The Market Soars As Heavyweights Report Big Profits

Tide of Volatility Continues ahead of RBI MPC outcome

Our Analysis

After continuing the record highs till Tuesday the market came to a halt after RBI Monetary Policy Committee (MPC) hiked Interest rate by 25 bps, 2nd consecutive hike. On Friday, the market rebounded which shows that in every decline investors are taking the opportunity to enter in fundamentally strong stocks. Earnings remained strong by heavyweights like Indiabulls Housing, ONGC, HDFC along with good microdata. For next week, GBPs GDP data, US oil inventories along with trade tariff war, oil prices, movement of rupee & earnings will be the key events to track.

This Weeks Market Highlights:

Benchmark Indices:

1. The benchmark indices started the week on a strong note as Sensex rose over 150 points while Nifty above 11,300.

2. Nifty PSU banks surged 4.3% followed by banking & financials, pharma & metal while IT index corrected 0.5%. The Nifty midcap index closed 20 points higher.

3. On Tuesday, the market continued uptrend for the 4th day to hit fresh high as Sensex rose 112 points while Nifty closed above 11,350.

4. On Wednesday, momentum came on equity indices came to a halt as Sensex fell 85 points & Nifty closed below 11,350 after RBI MPC hiked interest rate.

5. On Thursday, the market ended on a weak note as Sensex dipped 350 points while Nifty below 11,250, amid weak global cues.

6. Baring Nifty pharma & metal all sectoral indices closed in red led by banking, financials, auto, realty and IT. The Nifty midcap index closed tad higher, was up 21 points.

7. On Friday, Nifty reclaimed 11,300

Broader Index & Global Market:

- This week again broader market outperformed benchmark indices on strong earnings as Nifty midcap & smallcap both rises 2-3% against flat indices. On sectoral indices, Nifty pharma, FMCG, metal & IT rose 1.5-5% while auto, realty, banking & financials remained under selling pressure.

- Global market especially the US market remained under pressure while the European market along with Asian market remained under pressure as BoE hiked interest rate while the threat of trade war remained high. Crude oil prices eased a bit on the back of high production. Next week, several macro data from US and GBP will be presented along with US crude oil inventories data will also be presented.

Movers & Shakers

Aditya Birla Fashion & Retail Ltd. zoomed more than 20% this week after the company reported the net profit of Rs.60 million in June quarter (Q1FY19) against net loss of Rs.600 million last fiscal year on the back of strong operational performance. The company said the outlook for the year is positive as all of ABFRL major brands have a well-charted growth path.

Shares of Redington India Ltd. dipped over 15% after its net profit declined 32.08% to Rs.26.46 crore in the quarter ended June 2018 as against Rs.38.96 crore during the previous quarter ended June 2017. Sales rose 5.14% to Rs.3,570.55 crore in the quarter ended June 2018 as against Rs.3,395.99 crore during the previous quarter ended June 2017.

Key Market Drivers

RBIs Policy Review:-

RBI hikes Repo Rate by 25 bps to 6.50%, Reverse repo rate at 6.25%.

MPCs remains optimistic on GDP growth retained at 7.4% for FY19.

MFS, Bank rate adjusted at 6.75%.

RBI's Monetary Policy Committee maintains neutral stance.

Inflation is projected at 4.6% in Q2, 4.8% in H2 of 2018-19 and 5.0% in Q1.

Banks, NBFCs allowed to co-originate loans for priority sector.

The U.S. Federal Reserve kept interest rates unchanged on Wednesday but characterized the economy as strong, keeping the central bank on track to increase borrowing costs in September. The Fed said economic growth has been rising strongly and the job market has continued to strengthen while inflation has remained near the central banks 2% target since its last policy meeting in June when it raised rates. The Feds decision left its benchmark overnight lending rate in a range of 1.75% to 2.00%.

Event Watch

Indias Forex Reserve (USD) data will be on 10th August 2018.

Q1 FY19 Result:- M&M, HPCL, Eicher Motors, Bharat Forge, Divis Labs, Wockhardt, Arvind, Britannia, Max Financial, Adani Ports, Ujjivan Financial, Adani Enterprises, Mphasis, Edelweiss, PNB, NMDC, GNFC, MRF.

Global:- US Oil Inventories data will be on 8th August 2018 & Core CPI for July (YoY & MoM) data will be on 10th July 2018. GBP GDP for Q2 (QoQ & YoY) will be on 10th August 2018.

Stocks To Watch

Indiabulls Housing Finance Ltd. is on the upside while JK Lakshmi Cement Ltd. is on the downside.

 

ABOUT AUTHOR

Niveza Editorial Desk : We are a team of stock market nerds trying to stay ahead of the herd. We spend our grey cells everyday to a pave a smooth road for our clients in the shaky world of stock market. While tracking the mood swings of the market we bring our clients the most rewarding deals.

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