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Markets near all time high: What next?

Monday, May 15, 2017
By Dominic Rebello

With the markets at historic levels, market participants are eagerly looking forward with bated breath towards the next direction the markets are likely to take. Currently, the  market is witnessing profit booking and slowdown in momentum at regular intervals. Earnings have so far been inline or a moderate beat compared with the estimates so that is supporting the sentiment, say experts. The Indian Meteorological Department’s (IMD) forecast of 100% rainfall this year, set the stage for the stock market to register their all time highs last week.

The Sensex rallied to to mark all-time new high at 30,366.43 and registered a new closing peak of 30,250.98 on May 11. The Nifty surged to register its life time highs at 9,450.65 and marked a new closing peak at 9,422.40 on May11. Last week the Sensex rose by 329.35 points or 1.10% to close at 30188, while the Nifty gained 115.60 points or 1.24% to close at 9400 points level respectively.

Last week, FPIs bought stocks worth a net Rs 2,135.10 crore from secondary equity markets in four trading sessions from May 8 to 11 on the back of strong domestic and global cues.

“Going forward for the markets to sustain around the historic levels, broad-based participation would be indispensable,” said Vijay Singhania, Founder-Director, Trade Smart Online.

Among the blue-chip companies that are scheduled to announce their earning (Q4FY17 and FY17) this week include Bata India, Colgate-Palmolive (India), Punjab National Bank, Shree Cement, Tata Steel, Hindustan Unilever JSW Steel, Bajaj Auto, Bank of Baroda, State Bank of India and Tata Power.

“This week, market movement will largely be dependent on corporate results, IIP and inflation data as well as further updates on monsoon. There will be a new series of IIP and WPI to help in more accurate mapping of economic activity. Globally, escalating tension between the US and North Korea, tax reform measures from US President as well as oil prices will be important events to watch out for,” said Teena Virmani, Vice President, PCG Research, Kotak Securities.

“We have been maintaining a positive bias as it continues to trade above the short term average which is placed now at 9,250 levels. India VIX continues to trade at multi year lows near to sub 11 levels indicating a very narrow range this week for the broader markets unless some major news item could increase volatility,” said Rakesh Tarway, Head – Research, Reliance Securities.

Today markets will react to two key economic data IIP and inflation which were released last Friday post market hours. On the macro front, industrial output rose at a slower rate of 2.7% in March, compared to 5.5% a year ago, according to data based on the revised base year of 2011-12.

The Consumer Price Index (CPI) based inflation for India eased in the month of Apr’17. It stood at 2.99% (provisional) in April 2017 compared with 3.89% recorded in the previous month. It is however lower than 5.47 % recorded in the corresponding month last fiscal.

The WPI inflation for the month of April’17 has declined considerably to a four-month low of 3.85% as against 5.29% inflation in the month of March’17 as both food articles and manufactured items showed cooling in prices.

“Several macroeconomic data like Service PMI & manufacturing PMI are also expected, which could give some direction regarding the move on either side. The most important event i.e. RBI policy is also due in the same, it would be crucial to watch the step taken by the RBI governor along with any development related to bad debt restructuring. Overall, we believe market to remain traded with volatility in the coming week,” said Abnish Kumar Sudhanshu, Director & Research Head, Amrapali Aadya Trading & Investments.

Nine of 10 most valued firms add Rs 36K crore to m-cap
Nine of the 10 most valued firms in India added Rs 35,984 crore in market valuation last week, with TCS, Infosys and RIL stealing the show as the stock market reached new heights.

Barring ITC, rest of the nine companies, including HDFC Bank and HUL saw addition in their market valuation for the week ended Friday. TCS' valuation surged Rs 7,793.04 crore to Rs 4,64,922.47 crore, becoming the biggest gainer in the top-10 list.

TCS remained at the top in the domestic market cap chart followed by RIL, HDFC Bank, ITC, HDFC, SBI, ONGC, Infosys, HUL and IOC.

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