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04 July 2016
I had mentioned in Friday’s closing report that Sensex,
Nifty were vulnerable to a short-term decline. The major indices of the Indian
stock markets were range-bound on Monday and closed with gains of around 0.50%
over Friday’s close. The trends of the major indices in the course of Monday’s
trading are given in the table below:
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Positive global cues, along with higher crude oil prices
and firm rupee buoyed the Indian equity markets for the sixth consecutive
session on Monday. The key indices traded with appreciable gains to reach their
new 2016 intra-day high levels, as healthy buying was witnessed in capital
goods, oil and gas, and metal stocks. The BSE market breadth was skewed in
favour of the bulls -- with 1,724 advances and 1,016 declines.
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Even though Indian commercial banks' shares have moved
higher, ignoring Brexit (Britain exiting European Union), the currency
volatility risks have to be understood, said US investment banking firm
Jefferies in a report. Banks need to make provisions for their exposures to
corporate with unhedged foreign currency exposure (UFC) and additional capital
buffer for high risk UFCEs, the report said. Jefferies estimate the risk
exposure at 1.7% of gross credit exposure for banking system. Banks have built
Rs13 billion in provisions and Rs29 billion in additional capital as of FY16.
According to the report, Bank of Baroda (BOB) is the only to report Liquidity
Coverage Ratio (LCR) in British pound implying five per cent plus of liability
in that currency. “This may result in higher hedge costs going forward -- marginal
NIM (net interest margin) negative. This of course depends on the currency
composition on the asset side -- unfortunately we don't have sufficient public
data to delve deeper," the report said. Bank Nifty closed at 18,097.65, up
0.62%.
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The price of OPEC's basket of 13 crudes rose to $46.27 a
barrel on Thursday, compared to $45.82 on Wednesday, according to the OPEC
Secretariat. Healthy oil prices at the international level are still important
for the major indices of the Indian stock markets to keep from slipping lower.
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Healthy monsoon rains, more economic reforms and a firm
rupee are expected to support the equity markets' upward trajectory in the
coming week. According to market observers, clarity on Britain's exit from the
EU (Brexit) and increased chances of stimulus measures expected to be initiated
by global central banks will provide the incentive for investors to chase
prices. "Domestic markets are expected to continue to behave in line with
global sentiments in the near-term. However, we expect the market to remain
bullish," D.K. Aggarwal, Chairman and Managing Director, SMC Investments
and Advisors, told IANS. Last week, the Indian markets gained momentum on the
back of resurgent Asian and European markets which recovered after clarity emerged
on the modalities of Brexit. Further, global investors were hopeful that
international central banks might initiate major stimulus measures to protect
growth.
The top gainers and top losers of the major indices are
given in the table below:
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The closing values of the major Asian indices are given
in the table below:
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