S&P 500 Index Price Forecast January 11, 2018, Technical Analysis

The S&P 500 initially fell during the trading session on Wednesday, but we have found enough support at the 2735 level to bounce and rally significantly. The 2750 level looks to be resistance, and I think if we can break above there it’s likely that the market will continue to go much higher. I think that the market is continuing to base its decision based upon tax laws, and perhaps even potential global growth.

  

The S&P 500 has initially fallen during the trading session, reaching towards the 2735 handle. There’s enough bullish pressure in that area though that we turned around and rally. Ultimately, I think that if we can break above the recent highs, the market is free to go to the 2800 level, and then possibly even 3000 which is my longer-term projected target for 2018. Ultimately, this is a market that is going to be very noisy, but I believe in buying on dips as it has been proven more than once that algorithmic traders are willing to get involved.

In general, I’m not interested in selling this market, because I believe that the overall uptrend continues to be very important, and certainly very aggressive. I think that the market will eventually find reason enough to rally based upon just about any metric you throw at it. I think that the market continues to be noisy, but I also believe that the underlying trend is certainly intact, and it’s very likely that we will continue to find that dips will be looked at as value. As long as that’s the case, and there’s nothing on this chart to suggest that it will change, we should continue to find plenty of buyers. I have no interest in shorting.

MORE WILL UPDATE SOON!!

Nifty heads towards 10,800; 3 stocks which can give up to 21% return in 6 months

Dharmesh Shah believes that any correction from hereon should be used as an incremental buying opportunity as Q3FY18 earnings expectations and Budget expectations would influence investor sentiment.

 

The equity benchmark index rolled over bullish momentum in the calendar year 2018, further boosted by government’s step of seeking Parliament approval for the recapitalisation of bonds.

Eventually, this helped Nifty to record all-time high of 10,659. Similarly, Midcap & Smallcap indices are sustaining at all-time high suggesting buoyancy in the broader market.

On a weekly basis, the index has continued showing respect to the long-term trend line joining the December 2016 and September 2017. The resilience of the key long-term trend line indicating that the market internals remains robust and bodes well for the continuance of the primary uptrend.

Thus, we believe that any correction from hereon should be used as an incremental buying opportunity as Q3FY18 earnings expectations and Budget expectations would influence investor sentiment.

We expect Nifty to move towards 10,836 as the recent leg of up move from December low of 10,033 would equate with October rally (9,687-10,490) at 10,836.

In the entire up move since December 2017, intermediate corrective phases have not lasted more than 2-3 trading sessions post which the index has resumed the uptrend.

Based on this tendency, we expect current consolidation to conclude over the coming one week post which the index should resume upward momentum.

The ongoing secondary corrective phase forms part of the larger degree uptrend and provides incremental opportunity to accumulate quality stocks in a staggered manner.

The immediate support base for the index has shifted upwards to 10,400 regions as it is the confluence of following:

a) Recent swing low of 10,405 recorded on 2nd January 2017.

b) 38.2 percent retracement of the current leg of the rally starting from low of 10,033 to high of 10,659.

Here is a list of top 3 stocks which could give up to 21% return in the next 6 months:

Reliance Industries Ltd: BUY| CMP Rs942 | Target Rs1070| Stop Loss Rs864| Return 14%| Time Frame 6 months

The share price of RIL was consolidating after recording a 52-week high of | 960 in November 2017. Since then, it has been trading in a contracting range.

The stock has resolved out of a contracting symmetrical triangle pattern, where it has also broken out of five weeks high of Rs939, leading to higher high on the daily chart signalling end of the corrective phase and resumption of the fresh uptrend.

The overall positive structure remains intact as the stock has already taken nine weeks to correct just 50% of the previous five weeks’ rally from Rs786 to Rs957.

The limited price wise correction corresponding to elongated time correction shows inherit strength and foretell positive momentum, going ahead.

On the downside, the share price has a key support around Rs868 in the medium term as it is the 50% retracement of the last leg of the rally (Rs779-958).

The above-mentioned technical evidence suggests the two months’ consolidation is likely to conclude, in turn, giving a fresh entry opportunity.

