Equity Research Report Ways2Capital 26 june 2017

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Equity benchmark Index Nifty traded in a very narrow range last week by making a high of 9654 and low of 9561, but Indian shares showed good strength. Among the sectors, Financial Services and Auto were in top. Small Cap has given an upside movement of around 1% last week and closed at 7444 after making a high of 7473. Last week has been a boring week for the Market. The Indices have moved in a very tight range 94 points throughout week. The benchmark Nifty on 19 June Monday trading session opened at 9626 and made a high of 9673, after making a low of 9615. Nifty closed at 9657 levels, up by 69 points from its previous day close. Hotel stocks during Monday’s trade were gaining ground as the GST Council on Sunday has fixed the tax rate for hotel rooms costing between Rs 2,500 to Rs 7,500 at 18%. Logistics stocks on Tuesday’s trading session jumped as the Finance Minister Arun Jaitley during a press conference said that the GST switch-over will happen from June 30 midnight and roll-out on July-1. Globally, the rate hike by the Fed has taken the rates to 1.25 %. What no one realizes is that higher the rates go in the US, lesser is the cushion for a rate cut in India. Indian market may focus on RBI minutes, which termed as quite hawkish and RBI/MPC may not be in a mood to cut in Aug’17. All the eyes may be now on NPA resolution & IBC act. effectiveness apart from GST implementation & high probable short term disruption. Also, SEBI war on P-Notes may be in focus. The Progress of Monsoon and Goods and Services Tax will be closely watch for it’s impact on Market. Time and Price action Suggest that Nifty need to Sustain over 9540 level for Further up move toward 9580-9640 level. On the Flat side Sustaining below 9540 level may drag the index toward 9487-9400 Levels.

BANK NIFTY : – Bank Nifty last week made a high of 23630 and closed at 23503. Bank Nifty touched its all time high of 23807 level. The index opened at 23571 and closed at 23742. Today, Bank Nifty got good support from hopes of a quick NPA resolution by RBI IBC mechanism and a report that Govt may request RBI to defer Basel-III norms for the Indian Banks by another year as it may provide the Govt some relief for its obligation of huge recapitalization funds. But, RBI may not agree with this idea as it may cause Indian Bank’s rating downgrade. Asset quality pain for banks is expected to continue in fiscal year ended March 2018 due to restructuring by banks, weakness in some large corporate accounts and events like waiver of farm loans, credit rating agency ICRA said. As of now Bank Nifty need to Sustain above 23868-24096, On the Other side Sustaining below 23500 level may drag the index toward 23412-23338 level in near term.


Monsoon to be close to normal or above normal: IMD – Monsoon is expected to pick up pace later this week and likely to intensify its advancement in central and north India, said a senior IMD official, reported a national news agency. Till June 20, all India rainfall was 104%, said DS Pai, Director-Long Range Forecast, IMD in an interaction with a media outlet. “Overall we are close to normal or above normal monsoon,” said Pai. Monsoon is expected to advance to areas like Bihar, Chhattisgarh, Jharkhand and eastern part of Uttar Pradesh and Madhya Pradesh in the next 2-3 days. After June 26, it is expected that monsoon will progress faster in the northern part of the country.

NCAER pegs FY’18 GDP growth at 7.6% on normal monsoon – Economic think-tank NCAER has revised up its projection for the country’s economic growth to 7.6 per cent for the current fiscal, compared with the earlier prediction of 7.3 per cent on forecast of normal monsoon. In its quarterly review of the economy, NCAER said prospects for the agricultural sector in 2017-18 remain optimistic on forecast of good rains.  Recent estimates show that foodgrain production in 2016- 17 has touched a new record of 273.4 million tonnes or 8.7 per cent higher as compared to last year. Also, the level of water storage in the country’s main reservoirs in 2017-18 is better compared to last year. In fact, better than the average storage over the last ten years.  “The forecast for growth of Gross Domestic Product at market prices in 2017-18 is 7.6 per cent at constant (2011 -12) prices,” said the National Council of Applied Economic Research. The agency has also revised upward its forecast of GVA growth at 7.3 per cent for 2017-18 from its February estimate of 7 per cent. 

From 11% to 2.2%, five charts explain India’s vanishing inflation – Four years ago Indian inflation was running at more than 11 percent. Now it’s melted to a record low 2.2 percent, below Mexico, Turkey and the U.K., as the central bank’s battle against price pressures gains traction.  The slide has prompted the Reserve Bank of India, led by Urjit Patel, to slashed its inflation forecasts and led one members of its six-person monetary policy committee to break ranks at its June 6 announcement, stoking market speculation the bank could next cut rates, perhaps as early as August.  So what’s changed? Economists say cyclical or temporary issues like a stronger currency and weaker domestic demand, combined with structural factors such as better food management by Prime Minister Narendra Modi’s government are in play.  There are risks the cyclical factors could easily unwind, but for now, economists increasingly see structural factors winning out. Inflation is expected to hug the lower band of the RBI’s 2 percent to 3.5 percent forecast for the first half of the financial year ending in March and remain below the 3.5 percent to 4.5 percent target for the second half. 

Digital economy can reach $ 4 trillion in 4 years: Tech sector to government – Surpassing the government’s expectations to make India USD 1-trillion digital economy by 2022, technology companies today said it has potential to grow up to USD 4 trillion during the period. IT Minister Ravi Shankar Prasad, who chaired a meeting with industry captains to chalk out a growth plan, said the government will formulate a new set of strategies to support growth including a new electronics policy, software product policy and a framework for data security and protection. “There was unanimity among all the participants that USD 1-trillion digital economy is an understatement. India has the immense potential to go to USD 2 to 3 to 4 trillion digital economy potential,” Law and IT Minister Ravi Shankar Prasad told reporters after meeting with top industry leaders. The meeting was attended by top experts such as Nasscom President R Chandrashekhar, Google India’s Rajan Anandan, Wipro’s Rishad Premji, Indian Cellular Association National President Pankaj Mohindroo, NIIT Chairman Rajendra Pawar and Hike Messenger CEO Kavin Bharti Mittal, among others. 

CAD expected to be around 1.4 per cent of GDP in 2017: Nomura – : India’s current account deficit is expected to be around 1.4 per cent of GDP in 2017 compared to 0.6 per cent in 2016, owing to stronger domestic growth, says a report.  The Japanese financial services major Nomura has revised India’s 2017 CAD forecast to 1.4 per cent of GDP from 1.6 percent earlier, but still expects current account deficit to be higher than the 2016 figure.  Nomura expects India’s CAD to widen in 2017 against last year as import growth should pick up in the second half 2017 due to a stronger domestic recovery, even as protectionist policies will likely hurt services exports. 

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