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Friday, February 16, 2018

Nifty may bounce back to 10,700-10,800 in short term; metal stocks likely to be best performers

10,000 is the first major support below which 9,200 is possible. 9,200 is close to a 61.8 percent retracement of the entire move from the December 2016 bottom to the February 2018 top.

After the market correction, Rohit Srivastava, Fund Manager – PMS, Sharekhan, feels that the Nifty may bounce back in the near term to 10,700-10,800. Metal stocks are likely to be the best performers, he said in an interview to Moneycontrol's Sunil Shankar Matkar. Here's an excerpt from that interview:

Q) After recent correction followed by volatility, what is your technical outlook on market and target for year-end?

After the market correction we are looking at the Nifty bouncing back in the near term to 10,700-10,800. STOCK TRADING TIPS

The recent fall to 10,276 retraced around 23.6 percent of the entire rally from the December 2016 bottom. The fall also saw the Nifty make a false breakout above 10,760 and then fall below it. 10,760 was the trend line of the August-November tops. This failure to breakout amounts to a trend reversal.

The risk reward on a one year basis does not appear favorable. The upside maybe capped at the 11,171 high seen recently and the downside is open to a 10-20 percent correction at some point.

10,000 is the first major support below which 9,200 is possible. 9,200 is close to a 61.8 percent retracement of the entire move from the December 2016 bottom to the February 2018 top.

Q) Banks corrected a lot recently. Do you think the phase is over, or will the Bank Nifty correct more? What is your year-end Nifty Bank target?

Nifty Bank too could see a correction in the coming months as interest rates are likely to rise given the falling bond prices around the world. That said a 10-20 percent cut in Nifty Bank at some point during the year is very much possible.

25,000 is the first major support below which 22,700 is possible. The recent correction saw prices breakout above 26,500 and then fall back below it amounting to a false breakout. This marks a trend reversal along with weekly momentum indicators that are now in sell mode.

We have retraced 23.6 percent of the December 2016 rally and 22,700 is around a 50 percent retracement of the rally.

Q) Crude oil prices slipped to USD 62.5 a barrel from USD 71 a barrel. Do you think the crude prices will be rangebound?

Crude started a rally from USD 42 a barrel amid a lot of pessimism, however the move caught on and we have been making higher tops and bottoms for months.

The recent correction was the steepest for the period but is still above the low of USD 56 seen in December. As long as we make higher bottoms the trend is up.

Crude Oil prices are finding a base at USD 58 and could remain between USD 58-61 over the next few months because of the huge long positions reported by CFTC in the recent months.

However after a consolidation and unwinding of those longs a move towards USD 70 later in the year is expected.

Q) What are 10 (or as per your advisory) technical picks you advise for short-to-medium term?

The falling dollar has been the biggest macro-economic trend of the last year and technically this trend is likely to continue. This has led to a reflation rally in metal prices and base metals like Copper Zinc and Aluminium are likely to continue making new highs.

Thus metal stocks are likely to be the best performers. Stocks like Vedanta, Tata Steel and National Aluminium or Hindustan Zinc, should outperform even in a weak market, as they continue to make higher tops and bottoms. This would be my single bullish sector for the coming year.
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Tuesday, February 6, 2018

Market Update: Mayhem on Dalal Street as Sensex, Nifty tank over 2%; 166 stocks hit new 52-week low

The brutal sell-off in the Indian equity market was largely on the back of the US market giving way with the S&P 500 and Dow Industrials indices slumping more than 4 percent, as the Dow notched its biggest intraday decline in history with a nearly 1,600-point drop and Wall Street erased its gains for the year.

It was mayhem, a disastrous Tuesday for the Indian markets. The Sensex tanked over 1000 points in the morning trade while the Nifty nose-dived 300 points.

The brutal sell-off in the Indian equity market was largely on the back of the US market giving way with the S&P 500 and Dow Industrials indices slumping more than 4 percent, as the Dow notched its biggest intraday decline in history with a nearly 1,600-point drop and Wall Street erased its gains for the year.

