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Monthly Market Roundup                                              Market Outlook: February

Indian equity markets            The market participants cheered    With the Budget blues behind us, the government’s
witnessed pre-budget rally       the move of not tinkering with     much applauded move to maintain fiscal prudence
in the month of January          securities transactions tax and    despite increase in capital expenditure and reduction
owing to better than expected    maintaining status quo on capital  of government borrowings should set a positive
corporate earnings and           gains tax.                         undertone for the domestic markets and bring FII
short covering of positions.                                        inflows. Higher allocation towards farmers, rural
The budget was eyed by           A new ETF with diversified         population, youth should boost consumption and
all as it had raised huge        CPSE stocks will be on             revive the demonetized economy. All eyes will now be
expectations to cool down        offering in 2017-18. Further,      glued at RBI’s monetary policy which will be unveiled
the effects of demonetization    shares of Railway PSEs like        on Feb 8, 2017 and upcoming state elections.
and was presented before         IRCTC, IRFC and IRCON will         On the global front, European Central Bank (ECB)
the upcoming state elections.    be listed in stock exchanges.      meeting minutes, Bank of England’s (BOE) monetary
Further, it was a historic                                          policy and US FOMC meeting minutes will be major
budget with the first of its     Railway budget cheered             events to watch for. Political climate in developed
kind step by the Government      up everyone with the               countries that are moving towards protectionism
of merging railway and           removal of service charges         may impact global trade and hence export related
general budget in 93 years.      on bookings made through           sectors should be viewed with caution. Though
                                 IRCTC which indicates              Indian markets cannot be seen in insolation in light
Finance Minister, Mr Arun        government’s focus to              of global uncertainties, yet they are better placed than
Jaitley delivered rural          improve digital transactions.      other emerging market peers. Hence, we recommend
centric budget and chose         The announcement for               investors to invest in stocks with strong fundamentals
to stick on the path of fiscal   railways mainly focused on         for long term perspective.
consolidation. The budget was    four themes; safety, capital
mainly focused on farmers by     and development focus,              Nifty Technical Outlook: February
aiming to double their income    financial accounting reforms
in five years and several        and Swachhh railways.                     Nifty
other agricultural sector
developments. Affordable         The month finally ended with        On the monthly chart, we are observing that the
housing has been given           downward bias as S&P BSE            preceding up move has taken support at the 50%
infrastructure status that will  Sensex delivered positive           Fibonacci retracement levels and has formed a
improve progress in the real     return of 3.87% to settle at        bull candle. This clearly suggests that monthly
estate sector and boost the      27655.96 and Nifty 50 gained        bias has turned positive and momentum on the
mission “Housing for All by      4.59% ending the month at           upside is likely to continue. In the coming month
2022”. Reduction in tax rates    8561.30.                            if Nifty trades and closes above 8664 level then it
for individuals in tax slab of                                       is likely to test 8822 – 8979 – 9162 levels. However,
Rs 2.5-5 lakhs from 10% to       On the institutional side,          if Nifty trades and closes below 8457 level then it
5% and for corporates with       foreign institutional investors     can test 8300 – 8143 – 7960 levels.
annual turnover upto Rs 50       (FIIs) sold Rs 1,176.60 crore       Since, the monthly bias has turned positive we
crores to 25% will improve       worth of equities during            expect momentum on the upside to continue and
sentiments. Fiscal deficit of    the month while domestic            Nifty may test the above mentioned resistance
3.2% was in line with market     mutual fund houses continued        levels. Further, stock specific activity viz. in the
expectations.                    their buying spree with net         midcap and small-caps is likely to continue.
                                 purchases of Rs 5,233.90 crore
                                 in January 2017.                                            3 ARIHANT CAPITAL ¡ FEBRUARY 2017
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