We expect the stock to move higher towards the projected target of Rs1070 in the medium term being the price equality of the last up leg from Rs779– 958.

Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.

Maharashtra Seamless: BUY| CMP Rs526| Target Rs578| Stop Loss Rs491.00| Return 10%| Time Frame 1 months

The share price of Maharashtra Seamless has recently broken out of a consolidation pattern and has been consolidating above the same in the last one week signaling positive bias.

The breakout from the consolidation range was accompanied by a sharp surge in volume that is more than five times the average volume seen over the past 200 sessions.

After a strong rally in October 2017, the stock entered a consolidation phase over the next two months during which it formed a higher low after having retraced just 50% of the preceding rally.

The stock has now given a resolute breakout from this consolidation, suggesting at the resumption of the uptrend. We feel that the stock is likely to head higher in the near-term towards Rs580, being the price parity of the previous up move from Rs384 to Rs513 as projected from recent trough of Rs 450

Zee Entertainment: BUY| CMP Rs580| Target Rs698| Stop Loss Rs522.00| Return 21%| Time Frame 6 months

The share price of Zee Entertainment managed to topple its CY2000 peak in late 2016. Since then, it has been in a consolidation mode thereby discounting the disruptions created by key reforms like demonetisation and implementation of GST.

The recent price action has led the share price to resolve out of consolidation signalling resumption of a fresh up trend. The share price corrected from its October 2016 peak of | 589 to anchor around Rs430 in December 2016.

The subsequent 12-month period witnessed a basing pattern wherein the stock discounted a host of headwinds while maintaining a higher bottom formation.

The entire price action during this period has taken the shape of a contracting symmetrical triangle, which is a continuation pattern. The consolidation, which is viewed as a secondary corrective phase within the primary up trend, has rested upon long-term 52-week EMA.

In early December 2017, the share price resolved higher out of a triangle pattern signaling end of corrective bias and resumption of the uptrend.

The aforementioned technical observations make us believe the consolidation phase that lasted over 12 months has come to maturity, in turn, giving a fresh entry opportunity.

We expect the stock to move higher towards the projected target of Rs720 in the medium term. The area of Rs182 in the medium term is the pattern implication of a Triangle consolidation (158-133) as projected above the breakout level of Rs157.

MORE WILL UPDATE SOON!!

Budget 2018: Don't expect big bang reforms; rural, cement themes a play, says Sundaram MF

The overall market is factoring in a lot of positive news, said S Krishna Kumar. Cues such as India being fastest-growing economy going ahead along with swelling order books of EPC firms are working well.

   

While the Street gears up for the Union Budget 2018, Sundaram Mutual Fund does not expect big bang reforms.

Clearly, in the last year of its term, the government would like to consolidate on major steps taken than opening up of any new front. Steps could be taken to progress things that have been done in the past few years. He expects the government to stay on course with fiscal (discipline) and allocate to schemes on rural development and job generation.

Meanwhile, the overall market is factoring in a lot of positive news. Cues such as India being fastest-growing economy going ahead along with swelling order books of EPC firms are working well.

Speaking on the December quarter performance, Kumar said investors were factoring in 12-15 percent growth in this quarter and probably higher in the next one. With high PE multiple, one could probably play earnings growth, which will drive returns, he told the channel.

Kumar expects crude prices to soften in one month and sees it back to levels of around USD 60, which is one of the bases. So, crude-driven inflation will come back down, while CPI too could cool off as the current price surge was seasonal, he observed.

So, is there a rural theme to be played in the run up to the Budget? Kumar said it has been broadly playing the theme in the past couple of years. “We have increased allocation towards the rural theme in the last two years. Agro chemicals, sugar, tea and tractors are parts of the portfolio.

Among other sectors, he expects a strong performance from cement sector as costs come under control and margin expansion takes place. He is upbeat on South India-based cement companies as they come out of a multi-year soft cycle.

In the auto space, he believes auto ancillaries have come of age and are serious players in the global value chain.

MORE WILL UPDATE SOON!!

