetary policy review on August 2 along with the Manufacturing and services PMI data will be released this week. Market Economics will unveil the result of a monthly survey on the performance of India's manufacturing sector in July 2017 on Tuesday. Nikkei India Manufacturing purchasing managers index (PMI) dropped to four-month low of 50.9 in June 2017. While Market Economics will unveil the result of a monthly survey on the performance of India's services sector in July 2017 on Thursday. Nikkei India Services PMI rose to an eight-month high of 53.1 in June 2017.

“Valuations and sentiments both are running high which makes much harder for the investors to refrain from making fresh investments, but doing hard things is all but required in order to build sustained wealth. Investors should hold on to their investments but refrain from fresh buying,” said Jimeet Modi, CEO, SAMCO Securities.

Advising investors Zarbade said, Investors may consider profit booking wherever they are having oversized holding in a particular stock. We remain positive on the market on a medium to long term basis.

FPIs remain bullish on Indian markets, pour USD 4 bn in July
Overseas investors have pumped a staggering USD 4 billion into the Indian capital market this month, primarily due to "better prospects" of economic growth as compared to other emerging markets.

The latest inflow follows net infusion of Rs 1.6 lakh crore in the previous five months (February-June). In January, they had pulled out Rs 3,496 crore. "FPI inflow could be attributed to relative opportunity or better prospects of growth in the Indian economy as compared to other emerging markets as well as developed countries," Vidya Bala Head of MF Research at Fundsindia.Com said.

Better-than-expected earnings by most corporates so far and a steady progress in monsoon also aided investors' sentiments, said Anand James, Chief Market Strategist, Geojit Financial Services. According to latest depository data, FPIs invested a net Rs 7,611 crore (USD 1.2 billion) in equities during July 3-28, while they poured Rs 18,599 crore (USD 2.9 )in the debt markets review, translating into a net inflow of Rs 26,210 crore (USD 4.1 billion).

The inflow for the month could rise further as one day of trading session still left, experts said. With the latest inflow, total investment in the capital markets (equity and debt) has reached Rs 1.74 lakh crore (USD 26 billion) this year.

Eight of 10 most valued cos add Rs 62,998 cr in m-cap
Eight of the 10 most valued companies together added Rs 62,997.73 crore to their market valuations last week, with HDFC and HDFC Bank emerging as the biggest gainers.

Barring TCS and HUL, rest eight companies, including Reliance Industries Ltd (RIL), ITC, SBI and Maruti Suzuki, saw a rise in their market capitalisation (m-cap) for the week ended Friday.

Among the gainers, HDFC's valuation zoomed Rs 22,650.95 crore to Rs 2,84,140.36 crore. The m-cap of HDFC Bank jumped Rs 19,579.63 crore to Rs 4,58,002.04 crore while that of State Bank of India (SBI) soared Rs 7,639.37 crore to Rs 2,58,270.95 crore. Infosys added Rs 4,123.01 crore to reach Rs 2,29,200.62 crore in market capitalisation and ITC also saw an addition of Rs 3,344.5 crore to Rs 3,54,212.97 crore.

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