Stocks
Nifty, Sensex deeply oversold – Weekly closing report
  • Nifty has to close above 7,600 for a rally to materialise
 
We had mentioned in last week’s closing report that Nifty, Sensex may record a minor bounce and that Nifty has to close above 7,670 for the first sign of a bullish trend. The market trend for most of the week was bearish on account of negative global cues and weak macroeconomic data. Weekly losses were around 2% or higher for the major indices, in spite of thin volumes. The trends of the major indices during the week are given in the table below:
 
Negative global trends, coupled with the upcoming third-quarter results and macro-economic data, depressed Indian equity markets on Monday. This resulted in the 30-scrip sensitive index (Sensex) of the Bombay Stock Exchange (BSE) provisionally close the day's choppy trade session down 109 points. Initially, both the bellwether indices opened on a negative note in sync with their Asian peers and last week's massive falls. Other Asian markets were deep in the red after Chinese stocks receded by 5%. However, the bellwether indices pared their losses as investors were attracted by a sizeable number of stocks that were trading at their yearly lows. Apart from value buying, short covering amidst thin volumes led the morning relief rally. However, markets soon resumed correction. In addition, investors were hopeful for a better third quarter (Q3) results by India Inc on the back of an economic recovery and low commodity prices. The Q3 earnings results will start coming out from Tuesday. However, the gains were soon capped by the long-liquidation positions and Friday's US-based data which showed a strengthening jobs market. The data hinted at a potential future rate hike. Another rate hike by the US Fed will lead more FPIs (foreign portfolio investors) away from emerging markets such as India, denting the equity and currency markets. Besides, caution prevailed over the upcoming domestic macro-data on industrial output, and retail inflation. Both the data points are slated to be released on Tuesday. The choppy trade session again led to value buying, but gains were soon ceded due to prevailing negative bias.
 
Caution over third-quarter results, coupled with anxiety over the upcoming macro-data points subdued the Indian equity markets on Tuesday. This led to the BSE Sensex to decline by 143 points. Initially, both the bellwether indices of the Indian equity markets made modest gains as investors were attracted by a sizeable number of stocks that are trading near their yearly lows. Besides value buying, short covering amidst thin volumes led to the morning relief rally. However, both the indices soon ceded their gains, as anxiety was stroked by the third quarter (Q3) results which will start coming in from Tuesday. Amongst the companies which will release their Q3 results on Tuesday are information technology (IT) major Tata Consultancy Services (TCS), Federal Bank and IndusInd Bank. In addition, long-liquidation positions and lacklustre Asian markets, too, dented investors' sentiments. Caution also prevailed over the upcoming domestic macro-data on industrial output, and retail inflation. Both the data points are slated to be released on Tuesday.
 
Positive European indices, coupled with short-covering and attractive prices, buoyed the Indian equity markets on Wednesday. This led to the S& P BSE Sensex to close the day's trade with a gain of 172 points. However, the indices soon ceded all their gains. Anxiety was stoked by the third quarter (Q3) results season that started on Tuesday. Long-liquidation positions and sliding Chinese markets, too, dented investors' sentiments on Wednesday.
 
Diminishing hopes of an interest rate cut, coupled with caution over the third quarter results and thin volumes depressed the Indian equity markets during a volatile late-afternoon trade session on Thursday. The bellwether indices' receded after making healthy gains as key macro-data showed acceleration in inflation trends. The rise in wholesale price index (WPI) diminished hopes of a rate cut by the country's apex bank and subdued investors' sentiments. Caution over the third quarter (Q3) results season, long-liquidation positions and sliding Asian markets, too, dented sentiments. Initially, the bellwether indices opened deep in the red, following lower closing of the US markets on Wednesday and a further plunge in oil prices. However, both indices pared their initial losses as healthy Q3 results, recovering European markets and short-covering restored investors' risk-taking appetite. Value buying at lower levels, which was prompted by attractive prices, supported the markets' upward movement.
 
Bearish global markets, coupled with disappointing macro-data and caution over the third quarter results, subdued Indian equity markets on Friday with S & P BSE Sensex provisionally closing 318 points in the red. Initially, both the bellwether indices opened on a firm note, following higher closing of the US markets on Thursday and value buying at lower levels. However, both indices soon ceded their initial gains due to bearish Asian markets, lack of fresh triggers and caution over Q3 results. Besides, the bellwether index receded after Thursday's macro-economic data showed acceleration in inflation trends. The rising wholesale price index (WPI), coupled with a higher annual retail inflation, have diminished hopes of a rate cut by the country's apex bank. Moreover, long-liquidation positions, sliding European markets and upcoming US macro-data dented sentiments.
 
Out of the 27 main sectors tracked by Moneylife, top five and the bottom five sectors for this week were:
 

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COMMENTS

LALIT SHAH

1 year ago

Picture abhi baki hey mere Dost sensex/Nifty likely to test new low before any rally or pullback
BAZAR ki chotli jaitly ke hath me hey
We see huge potential in selected smallcaps midcaps

Sanjeev Dhabre

1 year ago

Any analysis at what level(lower side) sensex can go from here?

REPLY

Suhas Patil

In Reply to Sanjeev Dhabre 1 year ago

It will not go below 22000.