All sectoral indices were trading lower by at least 2 percent with Nifty realty slumping over 4 percent dragged by stocks like DLF, Indiabulls Real Estate and HDIL, each tanking over 5 percent. Unitech, Sobha and Delta Corp were the other losers.

Bank Nifty dipped 3.2 percent led by Axis Bank and Canara Bank, falling over 4 percent each while SBI, PNB, Yes Bank and IndusInd Bank were the other top losers.

The top Nifty losers included names like Tata Motors which fell 7.11 percent followed by Axis Bank and Indiabulls Housing Finance, each shedding over 4.5 percent. UPL and Yes Bank were the other losers.

The top Sensex losers were Vakrangee which tanked 10 percent while Adani Power and Dilip Buildcon were down over 7 percent each.

The top Sensex gainers included Religare Enterprises which added 3.16 percent followed by Astral Poly Technik which added 2 percent.

139 stocks hit new 52-week low on NSE including Allahabad Bank,  Castrol India, Exide Industries, Fortis, IDFC twins, India Cements, LIC Housing Finance, PTC India Financial, Tata Motors, Union Bank and Suzlon Energy.

On the BSE, 158 stocks hit fresh 52-week low including names like Srei Infra, Tata Motors, Fortis Healthcare and Cosmo Films among others.

The market breadth was in favour of the declines on Tuesday morning with 84 stocks advancing while 1545 stocks declined and 381 stocks remained unchanged. On the BSE, 173 stocks advanced while 1947 stocks declined and 67 remained unchanged.

In an interview to CNBC-TV18, Sanjay Mookim of BofAML said that the pace of the decline in the market is astounding. He expects earnings growth in FY19 to be better than H2FY18 while he has a Sensex target of 32,000 by end of 2018.

When markets are underperforming, low PE stocks will perform well, he said, adding that this is not the time to buy midcaps.

Sanjay Mookim further added that divestment number looks relatively high if only it is done through secondary markets. Dynamics of Indian market and earnings environment are secondary to global markets.
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Monday, February 5, 2018

Asia markets trade lower; major indexes in Japan, South Korea, Australia and China fall

In Japan, the Nikkei 225 fell 2.33 percent in morning trade, while the Topix index was down 2.07 percent. South Korea's Kospi index fell 1.58 percent.

Asia markets fell across the board in Monday morning trade, following a sharp decline in US stocks on Friday amid a stronger-than-expected jobs report that sent interest rates higher.

In Australia, the ASX 200 fell 1.41 percent to 6,034.80 in late-morning trade, with most sectors trading lower. The heavily weighted financial subindex was down 1.26 percent, while the energy and materials sectors fell 2.39 percent and 1.96 percent, respectively.

The biggest banking names in the country fell: Shares of ANZ were down 1.48 percent, Commonwealth Bank declined 1.15 percent, Westpac was down 1.45 percent and the National Australia Bank fell 1.42 percent. STOCK FREE TIPS

Major Australian miners were also down. Rio Tinto shares fell 2.1 percent, Fortescue was down 1 percent and BHP Billiton declined 2.66 percent.

In Japan, the Nikkei 225 fell 2.33 percent in morning trade, while the Topix index was down 2.07 percent. South Korea's Kospi index fell 1.58 percent.

Chinese mainland markets opened lower, with the Shanghai composite down 0.62 percent in early trade. The Shenzhen composite fell 0.82 percent. In Hong Kong, the Hang Seng index declined 2.01 percent.

Elsewhere, US futures fell notably as Wall Street looked to add to the large losses set last week. The Dow Jones industrial average futures were down 155 points at 9:39 a.m. HK/SIN, after briefly falling more than 250 points. S&P 500 and Nasdaq futures fell 11.25 points and 21.5 points, respectively.

On Friday, the Bureau of Labor Statistics said the US economy added 200,000 jobs in January. That number was higher than the 180,000 jobs expected by economists in a Reuters poll. Wages, meanwhile, rose 2.9 percent on an annualized basis. The report sent Treasury yields higher, adding to investor concerns that interest rates may be rising too fast.

