Daily Big Picture – Markets Stage a Solid Comeback; Nifty Marks Closing All-time High

Today’s Action:

The major indices post significant gains after four days of consolidation. The NiftyMidcap and Smallcap indices continue to grow higher.

Current Outlook:

●         Market environment conducive for new purchases, but remain selective.

●         Focus on fundamentally strong stocks breaking out of strong technical                  patterns.

●         Stay disciplined and exercise sound buy and sell rules.

Daily Market Review

The benchmark indices staged a strong up move in today’s trading session after ending flat in the earlier two sessions of the week. ICICI Bank’s positive result and the government’s move on National Steel Policy 2017, and Banking Regulation Act lifted investor spirits.

The Nifty recorded an all-time closing high of 9,359.90 to gain 0.51% in today’s trading session. It opened at 9,360.95 points and traded in the range of 9,323.25-9,365.65.

The Sensex surged by more than 200 points and closed at 30,126.21 gaining 0.77% at the end of today’s trading session. It started the day off at 30,069.72 mark and the trading range was observed between 30,007.40-30,169.95.

Both the key indices witnessed high action as reflected in today’s heavy trading volume. A significant increment coupled with good trading volume is a sign of accumulation.

The broader markets moved in line with the frontline indices. The Nifty Midcap and Smallcap indices extended their all-time highs by adding 0.56% and 0.50%, respectively.

The William O’Neil IND 47 Index, which lists the top 47 stocks in chart and fundamental characteristics, outperformed the market by gaining 1.0%.

Today’s good performance is solely credited to the banking and financial stocks. The top sectors of the day were the Nifty PSU Bank, Pvt Bank, Bank and Financial Services indices. The Nifty bank index recorded an all-time high today. On the negative end, Nifty Realty, Media, and Metal indices were on the bottom of the sector chart.

As widely expected by global analysts, the U.S. Federal Reserve left the country’s key interest rates unchanged. The announcement came at the end of the two-day monetary policy review meeting. The central bank added that the recent slowdown in the economy is temporary and unlikely to affect the economy in the long run. Further, the positive momentum in the U.S. job growth, wage rate increments, stronger business investments and consumer spending are optimistic signs, which will keep their forecast of two more rate hikes in 2017 intact.

In order to tackle the mounting non-performing assets (NPAs) of public sector banks, the Union Cabinet on Wednesday night issued an ordinance to amend the Banking Regulation Act that will empower the RBI to go after defaulters. It’s believed that the ordinance would give powers to the Reserve Bank of India (RBI) to take strict action against defaulters while being lenient in cases of genuine business failures.

Further, the Cabinet approved the National Steel Policy yesterday, under which priority will be given to Indian steelmakers in government tenders for infrastructure projects. The policy aspires to achieve 300MT of steel-making capacity by 2030 and will steer in creating an environment for promoting domestic steel manufacturer and thereby ensuring a scenario, where the production meets the anticipated pace of growth in consumption.

Today, ICICI Bank was in the market spotlight after announcing Q4 FY 2017 results after the close of yesterday’s session. The bank reported an 188%, y/y, growth in its standalone profits, aided by a solid net interest income and lower provisions. NII for the quarter grew at 10.3%, y/y, complemented by a growth in the loan book of 6.65%, y/y. However, the deterioration in asset quality plagued ICICI Bank as well. Gross NPAs increased 11.7%, q/q, on an absolute basis, while net NPAs surged 26%, q/q. The stock witnessed heavy accumulation in today’s session as it rose over 9% by the close of trading.

Key composites regained positive momentum boosted by good earnings and positive domestic and global cues. The distribution day count for the Sensex and the Nifty stands unchanged at 4.0 and 3.0, respectively. As key indices move back closer to their all-time highs, the Indian market condition remains undeterred in a Confirmed Uptrend.

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