The market is expected to continue its liquidity-driven rally on earnings recovery hope and ahead of Budget 2018 (which will be presented on February 1) in the coming truncated week as well.
The bulls seemed unstoppable as the market continued its record-hitting spree in the first three weeks of the current calendar year, even in the face of rising crude oil prices.
Encouraging earnings numbers, a cut in GST rates on 83 goods and services, favourable global cues, buzz on allowing 100 percent FDI in the banking sector, and easing of fiscal deficit worries after lowered borrowing requirements, have driven the Nifty above the 10,900 level and the Sensex above the 35,500-mark for the first time ever.
In the passing week, the 50-share NSE Nifty rallied 2 percent to end at a fresh all-time closing high of 10,894.70 and the 30-share BSE Sensex jumped 2.66 percent to 35,511.58, taking year-to-date (2018) gains to 3.5 percent and 4.3 percent, on top of the 29 percent and 28 percent rallies in 2017, respectively.
Not only benchmark indices, but even the Nifty Bank index ended at a new closing high of 26,909.50, rising 4.5 percent during the week and taking total three-week gains to 5.4 percent on top of a 40.5 percent jump in the previous year.
However, the Nifty Midcap and BSE Smallcap indices underperformed equity benchmarks, falling nearly 2 percent and 3 percent in the week, respectively.
The market is expected to continue its liquidity-driven rally on hope of earnings recovery and ahead of Budget 2018 (which will be presented on February 1) in the truncated week ahead, but there could be some volatility due to expiry of January futures and options contracts on Thursday, experts suggested. Stocks specific action may continue ahead of Budget, they felt.
"Market is anticipating a sea change in the earnings trend starting from Q3 result. This is an extension of the marginal improvement we had seen in Q2. In Q2 adjusted PAT grew by about +4-5 percent for indices like Nifty50 & Sensex. And this time market is anticipating a strong growth of 15-20 percent in PAT led by revamp in businesses and low base effect. Economic data like WPI, IIP and PMI also suggesting improvement in pricing and volume growth. This trend is expected to improve to FY19-20, a main reason for the market to be buoyant," said Vinod Nair, Head Of Research at Geojit Financial Services.
He further said that for the week ahead, the market would closely watch the progress of Q3 results, which will dictate the overall trend of the market, while volatility may be heightened due to F&O expiry next week.
On the global front, developments in US over passing a spending bill to avoid a government shutdown as well as oil prices would also be closely watched out for, Teena Virmani, Vice-president – Research at Kotak Securities said.
The market will remain shut on Friday for Republic Day.
Here are 10 key things to keep investors busy next week:-
Earnings
Earnings season, so far, have been encouraging and also cheered the market from the start of the year. According to experts, Q3 and Q4 are set to dictate the FY19 earnings trend.
About 200 companies will announce their December quarter earnings in the coming week. Important ones amongst them are Maruti Suzuki, Axis Bank, Dr Reddy's Labs, Asian Paints, Havells India, RBL Bank, United Spirits, Canara Bank, InterGlobe Aviation, Idea Cellular, Mahindra & Mahindra Financial, Biocon and JSPL.
Reliance Industries and Wipro
The first on coming Monday, the market will react to Reliance Industries and Wipro's earnings that unveiled on Friday after market hours.
The flagship company of Reliance Group on consolidated basis reported a 16 percent profit growth quarter-on-quarter, driven by petrochemical business and Jio that reported its first ever profit at Rs 504 crore in Q3 against loss of Rs 271 crore in previous quarter. Gross refining margin was on expected lines at USD 11.6 a barrel QoQ in Q3.
Wipro's December quarter numbers missed analyst expectations as IT services dollar revenue growth was flat with EBIT falling 14 percent and margin contracted 250 basis points quarter-on-quarter, though the company said adjusted for one-time (provision of Rs 317 crore w.r.t a customer), margin stood at 17.2 percent that was slightly above analyst estimates of 17.1 percent for the quarter.
Maruti Suzuki
Overall for auto companies, December quarter earnings are expected to be strong on low base of last year due to demonetisation.
In particular, Maruti Suzuki, which is one of top picks (among largecaps) of majority of brokerage houses domestically as well as globally, will announce third quarter earnings on Thursday.
Brokerage houses expect the auto major's Q3 profit growth in the range of 13-24 percent and revenue growth around 13-16 percent. Operating profit growth is estimated at 19-25 percent YoY. Volume growth of more than 11 percent during the quarter driven by Baleno, Brezza and newly launched Dzire is likely to drive earnings.
Axis Bank
On coming Monday, country's third largest private sector lender is expected to report 22 percent growth YoY in profit and 4 percent in net interest income for quarter ended December 2017, according to average of estimates of analysts polled by CNBC-TV18.
Some brokerages are expecting big growth in profit due to low base in year-ago quarter. Loan growth is likely to be driven by retail business. Majority of them expect Q3 slippages to be lower than Q2FY18.
F&O Expiry
All January futures & options contracts will expire on coming Thursday and traders will roll over their positions to next month.
On the options front, maximum Put open interest was seen at 10500 followed by 10700 strikes while maximum Call OI was at 11000 followed by 10800 strikes, which indicated that 10,500 could be the support level and 11,000 could be resistance level for the Nifty in January series.
