Weekly Outlook (March 14, 2016 – March 18, 2016)
Nifty weekly performance (March 08, 2016 – March 11, 2016):
Indian Indices witnessed marginal gains due to lack of major domestic and global cues. The BSE Sensex and NSE Nifty both gained 0.3% for the week.The index consolidated in a tight range for all four trading session of the week. The Nifty was range bound between 7550 and 7440 most of the week.This range will restrict Nifty's moves on an immediate basis.
Nifty Prediction for Week (March 14, 2016 – March 18, 2016):
Support for the index lies in the zone of 7230 to 7280 from where the index has broken out of the short term top. If the index manages to close below this levels then the index can drift to the levels of 6900 where channel support for the index is lying.
Index has closed around the resistance zone of 7500 to 7550 from where the index has broken down after making the double bottom pattern. If the index manages to close above this levels then the index can move to the levels of 7700 where 100 Daily SMA is lying.
The index is positioned around the trend-line support which is holding the index in every correction since February – 2015. If the index can hold this levels and if the global turmoil settles then the index can witness a significant bounce which can take the index to the levels of 8000.
Broad range for the week is seen from 7300 on downside to 7700 on upside.
Weekly News and Highlights:
1)On Thursday, the ECB announced aggressive moves that lit a fire under European stocks. The ECB cut its main interest rate from 0.05% to 0% and cut its bank deposit rate from minus 0.3% to minus 0.4%. Four long-term loan schemes were also announced, with banks given incentives to boost credit growth with the help of cheaper rates. Borrowing terms in the scheme can be as low as the minus 0.04% rate on the deposit facility, meaning the ECB will pay banks to take its cash if they show they are lending it to households and firms.
Further, the bank also said that it will expand its quantitative easing program from 60 billion euros to 80 billion euros a month to boost inflation and revive a stuttering eurozone economy. The ECB also cut its eurozone inflation projections. The bank now expects inflation to be just 0.1% this year, substantially lower than the previous estimate of 1%. The bank stated that Inflation should rise to 1.3% in 2017 and 1.6% the following year, according to its estimates. Moreover, the ECB cut its growth forecasts to an increase of 1.4% this year - down from 1.7%.
ECB president Mario Draghi said that the bank cut eurozone inflation projections to reflect the recent decline in oil prices. He also warned that risks to economic growth across the 19 countries that use the euro remained tilted to the downside.
European stocks soared and the euro plunged and shot up again on the back of these developments.
2) In other news, China's exports fell 25.4% YoY in February. Further, imports declined 13.8% YoY. These numbers were far worse than expected. Analysts polled by Reuters had expected a 12.5% drop in February exports, and a 10% drop in imports. The decline in exports was recorded as the steepest since May 2009. Further, China's trade surplus came in at US$32.59 billion in February as against analysts' expectations of US$50.15 billion. The data raised doubts over external demand for Chinese goods and deepened concerns about the health of the world's second-largest economy.
3)Japan's GDP contracted at a 1.1% annualised pace in the last quarter. The revised figures released Tuesday compared with a 1.4% expansion in the July-September quarter. They showed a modest improvement over the previous estimate of a 1.4% contraction in October-December. This came in as a further evidence the world's third largest economy is failing to gain traction despite unprecedented efforts by the central bank to spur more growth.
India:
The Union cabinet cleared a proposal to amend the mines and mineral law. The law now allows the transfer of captive mines granted through non-auction route. Earlier, the act allowed transfer of the mining license only for the mines that have been auctioned. Most of the operational limestone mines in India were allotted and not auctioned. This also hindered the mergers and acquisition activities in the cement space. The amendment of this clause is likely to spur mergers and acquisitions in the cement industry. Given that limestone is a key raw material in the cement-making process, it is difficult to execute the sale of a cement unit without selling the related limestone mines as part of the deal.
Further, The Rajya Sabha passed a landmark real estate bill on Thursday. The bill promised to secure the interests of homebuyers and developers in equal measure and remove corruption and inefficiency from the sector. The bill has a provision for imprisonment of up to three years if developers are found guilty of fraud. Further, the bill made it mandatory for developers to deposit 70% of money from buyers in a third-party bank account and stated that builders will be responsible for fixing structural defects for five years after transferring the property to a buyer.
