Friday, 1 July 2016

Sensex, Nifty vulnerable to a short-term decline – Weekly closing report The Total Investment & Insurance Solutions

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1St july 2016

I had mentioned in last week’s closing report that Nifty, Sensex were likely to move sideways. After some hesitation in the early part of the week, following Brexit vote, the major indices of the Indian stock markets rallied to make some gains. The weekly gains were around 3%. The trends of the major indices in the course of the week’s trading are given in the table below:
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On Monday, taking cues from their Asian peers, Indian equity indices were trying to recover from the hangover of last week's Brexit vote. Selling pressure was witnessed in information technology stocks. The BSE market breadth was tilted in favour of the bulls -- with 1,813 advances and 795 declines. Initially on Monday, the key indices opened on a flat note -- marginally in the red -- as investors' sentiments remained weak on account of the volatility caused in the global markets due to Britain's vote to exit the EU. This had also resulted in a sharp drop in the rupee's value and dried up foreign fund inflows. However, the Indian markets gained some momentum shortly after to trade in the green as the Asian markets, especially the Nikkei, showed a considerable recovery by shrugging off the global selloff stimulated by the Brexit. 
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The National Stock Exchange of India Ltd (NSE) on Monday said it plans to list on bourses as its board had expressed a desire to file the Draft Red Herring Prospectus (DRHP) latest by January 2017 for domestic listing and by April 2017 for overseas listing, "after addressing restructuring needs of the exchange and the regulatory requirements for listing," the exchange said in a statement. The exchange said that the board had re-constituted the current listing committee as an empowered sub-committee of the board to accelerate the listing procedures. The committee would take decisions within a stipulated time line. All these decisions were taken during the last meeting of board of directors on June 23," it said.
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A sharp rise in US futures markets, a rise in European indices, and a rebounding rupee led key Indian equity indices to trade in the green on Tuesday, while recovering considerably from the Brexit hangover. Healthy buying was witnessed in stocks of fast moving consumer goods (FMCG) and healthcare. The BSE market breadth was tilted in favour of the bulls -- with 1,596 advances and 999 declines.
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On Tuesday, the US dollar continued to climb against most major currencies after Britain voted to leave the European Union in a historic referendum. In late New York trading on Monday, the euro fell to $1.1019 from $1.1144 of the previous session, and the British pound decreased to $1.3192 from $1.3696. The Australian dollar went down to $0.7343 from $0.7508. The dollar bought 101.99 Japanese yen, lower than 102.24 yen of the previous session.  The dollar rose to 0.9776 Swiss francs from 0.9724 Swiss francs, and it climbed to 1.3092 Canadian dollars from 1.2936 Canadian dollars. Currency movements are considered important by stock market analysts in India, as a substantial portion of the investments come from foreign institutional investors into emerging markets like India. However, international interest rates in the banking sector are expected to be stable and not contribute to volatility.
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Positive global indices, along with a rise in crude oil prices and a firm rupee, buoyed the Indian equity markets on Wednesday. Consequently, the key indices closed the day's trade with appreciable gains, as healthy buying was witnessed in automobile, information technology (IT) and consumer durables sectors. The BSE market breadth was skewed in favour of the bulls -- with 1,848 advances and 752 declines.
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On Wednesday, state-run Allahabad Bank said that it aimed at 10% business growth in the current fiscal (2016-17) year. "Business growth target is 10% this fiscal. It grew about 3.4% in the last fiscal," bank's Chairman and Managing Director Rakesh Sethi told IANS after the 14th Annual General Meeting. The total business of the bank stood at Rs358,352 crore as of March 31, 2016 as compared to Rs346,519 crore the previous year. Going forward, the bank was looking at a growth of 20% in the retail credit portfolio. Also, a major thrust will be given to loans having low capital requirement such as housing loans and gold loans, Sethi told shareholders during the meeting. The shares of the bank closed at Rs68.35, up 0.22% on the BSE on Wednesday.
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Key Indian equity market indices opened higher on Thursday in line with global peers and taking positive cues from implementation of the Seventh Pay Commission. Asian markets on Thursday were trading in the green. Tokyo shares opened higher after anxiety over Japanese economy on account of Brexit and the weakening yen started declining. The Nikkei however, ended flat. Other international markets were also in the green. US stocks closed higher, buoyed by gains in oil prices, as global markets continued to rebound from previous sharp losses after Britain's vote to leave the European Union (EU).
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By the end of trading on Thursday, market analysts pointed out that short covering on the back of latest key economic decisions, combined with positive global cues and a firm rupee, propelled the Indian equity markets into making healthy gains. Sector-wise, all the sub-indices witnessed healthy buying which was led by banking, automobile and capital goods stocks. The gains, on Thursday, in the major indices were around 1% over Wednesday’s close. The BSE market breadth was tilted in favour of the bulls -- with 1,598 advances and 1,011 declines. 
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Continuing the upward trend evinced all week, healthy macro-economic data and positive global cues lifted the Indian equity markets higher on Friday. The key indices provisionally closed the day's trade with appreciable gains, with healthy buying witnessed in capital goods, oil and gas, and health care stocks. The BSE market breadth was tilted in favour of the bulls -- with 1,572 advances and 1,137 declines. The gains on Friday in the major indices were around 0.50%.
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