Friday Round Up

13th December 2019

  • Nifty opened up for the week aided by encouraging US employment numbers announced on Friday but soon gave up the gains. The fall continued on Tuesday and Wednesday, before reversing. Nifty rose with an upgap on Thursday and also on Friday and ended the week with a gain of 1.35%. This was despite poor local macros (Oct IIP -3.8% vs -4.3% in Sept, Nov CPI 5.54% - a 40 month high led by food inflation) announced during the week. Auto Banks and Metals shares rose while IT shares fell.

  • The two central Banks – US Fed and ECB met during the week and maintained rates, while continuing bond buying (ECB). No negative surprises from the meet was welcomed by market participants. 

  • The US China trade tiff is about to be resolved as we come closure to the Dec 15 deadline for levying fresh tariffs by the US. Global markets seemed to have discounted this to happen over today/tomorrow and after a brief rise on Monday, some sell-on-news could happen in global markets.

  • China reported mixed economic data. Its November exports fell 1.1% YoY for the 4th straight month with exports to US falling 23%. Its oil imports rose while coal imports fell. 

  • Emerging markets touched a one month high on Thursday aided by the accommodative stance by US Fed.

  • In UK, the current ruling conservative party has won 364 out of 649 seats improving their tally from current 320. This could result in faster Brexit and some more concessions from the EU. The Pound rose. Indian companies that have exposure to the UK have already moved up - including Tata Motors, Mastek, Motherson, Infy, TCS, Tech M etc. However later the impact on Brexit on UK economy would be analysed when the euphoria over the current event may cool off.

  • In India we are also witnessing some encouraging data including Air passenger traffic growth in November – up 11.2% the fastest since Dec 2018, Fuel consumption that has risen (although power consumption is down). However YoY growth is important to track across parameters to remove the seasonality effect. 

  • Reports suggested that BPCL divestment global roadshows are slated to begin anytime. This divestment will be watched keenly to gauge the foreign investor interest in PSUs and a successful completion could trigger a rerating in all PSUs. 

  • Volumes in the market (NSE) were low initially in the week (avg Rs30-33k cr per day), but improved on Friday to ~Rs.36k cr. 

  • Stock gainers during the week included IB housing, BF Utilities, Aavas and PSU Banks while LalPathlabs, PNB Housing, KEI, Neuland and Bandhan Bank were some losers.

  • Nifty faces resistance at 12099 and then at 12159 while support will come in at 11932. Broader market participation has improved lately. Nifty could open higher on Monday (aided by the announcement of US China deal offset partially by disappointment over the outcome of FM press meet post market). Momentum could now shift to Metal and Auto stocks followed by Oil & Gas and the popular sectors – FMCG, Banks etc could remain sideways.

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