Month: August 2017

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Daily Big Picture – Key Indices Extend Gains; FMCG, Financials Lead Rally

MarketSmith India_William Oneil IndiaToday’s Action:

The Nifty and the Sensex post gains of over 1% each. Broader Indices outperform key composites.

Daily Market Review

In today’s trading session, the benchmark indices continued their recovery after a significant correction in the last week. Extending gains from the previous session, the Nifty and the Sensex reclaimed 9,850 and 31,500 levels, respectively. After trading flat in the first half, the benchmark indices trended upwards to close at the day’s high. Market displayed a positive momentum, as geopolitical tensions relating to the US-North Korea tussle eased.

Today, the Nifty opened higher at 9,819.00. After touching an intraday low of 9,774.45, the index trended higher and topped out at 9,902.75 before finally settling at 9,794.15, up 1.05% from the last closing price. Similarly, the BSE Sensex, opened at 31,566.24, and went on to hit an intraday low of 31,402.96. The index picked up steam in the second half, reaching the day’s high of 31,805.10. The Sensex finally settled at 31,770.89, up 322 points or 1.02% from the previous close.

The market breadth, indicating the overall health of the market, was tilted towards the gainers in today’s session. On the NSE, 1,027 stocks advanced, compared with 444 stocks declining, and 60 stocks remaining unchanged.

The broader markets witnessed solid demand as the Midcap and Smallcap were back in favour. The Nifty Midcap and Smallcap indices outperformed key indices with increments of 1.32% and 1.67%, respectively.

Similarly, the MarketSmith India IND 47 Index, which lists the top 47 stocks in chart on fundamental characteristics, advanced 1.51%, in today’s session.

On the sectoral front, barring the Nifty Energy index, which declined 0.22%, all the other sectors ended with significant gains. The Nifty FMCG, PSU Bank, and Metal indices remained on top of the gainers list with profits of 2.51%, 2.10% and 1.72%, respectively.

Market regulator Sebi has relaxed norms for the purchase of listed distressed companies, in an announcement that was made earlier today. Sebi has eased the norms for restructuring in troubled companies that are listed on exchanges subject to certain conditions. This move comes with the government and the RBI’s efforts to tackle the bad loan menace.

In other news, the Income Tax department is preparing a new list of penny stocks based on the clues from an earlier investigation into market operators who facilitate money laundering and tax evasion through listed companies. Many of these penny stocks are fraudulent in nature and are listed solely to evade taxes or launder unaccounted income.

Trading volume on the key indices picked up in comparison to Monday’s session, indicating healthy accumulation. The distribution count for the Nifty and the Sensex remains 5.0 and 6.0, respectively. Currently, the indices are about 2.5% away from their all-time highs. The Indian market status is in Uptrend Under Pressure.

Current Outlook:

– Be cautious with any new purchases.

– Make a defensive game plan for your portfolio.

– Stay disciplined and exercise sound sell rules.

To Read Detailed Reports including Stock Recommendations, Idea Lists, Evaluate Stocks etc. Subscribe to  MarketSmith India. 

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Know How To Preserve Your Hard Earned Capital

MarketAmith India_Know How to Preserve Your Hard Earned Capital

“If you want to learn anything about fish, sit in front of a fishbowl and look at the fish. If you want to learn about the market, you must observe and study the major indexes carefully.” – William J. O’Neil, MarketSmith Founder

Is it necessary to understand the market direction before you invest? Some investors ignore the market direction, which is a crucial tool that can be used to time the market. The market direction can be thought of as a tide. “A rising tide lifts all boats” – so does the market. Our methodology, based on market research, has shown us that three out of four stocks follow the market direction.

So if you invest when the market is rising, at the least, you are ensuring that the probability works in your favour, with little chance that the stock you are investing in, is one out of four stocks that defy the market condition.

The market direction can be assessed for strength or weakness based on a few technical concepts such as a distribution day count, current index with respect to 50-day and 200-day moving averages, a follow-through day, overhead supply of the index, among others.