Investors are now keeping an eye on next week's Federal Reserve meeting.
Indian Indices witnessed marginal gains due to lack of major domestic and global cues. The BSE Sensex and NSE Nifty both gained 0.3% for the week.The index consolidated in a tight range for all four trading session of the week. The Nifty was range bound between 7550 and 7440 most of the week.This range will restrict Nifty's moves on an immediate basis.
Nifty Prediction for Week (March 14, 2016 – March 18, 2016):
Support for the index lies in the zone of 7230 to 7280 from where the index has broken out of the short term top. If the index manages to close below this levels then the index can drift to the levels of 6900 where channel support for the index is lying.
Index has closed around the resistance zone of 7500 to 7550 from where the index has broken down after making the double bottom pattern. If the index manages to close above this levels then the index can move to the levels of 7700 where 100 Daily SMA is lying.
The index is positioned around the trend-line support which is holding the index in every correction since February – 2015. If the index can hold this levels and if the global turmoil settles then the index can witness a significant bounce which can take the index to the levels of 8000.
Broad range for the week is seen from 7300 on downside to 7700 on upside.
Weekly News and Highlights:
1)On Thursday, the ECB announced aggressive moves that lit a fire under European stocks. The ECB cut its main interest rate from 0.05% to 0% and cut its bank deposit rate from minus 0.3% to minus 0.4%. Four long-term loan schemes were also announced, with banks given incentives to boost credit growth with the help of cheaper rates. Borrowing terms in the scheme can be as low as the minus 0.04% rate on the deposit facility, meaning the ECB will pay banks to take its cash if they show they are lending it to households and firms.
Further, the bank also said that it will expand its quantitative easing program from 60 billion euros to 80 billion euros a month to boost inflation and revive a stuttering eurozone economy. The ECB also cut its eurozone inflation projections. The bank now expects inflation to be just 0.1% this year, substantially lower than the previous estimate of 1%. The bank stated that Inflation should rise to 1.3% in 2017 and 1.6% the following year, according to its estimates. Moreover, the ECB cut its growth forecasts to an increase of 1.4% this year - down from 1.7%.
ECB president Mario Draghi said that the bank cut eurozone inflation projections to reflect the recent decline in oil prices. He also warned that risks to economic growth across the 19 countries that use the euro remained tilted to the downside.
European stocks soared and the euro plunged and shot up again on the back of these developments.
2) In other news, China's exports fell 25.4% YoY in February. Further, imports declined 13.8% YoY. These numbers were far worse than expected. Analysts polled by Reuters had expected a 12.5% drop in February exports, and a 10% drop in imports. The decline in exports was recorded as the steepest since May 2009. Further, China's trade surplus came in at US$32.59 billion in February as against analysts' expectations of US$50.15 billion. The data raised doubts over external demand for Chinese goods and deepened concerns about the health of the world's second-largest economy.
3)Japan's GDP contracted at a 1.1% annualised pace in the last quarter. The revised figures released Tuesday compared with a 1.4% expansion in the July-September quarter. They showed a modest improvement over the previous estimate of a 1.4% contraction in October-December. This came in as a further evidence the world's third largest economy is failing to gain traction despite unprecedented efforts by the central bank to spur more growth.
India:
The Union cabinet cleared a proposal to amend the mines and mineral law. The law now allows the transfer of captive mines granted through non-auction route. Earlier, the act allowed transfer of the mining license only for the mines that have been auctioned. Most of the operational limestone mines in India were allotted and not auctioned. This also hindered the mergers and acquisition activities in the cement space. The amendment of this clause is likely to spur mergers and acquisitions in the cement industry. Given that limestone is a key raw material in the cement-making process, it is difficult to execute the sale of a cement unit without selling the related limestone mines as part of the deal.
Further, The Rajya Sabha passed a landmark real estate bill on Thursday. The bill promised to secure the interests of homebuyers and developers in equal measure and remove corruption and inefficiency from the sector. The bill has a provision for imprisonment of up to three years if developers are found guilty of fraud. Further, the bill made it mandatory for developers to deposit 70% of money from buyers in a third-party bank account and stated that builders will be responsible for fixing structural defects for five years after transferring the property to a buyer.
Investors are now keeping an eye on next week's Federal Reserve meeting.
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