One analyst said the move in the US market still had some way to go — and that the pullback will continue to affect most equity markets.

"The past week has seen shares come under pressure as Fed rate hike expectations increased, partly reflecting an acceleration in US wages growth, and the bond yield rose sharply," Shane Oliver, head of investment strategy and chief economist at AMP Capital, said in a Monday morning note.

"It's likely the pullback has further to go as investors adjust to more Fed tightening than currently assumed — we see four (or possibly five) Fed rate hikes this year against market expectations for three — and higher bond yields," he added.

In the currency market, the Japanese yen traded at 109.90 to the dollar, strengthening from an earlier low of 110.29.

Some of the major export stocks traded lower: Shares of Toyota fell 1.42 percent, Mitsubishi Motors declined 1.7 percent and Canon was down 2.98 percent. Honda shares, however, rose 2.47 percent, beating the broader market trend after the carmarker raised its full fiscal year profit forecast on Friday.

Meanwhile, the Australian dollar traded at USD 0.7925, climbing from an earlier session low of USD 0.7887.

The dollar index, which tracks the greenback against a basket of currencies, traded at 89.187 at 9:48 a.m. HK/SIN after falling below 88.800 in the previous week.

On the data front, China's services sector expanded at its fastest pace in almost six years, according to a private survey, Reuters reported. The Caixin/Markit services purchasing managers' index rose to 54.7 in January from December's 53.9, the highest reading since May 2012, according to Reuters.
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Friday, February 2, 2018

Budget 2018: Govt's infra theme may benefit construction, metal, cement stocks

The infrastructure related stocks including construction, metal and cement stock will benefit from the government infrastructure development theme.

In Budget 2018 the government continued to put more focus on infrastructure development as they allocated Rs 5.97 lakh crore towards the infrastructure development.

The infrastructure related stocks including construction, metal and cement stock will benefit from the government infrastructure development theme.

Finance Minister Arun Jaitley has allocated an extra-budgetary support of Rs 5.97 lakh crore against Rs 3.96 lakh crore in the budget 2018 for the infrastructure sector. Construction companies like KNR Construction, J Kumar, NCC to play infrastructure theme from the budget.

India Union Budget 2018-19 Live: News, updates and highlights from FM Arun Jaitley's Budget 2018 speech, announcements
According to Rakesh Tarway, Head Research, Reliance Securities, "Budget 2018 continued to put a strong focus on infrastructure development, which is in line with the expectations. FM has allocated an extra-budgetary support of Rs 5.97 lakh crore for the infrastructure sector, which is encouraging as India needs a large amount of investment in infrastructure due to growing needs."

The higher allocation in infrastructure segment will essentially expedite infrastructure development in the country, which in turn will aid many industries i.e. metals, cement, building materials, etc.

They like construction companies KNR Construction, J Kumar, NCC to play infrastructure and cement companies like JK Cement and Sagar Cement to benefit from push to infra.

Manish Nuwal, MD & CEO at Solar Industries India said, "Allocating Rs 5.97 lakh crore to improve India’s infrastructure is a firm step towards bringing it at par to Asian levels."

"We see rising demand for industrial explosives due to encouraging measures such as the target to complete construction of 9,000 km of national highways this year by the NHAI."

“On the infrastructure front, the Finance Minister has shown remarkable restraint, and therein lies the brilliance of his announcements. India is at the cusp of an infrastructure revolution, and the budgetary support of Rs. 5.97 lakh crore for FY19 will be a big positive for the sector and supplementary industries such as cement," said Yadupati Singhania, CMD, JK Cement.

Dinesh Rohira, Founder & CEO, 5nance.com said, "With government allocating over Rs. 1.48 lakh crore for railway projects and Rs. 14.34 lakh crore for rural infrastructural spread across various scheme under its infrastructural theme, the company engaged in construction and housing segment coupled with company engaged in railway and road project is expected to get boost."

Disclaimer: The views and investment tips expressed by investment expert on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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