The distribution day mechanism is a key concept that identifies weak days (down days, supported by institutional selling) in the market. The distribution day count helps determine the status of the market, whether it is in an uptrend or a downtrend. A follow-through day helps determine a strong up day in the market, which could potentially signal the beginning of a Rally.

So how to read the Indian markets now?

To continue reading, Buy Premium Access

 

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Weekly Big Picture – Geopolitical Tensions and SEBI Curbs on Alleged Shell Companies Put Market in Reverse Gear

MarketSmith India _ Weekly Big Picture.

MARKET PULSE

Status: Uptrend Under Pressure

Current Outlook:

– Be cautious with any new purchases.

– Make a defensive game plan for your portfolio.

– Stay disciplined and exercise sound sell rules.

Highlights:

Five down days

Weekly Market Review

The benchmark indices ended the first day of the week on a subdued note as SEBI announced trading restrictions on 331 entities suspected to be shell companies. On Tuesday, the selling pressure accentuated further due to the SEBI action. On Wednesday, there was no respite for the market, as North Korea’s warning on a possible missile strike on the U.S. Pacific territory of Guam, spooked the global markets. The market weakness continued as the key indices continued to slide on Thursday and Friday. The broader indices had a devastating day, when the Nifty Midcap and the Smallcap indices tanked 3.20% and 4.62%, respectively, in yesterday’s session.

The Nifty started the week at 10,074.80 and traded in the range of 9,685.55-10,088.10. The index finally closed at 9,710.80, down 3.53% from last Friday’s close.

After opening at 32,377.80 points, the Sensex gave away 3.44% this week to close at 31,213.59. During the week, the Sensex traded in a range of 31,128.02-32,396.14.

The Nifty and the Sensex have picked up three and two distribution days, respectively, during the week. The distribution day count for the Nifty and the Sensex currently stand at 5.0 and 6.0, respectively. The headline indices are currently trading more than 4% off their all-time highs. In view of the deteriorating technical set-up, we changed the market status from “Confirmed Uptrend” to “Uptrend Under Pressure” yesterday.

The broader markets underperformed the frontline indices this week; the Nifty Midcap and Smallcap indices lost 5.47% and 6.52%, respectively.

The MarketSmith IND 47 Index, which lists the top 47 stocks in chart and fundamental characteristics, lost 5.84%, this week.

The sectoral chart is awash in a sea of red for the week, as none of the sectors managed to escape the brunt of the market sell-off. The top three losers this week were Nifty Realty, PSU Bank, and Pharma with declines of 9.16%, 8.57%, and 7.95%, respectively.

The first ever mid-term economic survey that was tabled in the Parliament today, has pointed to downside risks to the government’s earlier GDP growth forecast of 6.75-7.50% for FY 2018. Since the first volume of the survey was published in February this year, new factors such as real exchange rate appreciation, farm loan waivers, increasing stress in the power and telecom sectors, and transitional challenges from implementing the GST have imparted a deflationary bias to the economic activity in the country. The survey, authored by Chief Economic Adviser, Arvind Subramanian, has also mentioned that inflation was expected to remain below the RBI’s 4% target through the end of the fiscal year.

State Bank of India beat analysts’ expectations, as it reported a nearly three-fold jump in its consolidated profit at INR 3,032 crore for the quarter ending June 2017, but asset quality, including that of subsidiaries, continued to slip. Gross non-performing assets increased 86 basis points to 9.97%, and net NPA rose 78 basis points to 5.97% on a sequential basis. The growth in profit was driven by low base due to higher provisions in Q1 FY 2017 and partly by higher other income despite a sharp rise in tax expenses.

The following events could serve as market movers in the coming week:

– Release of the Consumer Price Index inflation data for the month of July on August 14.

– Minutes of the U.S. Federal Open Market Committee meeting in July 2017 to be released on August 16.

To Read Detailed Reports including Stock Recommendations, Idea Lists, Evaluate Stocks etc. Subscribe to  MarketSmith India. 