TCS to kick off Q3 earnings season; here are 5 things to watch out

As it is seasonally a weak quarter for IT companies due to holidays and furloughs in western markets, analysts expect revenue growth to be muted.

  

IT major Tata Consultancy Services will be the first bigger company to announce earnings for October-December quarter on Thursday. The stock price rallied nearly 4 percent on Wednesday ahead of numbers.

As it is seasonally a weak quarter for IT companies due to holidays and furloughs in western markets, analysts expect revenue growth to be muted.

Here are five key factors one should look at in earnings:-

Profit

Profit for October-December quarter is expected to be flat at Rs 6,460 crore against Rs 6,446 crore in previous quarter, according to average of estimates of analysts polled by CNBC-TV18.

Lower other income and marginally higher tax outgo may limit profit.

Revenue from operations

Revenue growth is likely to be muted as pick up in insurance etc may be negated by weak retail segment growth in Q3 and BFSI is expected to be soft.

Revenue in rupee terms is seen rising 1.4 percent sequentially to Rs 30,960 crore, from Rs 30,541 crore in September quarter.

Analysts expect dollar revenue to increase by 0.9 percent quarter-on-quarter to USD 4,781 million from USD 4,739 million and constant currency growth to be around 1.1 percent.

Operational Growth

According to a poll, earnings before interest and tax (EBIT) is expected to rise 4.3 percent to Rs 7,987 crore from Rs 7,660 crore and margin to expand by 70 basis points to 25.8 percent from 25.1 percent on sequential basis.

EBITDA (earnings before interest, tax, depreciation and amortisation) may grow 1.3 percent to Rs 8,269 crore from Rs 8,164 crore QoQ.

Operational efficiency and normalisation of wage hike may aid margins, analysts feel.

Sequential currency impact may be negligible but there could be 250-300 bps impact YoY.

Deals

Deals will be closely watched by the Street as TCS has seen some large deals in North America and Insurance.

Commentary

Impact of US tax reform

Commentary on client budgets and digitalisation in 2018

Outlook of BFSI and retail

Likelihood of sustenance of growth in telecom & healthcare segments

Progress on large deals and pipeline.

MORE WILL UPDATE SOON!!

Nifty seen at 12,500 by FY18-end; 6 stocks that could turn out to be multibaggers in 2-3 years

Indian markets currently in pre-Budget rally might see a small correction which we believe would be a buying opportunity.

    

Our best multi baggers for 2-3 year perspective are:

MOIL (CMP Rs 255)

Strong demand uptick due to higher domestic steel production, higher realization with rate revision effective 1-Jan, possible avenues of demand from disruption in automotive segment with EV drive are some of the factors that provide us conviction for MOIL in spite of it being a ~USD 1bn company with majority owned by government. Moil has maintained healthy return ratios, strong profitability, lean balance sheet and completed its mine expansion. All this makes MOIL our preferred pick.

Ganesha Ecosphere (CMP Rs 435)

Ganesha Ecosphere is uniquely positioned to benefit from increasing PET demand in country and focus on environment as it converts PET bottles/waste into yarn/fibre. Ganesha Ecosphere has completed its capacity expansion and will benefit from volume growth FY19 onwards. The realizations for its product will also increase as polyester prices are closely linked to that of oil. Additionally Ganesha enjoys strong sourcing network and unbeatable track record.

Rajoo Engineers (CMP Rs 50)

Rajoo Engineers supplies machinery for packaging products and is bound to gain with strong consumption demand and uptick in FMCG sales. Currently trading at higher multiples wrt trailing multiples we confident strong sales and higher profitability due to positioning in industry. Rajoo has maintained strong return ratios and will continue to do so.

Greaves Cotton (CMP Rs 147)

Greaves Cotton has tied up with Piaggo to supply BS VI diesel and alternative fuel engines. Policy embargo on CV's and environmental concerns from NGT make us confident on prospects of company. Greaves Cotton drive significant portion of its revenue from agri-equipment and construction equipment. This makes Company uniquely positioned to gain from all quarters of government policies. Strong return ratios make us confident on management's capabilities to deliver.

