Domestic Market View
Markets to extend the somberness amid sluggish global cues
The Indian markets after a range bound day of trade ended flat with negative bias in last session, as investors awaited cues from the Q3 earnings season and next month's Union Budget. Today, the start is likely to remain somber on sluggish global cues and traders will be eyeing the official start of the third quarter earnings season with quarterly earnings from TCS and IndusInd Bank due later in the day. Traders however, will be getting some support with global rating agency Moody's latest report, which has said India and China remain the fastest growth economies in Asia Pacific region. Also, on the domestic front the cabinet’s decision to allow foreign airlines to invest up to 49% in ailing Air India, and ease foreign direct investment (FDI) policies in some critical areas, including single-brand retail, broking services in construction, pharmaceuticals and power exchanges, will keep the markets buzzing. Meanwhile, NITI Aayog Vice Chairman Rajiv Kumar after a meeting of Prime Minister Narendra Modi with country's leading economists said that employment generation was the key going forward. Agri related stocks will be in focus, as the economists during an interactive session with Prime Minister Narendra Modi, organised by NITI Aayog suggested need to shift focus to increasing farmers’ income rather than increasing just production.
Domestic Market Overview
Benchmarks end choppy day with minimal losses
Indian equity benchmarks ended the choppy day of trade with minimal losses, as traders remained on sidelines ahead of ahead of key corporate earnings later this week and the federal budget next month. Market participants also opted to stay away from buying risky assets ahead of the outcome of meeting organised by government think tank NITI Aayog, and attended by a host of ministers including Finance Minister Arun Jaitley, NITI Aayog functionaries and leading economists. Some concerns also came with rating agency ICRA’s latest report stating that credit growth of Infrastructure finance firms will remain subdued over the short term. However, losses remained capped with the World Bank projecting India’s growth rate to 7.3 per cent in 2018 and 7.5 for the next two years. It said that with an “ambitious government undertaking comprehensive reforms”, India has “enormous growth potential” compared to other emerging economies. The 2018 Global Economics Prospect released by the World Bank also said that India, despite initial setbacks from demonetisation and Goods and Services Tax (GST), is estimated to have grown at 6.7 per cent in 2017.
Traders also got some solace with domestic rating agency CRISIL expecting India Inc’s revenue growth to hit a five-year high of 9 per cent for the October-December 2017 period, on higher realizations in steel, aluminium, cement and crude oil-linked sectors, and a pick-up in consumptiondriven sectors such as auto and aviation. However, profits will continue to contract, primarily due to the rising commodity prices. Traders also took some comfort with the Cabinet approving key changes in India’s Foreign Direct Investment (FDI) policy by easing investment norms across sectors including aviation, construction and single brand retail among others. These amendments are government’s broader strategy to liberalize and simplify the FDI policy to facilitate ease of doing business and turn India into a global investment hotspot.
Global Market Overview
Asian markets end mostly in red on Wednesday Asian equity markets ended mostly in red on Wednesday after bond yields jumped in the US and inflation data from China painted a mixed picture of the economy. The benchmark ten-year US Treasuries rose to a nearly ten-month closing high on Tuesday after the Bank of Japan surprised markets by reducing its purchases of long-dated Japanese bonds. Consumer prices in China rose an annual 1.8 percent in December, the National Bureau of Statistics said. That missed expectations for an increase of 1.9 percent but was up from 1.7 percent in November. The bureau also said that producer prices jumped an annual 4.9 percent, exceeding forecasts for a gain of 4.8 percent but down from 5.8 percent in the previous month. Japanese shares ended in the red as traders locked in some profits after recent strong gains. However, Chinese shares extended their rally and to close at the highest in seven weeks, led by banking and consumer stocks.
US markets closed lower; S&P, Nasdaq logs first down day of 2018
The US markets closed lower on Wednesday, with the S&P 500 and Nasdaq logging their first decline in 2018, as traders kept an eye on US bonds following an accelerated rise in the yield on the 10-year Treasury note, prompted by a report that China is considering halting purchases of US debt. After the record run, Wednesday’s pullback was seen as merely a pause in the rally as traders took the chance to take some profits. A media report that Canada is expecting President Donald Trump to shortly announce an end to the North American Free Trade Agreement also weighed on sentiment. St. Louis Fed President James Bullard said that sub-par inflation over the past five years has cost the US economy nearly $1 trillion in nominal growth, as he fleshed out a proposal for a more dynamic system of setting price increase goals. Bullard added that the Fed’s inability to get inflation to its target over the past five years has allowed a 4.6 percent gap to emerge in where the economy, measured in nominal terms before adjusting for price increases, would have been otherwise. That amounts to more than $820 billion in an $18 trillion economy. To compensate, the Fed would have to allow annual inflation of 2.5 percent for a decade - a sign of just how large the gap has become but also of how aggressive the central bank would have to be in its commitment to make up for it.
Nifty Spot Daily (10632.20) :- Nifty finding difficult to clear higher hurdle 10661 (10655) and closed weak after dropping towards 10588 (10592) and managed to close near 10635. There is lot of cautious view on the way up and 10609 looks for a good support and 10635-10661 looks for a strong hurdle. Lower levels below 10609 are now Gap 10588-10566 and also the bullish gap of 10513-10520 if manages to trade below it then there is some concern. Over all the trend is bullish and higher level above 10635-10661.
Bank Nifty paused and closed weak and now range 25681 - 25521-25441. Overall both the Indices are at pause and looking for a big rally either side.
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