Weekly Outlook (April 11, 2016 – April 13, 2016):
Nifty weekly performance (April 04, 2016 – April 08, 2016)):
Indian indices ended the week on a negative note. For the entire week, the BSE Sensex was down by 2.4% and the NSE Nifty was down by 2%.
Bank Nifty nosedived 3.4% as the Reserve Bank of India (RBI) cut its repo rate by 0.25%.
The index lost its momentum as it hit multiple resistances. It has closed below the 13 EMA for the first time after a month. It has also closed below the 7,600 level.
It seems that the index is now trapped in a broad range of 7,800 to 7,400. Trading activity is likely to remain lackluster next week as traders will want to avoid taking any major bets ahead of the long weekend.
Nifty Prediction for Week (April 11, 2016 – April 13, 2016):
Support for the index lies in the zone of 7500 to 7550 from where the index has broken down after making the double bottom pattern and 100 Daily SMA is lying. If the index manages to close below these levels then the index can drift to the levels of 7400 where the index has opened with the gap up on 03/03/2016 and short term moving averages are lying.
Minor resistance for the index lies in the zone of 7720 where the index has opened gap down on 07/01/2016. Resistance for the index lies in the zone of 7900 where 200 & 500 Daily SMA is lying. If the index manages to close above these levels then the index can move to the levels of 8100 where trend-line joining earlier highs is lying.
Broad range for the week is seen from 7400 on downside to 7800 on upside.
Weekly News and Highlights:
1) The US Federal Reserve waved the caution flag on interest rate hikes later this year. Fed officials said a rate increase in April would signal an inappropriate sense of urgency.
Last month, the US Fed not only left the rates untouched but also signalled that it would expect to raise its benchmark rate just twice this year. This was as against the four interest rate hikes this year predicted by the Fed earlier. The focal question for now is will the Fed raise interest rates in its meeting later this month or leave them untouched?
Further, data showed that the US economy’s service sector expanded in March. The Institute for Supply Management (ISM) said its index of non-manufacturing activity rose to 54.5 in March. This was as against 53.4 for the month of February. The business activity index rose to 59.8 from 57.8 the month before. Also, the employment index rose to 50.3 from 49.7 a month earlier. This suggests business conditions in the US are moving positively.
The US Energy Information Administration (EIA) released its weekly petroleum status report on April 6, 2016. It reported that the US crude oil inventory fell to 529.9 million barrels for the week ending April 1, 2016. This comes as a welcome breather for crude oil, which has faced selling pressure the last couple of months amid worries of a global supply glut. The data cheered trading sentiments across futures trading markets.
2)Bank of Japan (BOJ) governor Haruhiko Kuroda said that the central bank was ready to take additional monetary easing steps to hit the bank's 2% inflation target. Also, Japanese prime minister Shinzo Abe said that countries should avoid seeking to weaken their currencies with ‘arbitrary intervention’. These comments suggest that the authorities in Japan are cautious towards arresting the yen’s appreciation. One shall note that the Bank of Japan adopted negative interest rates late in January. However, the move did little to weaken the yen so far.
India:
3) RBI slashed repo rate (the rate at which banks borrow money from the RBI) 0.25% to 6.5%
RBI reduced the minimum daily maintenance of the cash reserve ratio (CRR) from 95% to 90%, effective April 16, 2016. However, it kept the cash reserve ratio and statutory liquidity ratio unchanged.
The RBI expects CPI inflation around 5% in 2016-17 and the economy to grow 7.6% in FY17.
While the above rate cut was along the expected lines, what surprised was the RBI's assurance of steady infusion of liquidity. The central bank announced that it would infuse a large amount of liquidity. This will be done through either bond purchases or by buying dollars.
The central bank announced open market operations (OMO) to buy bonds to inject Rs 150 billion into the system this week.
4) Bharat Heavy Electricals Limited (BHEL) recently declared its FY16 provisional earnings. The earnings showed strong order inflows for the company at Rs 437 billion as against Rs 308 billion in the year ago period.
Further, the company has commissioned an all-time high power generation capacity of over 15,000 megawatt (MW) in 2015-16. With the commissioning of this capacity, the worldwide installed base of power generating equipment supplied by BHEL has exceeded 170 GW (1,000 MW is equal to 1 GW). This 15,000 MW included the highest-ever power generation capacity addition of 13,061 MW to the Indian utility segment. This was recorded 59% higher over the previous year.
BHEL is an engineering and manufacturing company. The company in 2015-16 has forayed into new markets with maiden orders from Belgium and Mozambique, expanding its global footprint to 78 countries. Also, the company during the year filed the highest-ever 477 patents and copyrights in a year, enhancing the company's intellectual capital to 3,441.
COMMODITIES - GOLD
Gold witnessed buying interest during most of the days of the week. On Monday, it opened lower as against its previous week's closing. This was seen as investors reduced their exposure towards the commodity after tracking the better-than-expected US jobs report released last week that stoked speculation for a US interest rate hike. However, these losses were limited as gold jumped 1% on Tuesday. The rise came as Asian stocks fell amid mixed views on the outlook for Federal Reserve monetary policy. Going forward, gold managed to continue this uptrend. Prices traded in the green on safe-haven demand for the metal amid a sell-off in equities. Finally, gold hold on to this northward rally and ended its session on a positive note. The MCX Gold June contract opened the session at 28,416.00/10 grams. It traded at a high of 29,152.00/10 grams before finally closing the session at 29,131.00/10 grams.
Also Read:
1) As per our Nifty Weekly View , nifty has fallen last week .