 

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How to Spot Market Tops – MarketSmith India Webinar

[embedyt] https://www.youtube.com/watch?v=GYx_bs7244A[/embedyt]

How to Spot Market Tops – MarketSmith India Webinar covers the following:

• Why You Need to Spot Market Tops
• Count Distribution Days to Spot a Market Top
• Other indicators of topping action
•Weak, Abnormal Behavior in Leading Stocks
• Low-Quality Stocks Leading the Market
• How to Protect Yourself When a Market Tops

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Daily Big Picture – Technical Weakness Drags the Market; Nifty Finds Support at 9,780

DailyBigPicture-MarketSmithIndia-WilliamOneilIndia

Today’s Action:

Benchmark indices extended their losses, after breaching the key support level of 9,928 in yesterday’s session. Broader markets tanked, underperforming the headline indices.

Daily Market Review

The benchmark indices had yet another weak session in today’s trade. The key indices opened in red and sold off as the day progressed. The slide witnessed in today’s trading session can be attributed to technical weakness, as the market closed below a key support level of 9,928 yesterday. In today’s pre-market commentary, we had mentioned 9,780 as the next support level for the Nifty. The index, in today’s session, found support at this level before staging a minor bounce back.

Today, the Nifty opened lower at 9,872.85 and topped out at 9,892.65. The index started losing ground as the day progressed and reached an intraday low of 9,776.20, before finally settling at 9,820.25, down 0.89% from yesterday’s closing price. Similarly, the BSE Sensex, after opening lower at 31,750.73, hit an intraday high of 31,756.27. The selling pressure accentuated in the final hour of trade, as the index reached an intraday low of 31,422.80. The Sensex finally closed for the day at 31,531.33, down 266.51 points or 0.84% from yesterday’s close.

The market breadth, indicating the overall health of the market, was tilted towards the losers in today’s session. On the NSE, only 119 stocks advanced, compared with 1,362 stocks declining, and 18 stocks remaining unchanged.

The broader markets underperformed the headline indices as the Nifty Midcap and Smallcap indices lost 3.20% and 4.62%, respectively, in today’s session.

Today, the MarketSmith India IND 47 Index, which lists the top 47 stocks in chart on fundamental characteristics, lost 3.91%.

On the sectoral front, barring the Nifty IT index which managed to advance 0.46%, all the other sectors ended in red. The Nifty Realty, Media, and Auto indices bore the maximum brunt of the market weakness, with declines of 5.07%, 3.45%, and 2.92%, respectively.

According to the Mid-Year Review tabled in Parliament today, the government’s capital expenditure is expected to increase 25% to INR 3.9 lakh crore by FY 2020, with the outlay for the defense sector alone jumping 22%. The government has budgeted for capital expenditure of INR 3,09,801 crore for the current fiscal year, which will increase to INR 3,41,000 crore in the next one, and to INR 3,90,000 crore in FY 2020. Defense expenditure, which accounts for about 30% of the government’s capital outlay, is set to rise from INR 91,580 crore in the current fiscal to INR 1,01,137 crore in the next one and INR 1,11,706 crore in 2019-2020.

With a multi-fold surge in gold imports from South Korea, the government is contemplating steps to check the shipments of the precious metal from the country. India had operationalised a free trade agreement with South Korea in 2010. Gold imports from South Korea have jumped to USD 338.60 million between July 1 and August 3 this year, compared with USD 70.46 million for the whole of FY 2017.

Yesterday, the Allahabad bench of the National Company Law Tribunal (NCLT) classified Jaypee Infratech as an insolvent company, after accepting IDBI Bank’s plea on the issue. As a result, the board of directors of the company has been suspended. The Tribunal will now appoint an insolvency resolution professional, who will sit with Jaypee’s creditors to see if a resolution of the company’s debt is possible. If not, then the Company’s assets will be liquidated.

With today’s heavy trading volume, both the Nifty and the Sensex have picked up a distribution day, reaching a count of 4.0 and 5.0, respectively. The key indices are now trading more than 3% off their respective highs. In view of the deteriorating technical set-up, we are changing the status of the market to “Uptrend Under Pressure”.

Current Outlook:

– Be cautious with any new purchases.

– Make a defensive game plan for your portfolio.

– Stay disciplined and exercise sound sell rules.

To Read Detailed Reports including Stock Recommendations, Idea Lists, Evaluate Stocks etc. Subscribe to  MarketSmith India.