Flex Foods (CMP Rs 136)

Flex Foods is an associate company of Uflex and a leader in flexible packaging technology. Flex Foods cultivates and processes food products and supplies vacuum freeze dried, air-dried, frozen and an individually quick frozen (IQF) product range. It sources its raw materials through contract farming through a dedicated network of 500 farmers. Strong pedigree, good product range and low forward earning multiples make us confident of better outlook for stock.

Hindustan Oil Exploration (CMP Rs 139)

First O&G company in private sector with professional board, debt free balance sheet and proven development/operating experience puts this company in sweet spot with rising crude prices and gas demand in India. Company is planning to ramp up production capacity, raise capital for inorganic growth and acquire additional acreage. Open Acreage Licensing Program & Discovered Small Field (DSF) bid round 2 announced by the Government present excellent opportunities to grow the portfolio.

MORE WILL UPDATE SOON!!

Fast & Furious! Top 12 stocks which rose up to 400% as Nifty rallies from 10,000-10,600

The Nifty 50 raced from 10,000 levels recorded on 26th July 2017 to 10,600 in January 2018 which translates into a gain of nearly 6 percent but as many as 36 stocks rose more than 10 times in the same period.

It has been a dream run for Indian markets in the year 2017. The Nifty50 closed above 10,000 levels for the first time in July 2017 but there were as many as 36 stocks which gave 10x return than the Nifty index in the same period.

The Nifty50 raced from 10,000 levels recorded on 26th July 2017 to 10,600 in January 2018 which translates into a gain of nearly 6 percent but as many as 36 stocks rose more than 10 times in the same period.

Stocks which gave 60-480% return from the period July 2017-January 2018 in the S&P BSE 500 index include names like Jai Corp, VIP Industries, Divi’s Laboratories, KEI Industries, Torrent Power, Adani Transmission etc. among others.

 

Stocks which more than doubled your wealth in the same period include names like HEG, Graphite India, Rain Industries, Bombay Dyeing, Phillips Carbon Black, Jai Corp, Meghmani Organics, Himadri Speciality, PC Jeweller, Gujarat Alkalies, VIP Industries, and Bombay Burmah.

For the year, the Nifty50 rose by about 29 percent but analysts caution investors to tone down their expectations from equity markets for the next 12 months. The index might at best give a low-teen return but the traditions of Nifty hitting fresh record highs is likely to continue.

The stupendous rally which we saw was driven not only by liquidity but also by hope of earnings and economic recovery (due to reforms by Modi government) going ahead, which had been lagging for many quarters in the past.

That kind of returns seem unlikely in 2018 though earnings and economic recovery look possible is the word coming from Aditya Birla Capital. What it expects is 12-15 percent return in the current year and the similar kind of uptrend is likely to continue in 2019 & 2020 as well.

Analysts do not expect a major correction on D-Street but a 3-5 percent correction could give a good entry point to long-term investors. However, investing should follow a staggered approach to investing because the upside remains limited.

Markets have been relentlessly rallying day after day with most stocks at their 52-week highs. The Midcap and smallcap universe in particular clearly seem to be in overvaluation zone.

This is more of a trader's market currently and the margin of safety for short-term investors is pretty low. Hence, new investments, if to be made for the short to intermediate term, are exposed to higher volatility and price risks.

We believe that if market indices are to correct by 3-5%, it will be a healthy sign for a sustained bull run to continue. We also believe that the budget will be rural and infra focused which will benefit sectors like Agrochemicals, Cement, FMCG and 2 wheelers.

MORE WILL UPDATE SOON!!

Market Live: Midcaps outperform Sensex, Nifty; Sun Pharma extends gains

Jai Corp, Prism Cement, GVK Power, Welspun India, Indiabulls Real, JSW Energy and NMDC gained 1-8 percent.

  

Estimates: Shree Cements is likely to post a profit after tax (PAT) of Rs 265 crore in Q3, a rise of 13 percent against Rs 235.4 crore year on year, according to a CNBC-TV18 poll of analysts.

