Indian Markets have rallied by 7% over the last five weeks. Rumours of Axis bank merger with Kotak bank, Reliance unveiling of its new tariff plan, Airtel Telenor merger news, record high US equities and prospects of good showing by the ruling BJP party in state polls after a good showing in Maharashtra Municipal Polls have spurred the market on. This week, if President Donald Trump delivers on the promised corporate tax cuts, markets may see breakout of 9000 levels of Nifty.
Last week, Federal Reserve Board released minutes of the February 1st meet where members expressed the view that it may be appropriate to raise rates fairly soon if data on labour market and inflation are in line with or stronger than their current expectations.
U.S. President Donald Trump’s planned economic agenda and major corporate tax cuts, which are likely to be announced next week will be keenly watched by global market participants. If President Trump fails to meet the expectations or gives no details of his planned policies, volatility in global markets will be high.
Mexico’s current account deficit (CAD) narrowed to USD 3.36 billion in Q4Fy16 compared to a downwardly revised USD 7.52 billion in the same quarter of the previous year. The goods deficit declined significantly to USD 0.66 billion from USD 3.78 billion a year ago while the services gap increased to USD 1.95 billion from USD 1.87 billion. Considering full 2016, the nation recorded a USD 27.86 billion gap, equivalent to 2.7% of the GDP.
Stocks of crude oil in the US went up by 0.564 million barrels in the week ended 17th February 2017, following a 9.527 million increase in the previous week and below market expectations of a 3.475 million rise. Also, gasoline stocks fell by 2.628 million, compared to expectations of a 0.888 million drop.
The number of Americans filing for unemployment benefits increased by 6,000 to 244,000 in the week ended 18th February 2017, from the previous week’s downwardly revised level of 238,000 and above market expectations of 241,000.
Germany’s gross domestic product advanced by 1.2 percent year-on-year in the fourth quarter of 2016, compared with a 1.5 percent expansion in the previous period. Domestic demand contributed positively, as household consumption increased by 1.5% and government expenditure was up by 3.2%.
Wall Street major indices closed at new record highs on 24th February 2017 as investors continued to assess the prospects for President Trump’s economic plans which are likely to be announced in this week. On weekly basis, Dow Jones rose by 0.96%, S&P 500 rose by 0.69% and Nasdaq rose by 0.12%.
US food company Kraft Heinz Company withdrew its proposed USD 143 billion merger with its rival Unilever. Share price of Kraft Heinz rose by 1% in last week.
Snapchat is expected to open up its IPO for subscription on 1st March 2017. Snap’s IPO, the first for a social media company since Twitter more than three years ago has set the valuation at around USD 22-25 billion.
The Sensex and the Nifty gained by 1.49% and 1.34% respectively in the last week.
Coal India’s arm Western Coalfields has received environment clearance for its Rs. 2630 million expansion project in Maharashtra. This proposal will enhance the production capacity from 1 metric tonne per annum to 1.87 metric tonne per annum. Share price of Coal India rose by 4% in last week.
Havells India has acquired the consumer durable business of Lloyd Electric and Engineering for a whooping enterprise value of Rs 16 billion. This deal will help Havells to access the Rs. 15 billion worth consumer durable business. Share of Havells India and Lloyd fell by 4% and 21% respectively in last week.
The management of TCS on 20th February 2017 announced a share buyback program worth up to Rs 160 billion. Post the announcement of the share buyback TCS shares shot up 4.1%.
India’s largest telecom operator Bharti Airtel acquired Telenor India last week. The Telenor acquisition will give Bharti Airtel additional spectrum in 1,800 MHz band besides a foothold in seven circles — Andhra Pradesh, Assam, Bihar, Gujarat, Uttar Pradesh and Maharashtra — where Telenor operates. The buyout gives Airtel additional access to 43.4 Mhz spectrum in the 1800 MHz band. Share price of Bharti Airtel rose 10% intra–day on the acquisition news.
Maruti Suzuki management announced its investment of Rs. 19 billion in Rohtak centre (R&D) for next 2 years i.e. till 2019. Share price of Maruti Suzuki increased by 0.30% in the last week.
Industry and Stock Specific trends
The sectoral indices closed in the positive territory last week. The S&P Bankex, Auto, Oil & Gas, PSU and IT indices have gained by 1.63%, 0.79%, 3.33%, 1.13% and 1.44% respectively.
HDFC Bank witnesses rise in turnover and Open Interest in Stock Derivatives
The Nifty Index futures saw fall in open interest by 66% for the February series. There was a rise in open interest by 594% and 74% for March and April series in the last week. Implied volatility(IV) rose for put option and call option in the last week. Rise in IV for put and call option shows unsteady support for Nifty at present levels.
HDFC witnesses rise in turnover and Open Interest in Stock Derivatives
HDFC Bank has witnessed rise in open interest in the stock future segment in the last week. Share price of HDFC Bank rose by 5.60% in last week.
On 16th February 2016 post market hours, RBI has removed the restrictions on foreign investors from buying shares of HDFC Bank. Foreign investors investment in Indian private bank is capped at 74%, when the limit touches 72%, RBI places these banks on the caution list. Post the RBI notice on removal of restrictions for foreign investors, on 17th February 2017 HDFC Bank share price rose by 9.50% intraday. However RBI called for an emergency meeting of the custodians to deal with the shareholding limit breach by foreign investors and this led to price fall from highs.
Foreign Institutional Investors (FIIs) Derivative Statistics have shown rise in the open interest across Index Options, Stock Options and Stock Futures on a week on week basis. Index Futures have witnessed fall in open interest on weekly basis.
Indian rupee appreciated by 0.316% against USD, USD/INR pair is trading at 66.8351.