Page 3 - 1964_Value Plus SEP 2016

Monthly Market Roundup
Indian equity markets
started the month of
August with positive
bias as the most awaited
landmark legislation,
GST Bill was passed in
Parliament. Substantial
inflow of foreign funds
and value buying at
lower levels led to gains
which improved market
sentiments and benchmark
indices ended at their
highest level in over
13-month. The Reserve
Bank of India at its policy
meet kept key policy rates
unchanged citing upside
risks to inflation which
accelerated to a 22-month
high of 5.77% in June well
above the 5% target set
by the central bank for
March 2017. Indian equity
Economic Data Wrap Up – August
¡ India's Jul Nikkei
manufacturing PMI rose to
51.8 from 51.7 in Jun.
¡ India’s Jul Nikkei Services
PMI rose to 51.9 from 50.3 in
Jun.
¡ India’s Jun IIP growth rose
to 2.1% from 1.2% in May.
¡ India’s Jul CPI inflation rose
to 6.07% from 5.77% in Jun.
Market Outlook: September
markets traded volatile Going ahead, the equity markets will continue to
throughout the month be influenced by global and domestic factors. The
due to weak domestic appointment of Mr Urjit R. Patel as the new RBI
macro-economic data and Governor is expected to give a positive boost to the
caution over US rate hike Indian equity markets. Other major factors such as
that dented investors' caution over US interest rate hike, macroeconomic
sentiments. events, movement of rupee against dollar, fluctuation
in crude oil prices and foreign fund inflow will be
The month finally ended keenly watched for market movement. The US Federal
with upward bias as S&P Reserve meeting will be held on September 21, 2016.
BSE Sensex delivering We believe that the Fed rate hike factor has already
positive return of 1.43% to been discounted by the markets and any possible hike
settle at 28452.17 and Nifty is expected to have limited impact. We recommend
50 gaining 1.71% ending investors to invest in fundamentally sound companies
the month at 8786.20. at attractive valuations.
On the institutional side, Nifty Technical Outlook: September
foreign institutional
investors (FIIs) bought Rs The current price action on the monthly chart has
9,071.30 crore worth of closed well above the supply zone (shown above
equities during the month in the graph). At present, the monthly trend
while domestic mutual remains up and suggests that the momentum
fund houses bought Rs on the upside is likely to continue. In coming
2,717.00 crore in August month if Nifty trades and close above 8846 level
2016. then it is likely to test 8934 – 9022 – 9125 levels.
However, if Nifty trades and close below 8725
level then it can test 8637 – 8549 – 8447 levels.
Broadly, we are of the opinion that the monthly
¡ India’s Jul WPI inflation rose trend is up and 8500 – 8550 remains crucial
to 3.55% from 1.62% in Jun. support zone. As long as Nifty holds the above
mentioned zone there is high probability that
¡ India’s Jul trade deficit fell Nifty may test above mentioned resistance
to $7.76 bln from $13.09 bln levels. However, stock specific activity is likely to
YoY. continue ahead.
¡ India’s Jul core sector growth 3 ARIHANT CAPITAL ¡ SEPTEMBER 2016
fell to 3.2% from 5.2% in Jun.
¡ India’s Apr-Jun GDP growth
at 7.1% from 7.5% YoY.