Significant Put writing was seen at 10800 and 10700 strikes which are shifting its support to higher levels whereas Call Unwinding was seen in all immediate strike prices.
“Option band signifies a trading band between 10,800 to 11,000 zones for the expiry,” Chandan Taparia, Derivatives, and Technical Analyst at Motilal Oswal Securities told Moneycontrol.
“It surpassed its supply trend line and now the same is acting as a support zone to push the market to higher levels. Now it has to continue to hold above 10,780-10,800 zones to extend the rally towards psychological 11,000-11,050 zones while on the downside supports are seen at 10,700 and 10,666 levels,” he said.
Technical Outlook
The 50-share NSE Nifty, which ended the passing week at fresh record closing high, made a strong bull candle on the daily candlestick charts.
For the coming week, analysts advise investors to remain long with a strict trailing stop loss below 10,790 as they expect strong upside momentum to continue next week and next target for the index to be 11,000 which is also its crucial resistance level.
"The indications of momentum oscillators and underperformance of broader indices are signaling a euphoric upmove in the market. The upside targets of Nifty could be around 11,000 and next 11,115 levels, which could be achieved in the next 1-2 weeks," Nagaraj Shetti, Technical Research Analyst, HDFC securities said.
Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in also said on such a breakout, a modest target of 11,100 looked certain.
However, as the market is entering into a truncated week with technical oscillators in steeply overbought zone, profit booking in next trading session can’t be ruled out, acccording to him.
IPOs and Listing
Apollo Micro Systems, which caters primarily to the defence and aerospace sectors, will debut on exchanges on coming Monday. The final issue price is fixed at higher end of price band of Rs 270-275 per share.
The Rs 156-crore issue saw a whopping oversubscription of 248.51 times during January 10-12, 2018.
Total six SME IPOs (three each on BSE and NSE) will open for subscription in the coming week and one will end on Monday.
Stocks in Focus
ONGC is going to acquire government's 51.11 percent stake in HPCL at Rs 473.97 per share. The acquisition which costs Rs 36,915 crore to ONGC, is expected to complete by January-end. After this deal, the government has revised its FY18 divestment target upward approximately Rs 92,000 crore, from Rs 72,500 crore earlier.
Dr Reddy's Labs will be in focus as the US Federal Court has imposed USD 5 million penalty for distributing prescription drugs in blister packs that were not child resistant.
DCM Shriram's consolidated net profit in Q3FY18 increased sharply 56 percent year-on-year to Rs 212.9 crore and revenue grew by 30.6 percent to Rs 1,783.7 crore while operating profit shot up 74.5 percent to Rs 329.1 crore and margin expanded by 465 basis points to 18.46 percent compared to year-ago.
Godawari Power & Ispat has posted consolidated profit at Rs 73.7 crore for December quarter against loss of Rs 9.6 crore in year-ago. Revenue increased 58 percent year-on-year to Rs 672.1 crore and operating profit grew by 88 percent to Rs 169 crore with margin expansion of 409 basis points YoY. The board of directors has approved company's proposal to raise Rs 500 crore via equities, GDR, ADRs and FCCB.
Gruh Finance, which surged 16 percent on Friday, showed a 28 percent growth in Q3 profit and 12.5 percent in revenue YoY. Operating profit grew by 16 percent and margin expanded by 282 basis points during the quarter YoY.
Hindustan Oil Exploration may react positively to its earnings as profit grew by a whopping 207 percent year-on-year to Rs 12.9 crore and revenue by 144 percent to Rs 13.4 crore for December quarter.
Lux Industries has reported a 31 percent year-on-year growth in profit at Rs 18.44 crore and 29 percent growth in revenue at Rs 297.4 crore for quarter ended December 2017.
J Kumar Infraprojects has received letter of acceptance from Delhi Metro Rail Corporation (DMRC) for Line 2A Architectural Station on Dahisar (east) to DN Nagar Corridor of Mumani Metro Rail Project, which is worth Rs 57 crore.
HDFC Standard Life has reported nearly 15 percent growth in Q3 profit at Rs 207 crore and its net premium grew by 19.5 percent to Rs 5,420 crore compared to year-ago quarter.
Future Retail will acquire Travel News Services for Rs 100 crore, which will help the company to expand its presence at airports, metro stations and universities where the majority of retail outlets of TNSI and TNSI Retail are operating.
CRISIL upgraded DLF's long term/non-convertible debentures rating to A+/stable from A and short term debt rating to A1 from A2+, removing from 'Rating watch with developing implications'.
IFCI said the government was considering capital infusion of Rs 100 crore during the financial year 2017-18 to the company.
Global Cues
Two major central banks - Bank of Japan and European Central Bank - will announce rate decision on Tuesday and Thursday, respectively. Economists largely expect status quo on interest rates but commentary will be closely watched, especially related to winding down stimulus program.
Apart from central banks' monetary policy decisions, Japan's manufacturing PMI for January, and Europe & US' manufacturing & services PMI for January will be released on Wednesday.
The US will announce its initial jobless claims data for the week ended January 19 and new home sales on Thursday, and Q4 GDP data on Friday.
MORE WILL UPDATE SOON!!
0 comments:
Post a Comment