The revenue from operations may grow over 24 percent at Rs 2,290 crore against Rs 1,843 crore in the third quarter of FY17.

At the operating level, operating profit may grow to Rs 545 crore, a rise of 16 percent from Rs 469 crore, while the operating margin is seen lower at 23.8 percent against 25.4 percent.

Japan's stimulus:  The Bank of Japan maintained the amount of its bond purchases today, helping to soothe a market rattled earlier this week by a cut in its buying of longer-dated debt that fanned worries the central bank may be moving to turn off its stimulus.

The BOJ maintained the size of its buying in one- to three-, three- to five-, and five- to ten-year Japanese government bonds at 250 billion yen (USD 2.24 billion), 300 billion yen and 410 billion yen respectively.

CPI Inflation Poll: India's retail inflation likely rose to a 17-month high in December, a Reuters poll showed, and that could push the central bank to tighten monetary policy.

After November's 15-month high of 4.88 percent, consumer price inflation likely climbed to 5.10 percent, which would the highest since July 2016, according to the median in the poll of nearly 40 economists over the past week.

The December inflation data is due to be released on Friday, January 12 at 17:30 hours IST.

Rupee Trade: The rupee slid further by 22 paise to hit a low of 63.82 against the greenback in late morning deals on continued bouts of dollar demand from importers and banks amid flat equities.

The rupee opened lower at 63.65 per dollar from yesterday's closing level of 63.60 at the inter-bank foreign exchange market today.

The Indian unit witnessed volatility and fell further to 63.82 on heavy dollar demand.

Buzzing: Sun Pharma shares extended gains, rising more than 1 percent after CNBC-TV18 reports quoting Cogencis that company's Halol unit in Gujarat has received Good Manufacturing Certificate from Dutch Agency.

Dutch's health regulator had audited Sun Pharma's Halol unit on August 25, 2017.

Mobile Users Addition: Bharti Airtel has added 43 lakh users in November while Reliance Jio, the part of Reliance Industries, added 61.2 lakh users in same month.

Idea Cellular and Vodafone, which are going to merge in current year, added 32 lakh and 27 lakh users in November.

Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.

Buzzing: Share price of India Nippon Electricals advanced 10 percent intraday as board going to consider sub-division of equity shares of the company.

The company has been decided to convene a meeting of the board of directors on January 29 to consider the unaudited financial results of the company for the quarter ended December 31, 2017.

The board will also consider the proposal of sub-division of equity shares of the company. The board will consider payment of an interim dividend for the year ending March 31, 2018. The rate, quantum, date of payment of interim dividend and the record date, if declared, will be intimated soon after the meeting.

Lupin outlook: Lupin is aiming for a bigger thrust on the USD 54-billion complex generics market as it tries to insulate itself from increasing competition and consolidation of distribution channel in US in plain vanilla copycat drugs.

Out of USD 98-billion products under development 55 percent will come from complex categories like biosimilars, inhalation, depot injectables, opthalmic and topical dermatological drugs, the company said in its presentation at JP Morgan Healthcare conference in San Francisco, US.

Lupin—India’s number two company by sales—is banking on the inhalation pipeline worth USD 17 billion in the next three years. It said it is in discussions with the US FDA to explore opportunities to accelerate development timeline for inhalation programs.

Results Date: Car maker Maruti Suzuki said the meeting of the board of directors is scheduled to be held on Thursday, January 25 to consider and approve the unaudited financial results for the quarter ended on December 31, 2017.

 Market Outlook: "We expect strong momentum to continue for equity market over FY19 due to revival in earnings after teething problems of GST, low base of demonetisation, increasing focus of government on infrastructure development even at the cost of fiscal slippage and favourable global headwinds with favourable commodity prices," Abhinav Gupta - President, Capital Markets - Share India Securities said in an interview to Moneycontrol.

Increasing government spend will lead to higher purchasing power and we expect earnings to grow at around 17-18 percent over next year, he added.

The research house has maintained its year-end Nifty target at 12,500 in line with current multiples and pricing in the earning growth over the course of year. Indian markets currently in pre-budget rally might see a small correction which we believe would be a buying opportunity.

