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Posted on 05-May-2017 Comments  0

Highlights of the Week (May 01 – May 05) and Impact Analysis

Major News Item

Impact Analysis

  • Maruti announced stellar auto numbers for themonth of April 2017

  • The 19.5% jump insales was the best seen by Maruti in the last few months in terms of monthly growth

  • Interestingly,while the growth came from mid-sized and utility vehicles, entry level cars also saw smart spurt in sales

  • Core sector growth for March came in at 5% versus 1% for February

  • The sharp spurt incore sector growth was largely led by steel and electricity with the help of favourable policy

  • Cement continues to show negative growth even as refining and fertilizers have lagged during the month

  • PMI Manufacturing is flat even as PMI services disappoints

  • PMI Manufacturing at 52.5 was clearly indicative of a pick-up in order flow and increation of jobs

  • PMI Services was at around the cut-off 50 mark raising concerns that the lageffect of demonetization was still on

  • SEBI plugs an important loophole with respect to liquid funds

  • Instant redemption by liquid funds was a facility used by investors for week-endarbitrage profits

  • By limiting the instant redemption to Rs.50,000 and banning leverage, the regulator has plugged this arbitrage opportunity

  • Federal Reserve maintained status quo with respect to Fed rates

  • That was almost anticipated as the US economy had grown at just about 0.7% in the first quarter ended March 2017

  • However, the Fed has guided for another 2 rate hikes of 25 basis points for this calendar year

  • Macron leads the polls ahead of the French elections on 07th May

  • Macron is the centrist candidate who is preferred by global markets for his more moderate economic views

  • Marine Le Pen is extreme right and has promised to eject France from the EU and the common currency

  • Fitch has retained India’s sovereign rating at BBB-

  • This rating has been static since 2006 and does not do justice to the growth and reforms that India has embarked on

  • This is the lowest level of investment grade rating and is lower than China. Fitch has concerns over India’s fiscal position

  • RERA goes live across many states effective May 02nd 2017

  • Most states have managed to dilute the RERA substantially to favour the interests of builders

  • Only 9 states have officially shifted to the RERA since the other states are yet to pass the respective state Acts

  • Bitcoin touches an all-time high of $1400 inApril

  • This is the highest level since the launch of Bitcoin in 2008 and has appreciated nearly 3-fold in the last 1 year

  • Bitcoin, being a non-fiat currency, is emerging as a strong alternative to traditional fiat currencies that get debased

  • The cabinet ordinance on NPA Resolution gets Presidential assent

  • RBI will now get sweeping powers to take decisions on all aspects pertaining to NPA resolution

  • RBI will first facilitate restructuring of defaulting companies followed by haircuts and later insolvency proceedings

  • Cabinet approves National Steel Policy 2017 to give a big boost to steel

  • The policy proposes to take India’s steel output to 300 million tonnes by 2030, entailing an investment of $150 billion

  • The Policy also focuses on the creation of support infrastructure like power, gas and iron ore availability

  • ICICI Bank announced smart growth in profits but NPAs were higher

  • There was a sharp growth of 200% in net profits for the quarter on the back of lower provisioning

  • However, gross NPAs have shot up to 7.9% making the bank extremely vulnerable to external shocks

  • Brent Crude fell below the psychological level of $50/bbl

  • The sharp fall inprice is largely driven by a glut of supply coming from US shale which has now become viable

  • If the OPEC does not choose to renew its supply quotas in June this year, then oil prices may dip further

  • Global commodities like oil, copper and zincsaw a sharp fall in prices

  • While oil pricesfell on over supply, zinc and copper fell on expectations of slower growth in China and the US

  • The fall in commodity prices could be negative for Indian commodity stocks which have been in a massive market rally

  • Patanjali emerges as the third largest FMCG company after HUVR and ITC

  • With annual revenues in excess of Rs.10,000 crore, Patanjali has over taken Nestle, Godrej and Britannia

  • The company’s revenues have grown at a mind boggling total of 1900% over the last six years since 2011

  • Equity ETFs in India see a 3-fold increase in AUM in last 1 year

  • This growth has been largely led by the government sponsored CPSE ETF, which also gets EPFO investments

  • The equity ETF AUM stands at Rs.44,000 crore and is still dominated substantially by Nifty ETFs

  • Taiwan appears to have replaced India as preferred FPI destination in 2017

  • Taiwanese equities received nearly $7.5 billion of FPI inflows since the beginning of calendar year 2017

  • The FPIs have shown some concerns over valuations in Indian markets which are now getting closer to the 2010 peaks

  • The IRB InvIT IPO gets oversubscribed by 1.26times

  • This IPO was crucial in the sense that it was the first InvIT to list and will be the benchmark for many more to come

  • REITS and InvITshave now emerged as the latest model for real estate companies to monetize their illiquid assets

  • Buffett discloses reduction in IBM stake ahead of Berk shire AGM

  • IBM shares have lagged technology peers in the US and have returned just 21% in the last 6 years since Buffett bought it

  • Buffett admitted that he had revised his valuations of IBM downwards due to limited traction and visibility

  • Tata Motors stock plummets after JLR reports 2.3% fall in sales in April

  • One of the reasons was the increase in vehicle tax in UK from April 01st leading to a front-ending of car purchases in March

  • Most of the hit was taken by Land Rover with Jaguar actually showing a growth of 52% on a YOY basis

  • FY 2016-17 saw NCD issues lower by 24% at Rs.29,328 crore

  • One of the reasons for the lower reliance on NCDs was that equities were easier to raise due to robust IPO markets

  • Financial services companies like Indiabulls Housing Finance and Dewan Housing dominated the NCD borrowing market

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