LALIT SHAH

In Reply to Suhas Patil 1 year ago

Market in strong bears grip will stabilised in between 22000-20000

Traders' body sends legal notice to Salman over use of 'Khan Market' for his portal
CAIT, in the notice sent has asked Salman Khan to withdraw Khan Market from his portal, within seven days or be ready to face legal action
 
The Confederation of All India Traders (CAIT) has said it has sent a legal notice to actor Salman Khan over the usage of "Khan Market" name from his shopping portal to protect the brand name of the market in New Delhi designated as the most expensive retail location in India. Earlier this month, the Confederation had also sent a letter to Salman, which remained unanswered till day, CAIT said.
 
"What to say of withdrawing the name, Salman Khan in past more than 10 days did not think it proper to even to respond to communication which reflects his autocratic and adamant attitude having least botheration for feelings of traders and their natural right for using the name of Khan Market. It has highly disappointed the trading community," said Praveen Khandelwal, Secretary General of the CAIT.
 
CAIT, in the notice sent through its President Sanjeev Mehra, has asked the actor to withdraw the said name within seven days and with a warning that else the Association will left with no other alternative but to resort to legal action, CAIT said in a statement.
 
Salman Khan on his 50th birthday on 27 December 2015 had announced to launch his portal khanmarketonline.com, which was strongly resisted by Khan Market Trade Association. The Association had also made an appeal to the actor to withdraw the name of Khan Market from his portal.
 
Established in 1951, Khan Market was, last month, ranked the 24th most expensive retail location worldwide in a report by global real estate services firm Cushman & Wakefield.
 
"The name chosen by Salman Khan is more deceptive and infringes the rights of traders of Khan Market," Khandelwal had said.
 
In the legal notice, the Association, has charged Salman for fraudulent intention in using the name of Khan Market with a tendency to cause confusion and deception among members of trade, and commerce customers and the public in general as it enables him and his affiliate to pass of goods under the same name which is bound to cause damage and loss to the reputation of traders of Khan Market. 
 
"We will not allow anyone to encroach upon the goodwill earned by traders for the market in the last 65 years," Khandelwal added.
 
CAIT contended that things sold on 'khanmarketonline' would also be construed as sold by traders of the actual and physical Khan Market, leading to confusion and misunderstandings for consumers.
 
Describing Khan Market itself as a brand, CAIT said: "A name by custom/practice/usage over a long period of time by a group of persons becomes an intellectual property right of that group of persons is an integral part of principle of natural justice. Accordingly, the first lien of using the name 'Khan Market' lies with traders of Khan Market only."
 
CAIT National President BC Bhartia said that the act of Salman Khan is nothing short of hijacking the heritage of Khan Market. "He (Salman) is attempting to link his legacy with veteran freedom fighter Khan Abdul Gaffar Khan in whose honour the market has been given the name of Khan Market, which is not only a commercial market but an Institution in itself. Therefore, no one should attempt to encroach upon such a public asset," he added.

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Will IRDAI’s higher incentive to sell term plans, help consumers?
IRDAI has increased commission for selling term plans, which can boost sales, but online term plans will give a stiff competition to the offline ones. Clearly, IRDAI’s move is to boost sales not ensure that customers buy term plans knowing their positive features
 
The Insurance Regulatory and Development Authority of India (IRDAI) has higher commission for selling term plan to individual insurance agents and intermediaries. IRDAI draft guidelines are certainly a welcome move, which can help life insurance penetration in India with much of population grossly underinsured. Making the term plan sales attractive for agents may shift focus away from traditional (endowment, money-back and whole-life) and ULIPs (Unit Linked Insurance Policies). With commission being a percentage of premiums, term plans were less pushed due to lower premium when compared to insurance cum investment products. But, increase in the commission percentage could just do the trick of Indian population getting aware of importance of pure term plans.
 
 
 
IRDAI draft titled “Payment of commission or remuneration or reward to insurance agents and insurance intermediaries, regulations, 2016” have offered following commission structure for term plans –
 
 
 
IRDA draft guidelines states – “Where policies are procured direct by an insurer no commission or remuneration shall be payable either to insurance agents or to the insurance intermediaries.” It means online term plans purchased by consumer directly from insurer cannot earn any intermediary commission. 
 
There can be arguments about competition from online term plan making offline term plans redundant. Agents certainly feel the pinch due to online term plans, which are offered by most life insurers including behemoth Life Insurance Corp of India (LIC). Its online e-Term, with a premium of 15%-40% lower than what LIC offline term plan offers, will make it a tough sell for agents. But, the premium of term plans can be hiked after medical tests and hence online term plan deals are not a final quote and are subject to change during underwriting. Offline term plans, which are already having premium on higher side may also have some increase after medical tests. 
 
Giving the commission incentive by IRDAI is a sensible move. Moreover, even though online term plans may be offered in wider locations, it cannot really reach every nook of India, which agents serve. Smaller cities, rural population may not be still onboard with online term plans. Relying on agents to selling offline term plan will help pure insurance reach even remote locations. Hopefully insurers will not hike premium for offline term plans due to higher commission.
 
IRDAI approved around 97 protection-based plans and/or riders in 2015 as compared to 37 protection-based plans and/or riders in 2014. It means IRDAI has approved more than double such products. Clearly, IRDAI and insurers have given priority to long-term and systematic protection-based plans. 
 
These regulations will be effective from 1 April 2016. IRDAI is seeking comments or suggestions on the proposed regulations for consideration.  The comments or suggestions should reach them by 27 January 2016 in the specific format by e-mail to [email protected] and [email protected]
 

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