Monday, May 30, 2016



WORLD MARKETS                             

US indices gained 0.2%-0.6% on Friday after Federal Reserve Chair Janet Yellen said an interest rate hike in the next few months would probably be appropriate.

Speaking at Harvard University, Yellen said she believed growth and the strengthening of the labor market would continue, and in that case, "probably in the coming months such a move would be appropriate."

University of Michigan's consumer sentiment index stood at 94.7 in May, below expectations but up from 89 in April. The second revision to U.S. first-quarter GDP came in at 0.8%, a touch below expectations although up from the advance read.

US oil settled down 15 cents or 0.3% at $49.33 a barrel. The U.S. oil rig count showed a decline of 2 in the last week, for a drop of 330 year-over-year, Baker Hughes said.

Dollar index gained 0.6% to close at 95.70, its highest since March 29.

European markets, except a 0.2% lower Italy, ended modestly higher.

Earlier, China reported a slowdown in industrial profits, with 4.2% year-over-year growth in April versus 11.1% in March.

Group of Seven (G-7) country leaders met in Japan and expressed concern on Friday about risks to the world economy, including weak growth. In a statement after the two-day summit, the leaders committed to avoiding "competitive devaluation" of their currencies and warned against "disorderly" exchange-rate moves

For the week, Dow and S & P 500 rose 2.1% and 2.3% respectively while Nasdaq climbed 3.4%. In Europe, DAX and CAC rose 3.7% each while FTSE was up 1.9%. In Asia, Shanghai lost 0.2% but Hang Seng climbed 3.6% and Nikkei rose 0.6%. Dollar index rose about half a percent for its first four-week winning streak since March 2015.


Party continued on Dalal Street as benchmark indices climbed more than a percent on the last day of the week, extending the winning streak to fourth straight day and closing at the highest level since late October. Sensex soared 287 points to settle at 26654 while Nifty finished at 8157, up 87 points. BSE mid-cap and small-cap indices gained 1.4% and 0.6% respectively. Except a 0.04% and 0.01% lower Telecom and FMCG indices, all the BSE sectoral indices ended in green with Oil & Gas and Energy indices leading the tally, up 2.7% and 2.4% respectively.

FIIs net bought stocks, index futures and stock futures worth Rs 480 cr, 2162 cr and 1014 cr respectively. DIIs were net buyers to the tune of Rs 69 cr.

Rupee appreciated 14 paise to end at 67.03/$.

For the week, Sensex and Nifty gained 5.3% and 5.2% respectively to close at the highest level since the week ended 23rd October 2015.

SBI reported 66% fall in Jan-March quarter profit at Rs 1264 cr, impacted by more than 2-fold rise in provisions. NII grew by 3.9% at Rs 15291 cr. Provisions for non-performing assets shot up 143% y-o-y to Rs 12139 cr. Slippages at Rs 30313 cr were higher-than-expected. Gross NPA ratio deteriorated 140 bps q-o-q to 6.5% and net NPA ratio climbed 92 bps to 3.81%. The stock however rebounded after the bank said that it had provided for more than required by AQR and that assets worth Rs. 31352 cr are in the watch list, which is just 2% of its total loan book and 70% of them can go bad , which is just 1.4% of the book.

Hindalco posted 123% y-o-y jump in Jan-March quarter net profit at Rs 356 cr. Total income slipped 7.5% at Rs 8667 cr. EBIDTA was up 38% at Rs 1166 cr while margin stood at 13.5% vs 9%.

BHEL reported 60% fall in profit at Rs 360 cr. Revenue declined 21.5% to Rs 10005 cr. Operating profit plunged 78% to Rs 364 cr and margin contracted by 956 bps to 3.64%.

Coal India reported just 0.2% rise in net profit at Rs 4248 cr. Coal production increased 8.8% to 151.86 mt. Total income too remained flat at Rs 21403 cr. Operating profit dipped 8% to Rs 4839 cr. The company however surprised by approving a price hike of 6.29% over its current coal prices across all grades. The new price would be effective from May 30.


Today morning Asian markets are trading mixed with modest changes and SGX Nifty is suggesting about 40 points higher start for our market.

After 7980-7990 hurdle was taken out, we were working with the target of 8150, where 20-month moving average was placed. Nifty on Friday surged 87 points to finish at 8157, achieving the target mentioned above.

Next major target as well as resistance to eye is 8243, the 61.8% retracement level of the entire 9119-6825 fall.

Traders can raise stop loss to 8077, the bottom made on Friday.

Tata Motors, M & M and Sun Pharma will report their quarterly earnings today.

US markets will remain shut today for Memorial Day holiday.

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