2) Our latest recommendation -SML Isuzu Ltd is up by 7.2 % [ Techno Funda Stocks Recommendations -6th April 2016 ]
Indian indices ended the week on a negative note. For the entire week, the BSE Sensex was down by 2.4% and the NSE Nifty was down by 2%.
Bank Nifty nosedived 3.4% as the Reserve Bank of India (RBI) cut its repo rate by 0.25%.
The index lost its momentum as it hit multiple resistances. It has closed below the 13 EMA for the first time after a month. It has also closed below the 7,600 level.
It seems that the index is now trapped in a broad range of 7,800 to 7,400. Trading activity is likely to remain lackluster next week as traders will want to avoid taking any major bets ahead of the long weekend.
Nifty Prediction for Week (April 11, 2016 – April 13, 2016):
Support for the index lies in the zone of 7500 to 7550 from where the index has broken down after making the double bottom pattern and 100 Daily SMA is lying. If the index manages to close below these levels then the index can drift to the levels of 7400 where the index has opened with the gap up on 03/03/2016 and short term moving averages are lying.
Minor resistance for the index lies in the zone of 7720 where the index has opened gap down on 07/01/2016. Resistance for the index lies in the zone of 7900 where 200 & 500 Daily SMA is lying. If the index manages to close above these levels then the index can move to the levels of 8100 where trend-line joining earlier highs is lying.
Broad range for the week is seen from 7400 on downside to 7800 on upside.
Weekly News and Highlights:
1) The US Federal Reserve waved the caution flag on interest rate hikes later this year. Fed officials said a rate increase in April would signal an inappropriate sense of urgency.
Last month, the US Fed not only left the rates untouched but also signalled that it would expect to raise its benchmark rate just twice this year. This was as against the four interest rate hikes this year predicted by the Fed earlier. The focal question for now is will the Fed raise interest rates in its meeting later this month or leave them untouched?
Further, data showed that the US economy’s service sector expanded in March. The Institute for Supply Management (ISM) said its index of non-manufacturing activity rose to 54.5 in March. This was as against 53.4 for the month of February. The business activity index rose to 59.8 from 57.8 the month before. Also, the employment index rose to 50.3 from 49.7 a month earlier. This suggests business conditions in the US are moving positively.
The US Energy Information Administration (EIA) released its weekly petroleum status report on April 6, 2016. It reported that the US crude oil inventory fell to 529.9 million barrels for the week ending April 1, 2016. This comes as a welcome breather for crude oil, which has faced selling pressure the last couple of months amid worries of a global supply glut. The data cheered trading sentiments across futures trading markets.
2)Bank of Japan (BOJ) governor Haruhiko Kuroda said that the central bank was ready to take additional monetary easing steps to hit the bank's 2% inflation target. Also, Japanese prime minister Shinzo Abe said that countries should avoid seeking to weaken their currencies with ‘arbitrary intervention’. These comments suggest that the authorities in Japan are cautious towards arresting the yen’s appreciation. One shall note that the Bank of Japan adopted negative interest rates late in January. However, the move did little to weaken the yen so far.
India:
3) RBI slashed repo rate (the rate at which banks borrow money from the RBI) 0.25% to 6.5%
RBI reduced the minimum daily maintenance of the cash reserve ratio (CRR) from 95% to 90%, effective April 16, 2016. However, it kept the cash reserve ratio and statutory liquidity ratio unchanged.
The RBI expects CPI inflation around 5% in 2016-17 and the economy to grow 7.6% in FY17.
While the above rate cut was along the expected lines, what surprised was the RBI's assurance of steady infusion of liquidity. The central bank announced that it would infuse a large amount of liquidity. This will be done through either bond purchases or by buying dollars.
The central bank announced open market operations (OMO) to buy bonds to inject Rs 150 billion into the system this week.
4) Bharat Heavy Electricals Limited (BHEL) recently declared its FY16 provisional earnings. The earnings showed strong order inflows for the company at Rs 437 billion as against Rs 308 billion in the year ago period.
Further, the company has commissioned an all-time high power generation capacity of over 15,000 megawatt (MW) in 2015-16. With the commissioning of this capacity, the worldwide installed base of power generating equipment supplied by BHEL has exceeded 170 GW (1,000 MW is equal to 1 GW). This 15,000 MW included the highest-ever power generation capacity addition of 13,061 MW to the Indian utility segment. This was recorded 59% higher over the previous year.
BHEL is an engineering and manufacturing company. The company in 2015-16 has forayed into new markets with maiden orders from Belgium and Mozambique, expanding its global footprint to 78 countries. Also, the company during the year filed the highest-ever 477 patents and copyrights in a year, enhancing the company's intellectual capital to 3,441.
COMMODITIES - GOLD
Gold witnessed buying interest during most of the days of the week. On Monday, it opened lower as against its previous week's closing. This was seen as investors reduced their exposure towards the commodity after tracking the better-than-expected US jobs report released last week that stoked speculation for a US interest rate hike. However, these losses were limited as gold jumped 1% on Tuesday. The rise came as Asian stocks fell amid mixed views on the outlook for Federal Reserve monetary policy. Going forward, gold managed to continue this uptrend. Prices traded in the green on safe-haven demand for the metal amid a sell-off in equities. Finally, gold hold on to this northward rally and ended its session on a positive note. The MCX Gold June contract opened the session at 28,416.00/10 grams. It traded at a high of 29,152.00/10 grams before finally closing the session at 29,131.00/10 grams.
Also Read:
1) As per our Nifty Weekly View , nifty has fallen last week .
2) Our latest recommendation -SML Isuzu Ltd is up by 7.2 % [ Techno Funda Stocks Recommendations -6th April 2016 ]
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