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Fortnightly Market View: Reflation Is Here
The government has stepped in to boost growth. This should keep the market buoyant 
 
By the time you read this, the biggest yearly event for financial markets—the Union Budget—would have been presented. Whether the Budget is ‘transformative’ or not will be known by then. I would be pleasantly surprised if it is. So far, there is nothing the Modi government has done which can...
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Nifty, Sensex, Bank Nifty headed higher – Weekly closing report
Nifty will weaken only on a close below 8,820
 
The S&P BSE Sensex closed the week that ended on 28th February at 29,362 (up 130 points or 0.45%), while the NSE’s CNX Nifty closed at 8,902 (up 68 points or 0.77%). In the previous week, we had mentioned that Nifty may be headed lower, if it closes below 8,750, while Bank Nifty was already in a downtrend.
 
On Monday, Nifty slipped lower in the noon session and closed at 8,755 (down 79 points or 0.89%) after hitting a five-day low. There were uncertainties about Bills being passed in the Budget session. The Prime Minister reached out to the opposition, saying the Government will listen to their views, and efforts will be made to discuss all issues of national importance.
Rating agency Standard & Poor's warned that India's weak fiscal and debt indicators, coupled with the low-income levels, "constrain" the sovereign rating.
 
On Tuesday, Nifty witnessed a highly volatile session but managed to close marginally higher. Nifty closed at 8,762 (up 7 points or 0.08%). We anticipated the market to continue witnessing a weak move. The union government said that it was hopeful that the much-delayed Goods and Services Tax (GST) bill will be passed during the ongoing budget session. The Finance Commission has suggested raising share of states in central taxes to 42% from current 32%.
 
Gold prices dipped below the Rs27,000-mark by losing another Rs100 to trade at a 10-week low of Rs26,970 per 10 gram.
 
Weakness on the Nifty continued on Wednesday. Although it opened higher in the noon session it gave up all the intra-day gain and closed marginally higher. Nifty closed at 8,767 (up 5 points or 0.06%).  
 
Rating agency Moody's Investors Service said its assessment of India's credit ratings will be determined mainly by the extent of the country's fiscal reforms, and not on recent revisions to its economic growth data. Moody's rates India at "Baa3", the lowest investment grade rating, with a "stable" outlook.
 
Much awaited railway budget did not boost up the market sentiment and Nifty moved lower. After hitting nine-day low on Thursday Nifty closed at 8,684 (down 83 points or 0.95%). Railway Minister Suresh Prabhu said the railways will invest Rs8.5 lakh crore over the next five years. Ratings agency S&P raised its India GDP growth forecast to 7.9% from 6.2% for the year ending March 2016.
 
On Friday, Nifty moved higher throughout the session and closed near the day’s high. Nifty closed at 8,845 (up 161 points or 1.85%) in anticipation of a good budget.
 
In the Economic Survey 2014-15, Finance Minister Arun Jaitley stated that the government remains committed to fiscal consolidation and that the deficit target of 4.1% as envisaged in the Budget 2014-15 will be met.
 
The much awaited Budget for 2015-16 was welcomed with a positive opening on the Nifty. During the speech, it witnessed a highly volatile session with the benchmark giving up all the gains made at the beginning of the session. Post the budget speech, the market traded in negative but started rallying around 2 and finally closed higher. Nifty closed at 8,902 (up 57 points or 0.65%).
 
The government announced that corporate tax rate will be reduced from the current 30% to 25% over the next four years, will be defer the roll out of General Anti Avoidance Rule by two years until 1 April 2017 and increased the excise duty on cigarettes. It also proposed to merge Forward Markets Commission with Sebi, increase in service tax rate to 14% from 12% plus Education Cess. GST is to be put in place by 1 April 2016. It has abolished wealth tax and replaced it with an additional surcharge of 2% on the super-rich, with a taxable income of over Rs1 crore annually.
 
Of the 1,449 companies on the NSE, 516 companies closed in the green, 902 companies closed in the red while 31 companies closed flat.
 
Out of the 27 main sectors tracked by Moneylife, top five and the bottom five sectors for this week were:
 

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Nifty, Sensex, Bank Nifty turn around on Economic Survey – Friday closing report

Nifty’s bullishness will stall if it closes below 8,760

 

We had mentioned in Thursday’s closing report that the move on NSE’s CNX Nifty maybe weak but it may regain strength on a close above 8,750. The 50-share benchmark opened Friday in the positive and made a gradual upmove throughout the session. At the end of the session, it hit its day’s high and closed near to it. The market was waiting for the Economic Survey for 2014-15 to be tabled in the Parliament. The Survey was welcomed by the market.
 
S&P BSE Sensex opened at 28,865 while Nifty opened at 8,730. After hitting a low at 28,837 and 8,717, the benchmarks moved higher to hit a high at 29,254 and 8,857, respectively. Sensex closed at 29,220 (up 473 points or 1.65%) while Nifty closed at 8,845 (up 161 points or 1.85%). Bank Nifty too followed similar pattern of trading. It opened at 18,660 and moved from the low of 18,655 to a high of 19,114 and closed at 19,075 (up 536 points or 2.89%). NSE recorded a higher volume of 126.82 crore shares. India VIX fell 4.91% to close at 19.5700.
 
The stock exchanges will be open on Saturday as the Finance Minister presents the first full-fledged budget of the Narendra Modi government.
 
While tabling the Economic Survey 2014-15, Finance Minister Arun Jaitley stated that the government remains committed to fiscal consolidation and that the deficit target of 4.1% as envisaged in the Budget 2014-15 will be met. As per a medium-term fiscal strategy, there is a need to reduce fiscal deficit to the established target of 3% of GDP.
 
Annual GDP growth was seen at over 8% for 2015-16 and double-digit economic growth trajectory maybe possible in future, hoped the survey.
 
According to the Economic Survey the e-commerce sector in the country is likely to witness a growth of over 50% in the next five years.
 
Coming back to Indian stock markets, Unitech (17.07%) was the top gainer in ‘A’ group on the BSE, despite the fact that a police probe was ordered for Unitech allegedly cheating its buyers. However, the upcoming budget and anticipation of sops for the sector moved the stock higher. Hathway Cable & Datacom (8.49%) was the top loser in ‘A’ group on the BSE.
 
Tata Power (5.43%) was the top gainer in the Sensex 30 pack. Tata Power SED in consortium with L&T is one of the two selected development agencies for prestigious “MAKE” program Battlefield Management System for the Indian Army. L&T (4.67%) was among the top two gainers in the pack.
 
Gail (1.07%) was the top loser in the Sensex 30 stock. The board of directors have approved payment of interim dividend for the FY 2014-15 @ 30% (Rs3 per equity share) on the paid-up equity share capital.
 
On Thursday, US indices had a mixed closing. The consumer-price index fell 0.7% in January 2015 from December 2014, the Labor Department said yesterday. Prices slipped 0.1% from a year earlier, marking the first year-over-year decline since October 2009. Weekly jobless claims rose to 313,000 last week, above the 283,000 in the previous week. Durable goods orders figures for January increased 2.8%, after a 3.4% decline in the prior month.
 
Asian indices had mixed closing. Shanghai Composite (0.36%) was the top gainer while Straits Times (0.68%) was the top loser. Japanese industrial production rose 4% in January 2015 -the second straight on-month increase, following the 0.8% increase in December 2014, data showed today. European indices were showing mixed trading. US Futures were trading marginally in the red.
 
German lawmakers reportedly signalled that they will approve an extension of Greece's bailout with an overwhelming majority in parliament today, although many will do so reluctantly amid fears that Athens will not deliver on its reform promises.
 

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