Published on 10/01/2018 9:42:54 AM | Source: LKP Securities Ltd

Markets likely to get a flat but positive start - LKP Sec

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Domestic Market View

Markets likely to get a flat but positive start

The Indian markets despite a choppy session managed a positive close in last session and the major indices notched their fresh record highs. Today, the start is likely to be mildly in green with traders taking some support 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 will also be eyeing the 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. Prime Minister Narendra Modi will interact with leading economists and sectoral experts to deliberate on economic policy roadmap for promoting growth and employment. There will be some concern in the oil companies as the international oil prices hit their highest levels since 2014. Telecom stocks too will be in focus as the Telecom Commission (TC) has decided to relax spectrum holding caps, giving a boost to M&As and spectrum sale.

Domestic Market Overview

Markets hit fresh record closing highs; eke out slender gains

Extending winning streak for fourth straight day, Indian equity benchmarks once again settled at fresh record closing high levels, though gains remained minimal with traders turning cautious ahead of the corporate results season kicking in this week. Markets traded mostly in green during the day with traders taking some support from report that the Commerce and Industry Ministry is mulling incentives for States that play a proactive role in promoting exports as it will help boost economic growth. However, markets entered into red in noon deals with sentiments turning down-bear with report that Moody’s Investors Service and its Indian arm ICRA in a joint report have flagged anxiety about the growing delinquencies in the affordable housing segment, which are expected to continue in the calendar year 2018. Sentiments also remained dampened with the rating agency Crisil attributing the continuing slowdown to the after-effects of the demonetisation exercise, the Goods and Services Tax (GST) implementation and weakness in agriculture, rating agency, CRISIL in its latest report has maintained its projection of India's economic growth in 2018-19 to 7.6 percent on the low base.

Recovery in last leg of trade mainly helped markets to end at fresh record closing high levels with traders taking some solace with report that the government’s revenue collection continued its rising trend, mainly on account of income tax mop-up from individuals. India’s net direct tax collections, which are made up of personal and corporate taxes, rose to Rs 6.56 lakh crore during the AprilDecember period of the financial year 2018. The collection indicates that 67% of the annual budget target of direct taxes (Rs 9.8 lakh crore) has been achieved.

Companies related to FMCG space edged higher with a private report stating that in the next 12 months, consumer goods companies would see a revival, both in volume and margin terms, with an anticipated revival in the rural sector. Cigarette stocks too edged higher despite the Supreme Court staying a Karnataka High Court order quashing 85% pictorial warnings on packs containing such products. However, select stocks in housing loans and banking space remained under pressure after a report flagged concerns about the growing delinquencies in affordable housing segment.

Global Market Overview

Asian markets end mixed on Tuesday

Asian equity markets ended mixed on Tuesday as investors digested earnings guidance from tech heavyweight Samsung Electronics and kept an eye on ongoing talks between South Korea and North Korea, the first formal talk between the two Koreas in more than two years. Chinese shares extended gains after central bank data showed China's foreign exchange reserves increased for the eleventh straight month in December. Further, Japanese shares ended higher, with sentiments lifted by record highs on Wall Street overnight and strong December sales reported by clothing company Fast Retailing at its Uniqlo clothing outlets in Japan. Investors shrugged off the yen's strength against the dollar after the Bank of Japan trimmed the size of its bond-repurchase offer in its latest market operation.

US markets closed at fresh record high on Tuesday

The US markets closed at fresh record highs on Tuesday, with the S&P 500 and Nasdaq registering a sixth straight gain for 2018. The upbeat sentiment that has kept the 2017 global stock rally running into the New Year still has a grip on the market. On the Federal Reserve front, Minneapolis Fed President Neel Kashkari said that US must wrestle with a fiscal deficit over the long term tied to the tax-cut legislation. He also said he wouldn’t be surprised to see a burst higher for productivity, which has been elusive even as the job market remains healthy. The Dow Jones Industrial Average added 102.8 points or 0.41 percent to 25,385.80, the Nasdaq gained 6.192 points or 0.09 percent to 7,163.58, and the S&P 500 edged higher by 3.58 points or 0.13 percent to 2,751.29.

Technical View

Nifty Spot Daily (10637) :- Nifty paused at higher hurdle 10661 (10659) and closed neutral to flat for the day. 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 at the higher level facing hurdle 25761 and managed to closed above 25681. Lower support 25521-25441. Overall both the Indices are at pause and looking for a big rally either side.

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