Crude Oil Update: Oil prices held near three-year highs, supported by a surprise drop in US production and lower crude inventories, although analysts increasingly warned of signs that fuel markets have overheated.

US West Texas Intermediate (WTI) crude futures were at USD 63.49 a barrel, 0.13 percent below their last settlement but still close to a December 2014 high of USD 63.67 per barrel reached the previous day.

Brent crude futures were at USD 69.09 a barrel, 0.16 percent below their last finish. That was also close to the previous day's high of USD 69.37 a barrel, which was the highest level since an intraday spike in May 2015 and, before that, in December 2014.

Market Check: Benchmark indices continued to be rangebound in morning but the broader markets outperformed, with the Nifty Midcap rising 0.24 percent. Investors focussed on corporate earnings.

The 30-share BSE Sensex was up 3.41 points at 34,436.48 and the 50-share NSE Nifty slipped 7.30 points to 10,624.90.

About 1,268 shares advanced against 959 declining shares on the BSE.

Buzzing: Share price of Som Distilleries and Breweries touched 52-week high of Rs 262.90, gaining nearly 12 percent in morning as investor Porinju  Veliyath bought stake in the company.

On January 10, 2018 Porinju V Veliyath bought 1,50,000 shares of the company at Rs 197.95.

EQ India Fund also bought 5,00,000 shares of the company at Rs 197 on the NSE.

Rupee Trade: The rupee weakened 12 paise to trade at 63.71 against the US dollar in morning session at the Interbank Foreign Exchange on increased demand for the American currency from banks and importers.

Foreign fund outflows and rising crude oil prices also weighed on the rupee sentiment.

Crude oil prices were ruling at around three-year high levels, putting pressure on the rupee as India is a major oil importer.

Yesterday, the rupee had bounced back to end higher by 11 paise at 63.60 against the US currency on bouts of dollar selling by exporters and corporates.

Satyam Case: Finding Price Waterhouse guilty in the multi-crore Satyam scam, Sebi today barred its network entities from issuing audit certificates to any listed company in India for two years and ordered disgorgement of over Rs 13 crore wrongful gains from the audit major and its two erstwhile partners who worked on the IT major's accounts.

The market regulator's order comes after nine years post the scam at Satyam Computer Services came to light and after two failed attempts by auditor major Price Waterhouse to settle the case through consent mechanism.

This is also one of the most stringent orders passed by any regulator against a Big Four audit major.

Buzzing: Shares of GE Power India rose 5.6 percent in the early trade on contract win worth Rs 818.3 crore.

The company has been awarded a contract worth approximately Rs 818.3 crore by Navayuga Engineering Company.

The contract includes design, engineering, manufacturing, supply, erection, testing and commissioning of 12 Nos., 80 MW capacity vertical full kaplan turbine generator units along with all associated auxiliary and ancillary equipment.

IPO Subscription: The initial public offer (IPO) of Apollo Micro Systems, which caters primarily to the defence and aerospace sectors, was subscribed 2.14 times on the first day of bidding on Wednesday.

The IPO, to raise Rs 156 crore, received bids for 88,60,500 shares against the total issue size of 41,44,955 shares, data available with the NSE showed.

The portion reserved for qualified institutional buyers (QIBs) was subscribed 32 peipocent, non institutional investors 51 per cent and retail investors 3.78 times.

Market Check: Equity benchmarks were flat in opening on Thursday as investors await third quarter earnings of Infosys, TCS and IndusInd Bank.

The 30-share BSE Sensex was down 2.74 points at 34,430.33 and the 50-share NSE Nifty fell 7.20 points to 10,625.

About 780 shares advanced against 536 declining shares on the BSE.

Infosys, Hindalco and HCL Technologies were early gainers.

Wipro, Yes Bank, Bajaj Finance, Cipla, HPCL, L&T, Eicher Motors, Axis Bank and ICICI Bank were early losers.

Jai Corp, Prism Cement, GVK Power, Welspun India, Indiabulls Real, JSW Energy and NMDC gained 1-8 percent.

MORE WILL UPDATE SOON!!