Ongoing trade war between US and China to affect global markets; remain bullish on PSU Banking and pharma space..
market ended the rangeboud week on a positive note with Nifty, Sensex gaining
half-a-percent each. While Nifty ended above the crucial level of 10,800,
Sensex ended above 35,600. The market traded in a narrow range amid domestic
data including inflation data for the month of May while global cues include
ECB meet, Fed meet. India's wholesale inflation grew 4.43 percent in May, a
14-month high, driven by some food items and fuel prices.
bourses ended flat on Friday amid weakness in their Asian peers that wobbled on
Friday as investors braced for US tariffs against China. The S&P BSE Sensex
ended at 35,622, up 22 points while the broader Nifty50 index settled at
10,818, up 10 points. Among sectoral indices, the Nifty Pharma index ended over
2% higher led by rise in the shares of Dr. Reddy's
Laboratories, Cipla and Piramal Enterprises. The Nifty IT index too
settled over 2% led by a rally in Infosys and Tata Consultancy
Services (TCS). TCS hit a new high of Rs 1,849 per share on the BSE during
the day, after the IT major said that its board has approved a proposal of
buyback upto 76.19 million equity shares at price of Rs 2,100 per share through
tender offer. The stock eventually settled 2.75 per cent higher at Rs
1841.45 on the BSE.
Pharma index was quoting higher for the eight straight trading days on the
National Stock Exchange (NSE). During the period, the pharma index rallied 15%
as compared to 2% rise in the benchmark Nifty 50 index. Dr Reddy’s
Laboratories, Lupin, Cadila Healthcare, Sun Pharmaceutical Industries,
Aurobindo Pharma and Cipla from the Nifty Pharma index were up in the range of
8% to 14% thus far in the current week. Alembic Pharmaceuticals,
India, Marksans Pharma, Ajanta Pharma and Suven Lifesciences, the non-index
pharma gained between 9% and 20% during the week.
Dr Reddy’s Labs was up 4% to Rs 2,365
on Friday (15th June, 2018), after the U.S. Food and Drug
Administration (USFDA) approved the first generic versions of Indivior’s
Suboxone sublingual film for the treatment of opioid dependence. The stock
rallied 14% so far in current week. Lupin gained 3%
at Rs 923, too rallied 14% in past five trading sessions. The company on
Thursday it has received approval from the US health regulator to market
Drospirenone, Ethinyl Estradiol, Levomefolate Calcium tablets, used to prevent
pregnancy, in the American market.While, during the week, Sun Pharma announced
the resolution of regulatory compliance issues at Halol plant, Aurobindo Pharma
gained on the back of US FDA (Food and Drug Administration) approval for
Omeprazole (used to treat certain stomach and esophagus problems). Both these
stocks have gained 8% so far in current week.
Foreign investors were net sellers as they sold
equities worth Rs 5,294 crore, while domestic institutions were buyers in
the last week as they bought equities worth Rs 4,014.25 crore. India's
volatility index (India VIX) was down 5 percent last week. BSE Smallcap index
was up 0.4 percent, BSE Midcap was ended flat and largecap index was up 0.4
India's trade deficit widened to four-month high of US$14.62 billion in May as
imports surged nearly 15 per cent, the government said Friday. Commerce
Minister Suresh Prabhu said exports in May rose by 28.18 per cent to US$28.86
billion while imports were up 14.85 per cent to $43.48 billion. A rise in
receipts of petroleum, engineering and pharmaceutical products boosted May’s
export growth figures to a six-month high of 20.18 per cent, up from 5.71 per
cent in April. Even then the trade deficit widened to a four-month high of
$14.62 billion, compared to the $13.7 billion deficit in April as imports rose
by 14.85 per cent during the month, compared to the 4.60 per cent rise in
April. This could pressurise the current account deficit in the first quarter
of the current financial year after it stood at 1.9 per cent of GDP in the
fourth quarter of 2017-18, compared to 2.1 per cent in the third quarter.
However, within exports, major labour-intensive sectors, such as gems and jewellery
and ready-made garments, continued to see declines. The export growth rate had
peaked at over 30 per cent in November last year. Since then, the rate has
fallen continuously until March. However, growth in outbound trade strengthened
in May, with India exporting goods worth US$28.86 billion.
major refining units remained shut for over two months, India finally managed
to take advantage of rising global crude oil prices in May when petroleum
exports rose by over 104 per cent to $5.23 billion. It had declined by 4.48 per
cent in April. The same rising oil prices led to a much higher import bill of US$43.48
billion in May 2018. A major part of this was due to the US$11.5 billion crude
oil import bill, which jumped nearly 50 per cent, up from the 41 per cent rise
President Donald Trump has decided to impose "pretty significant"
tariffs and will announced a list targeting US$50 billion of Chinese goods on
Friday, and a second wave of products worth US$100 billion has been cued up. China
retaliated against planned US tariffs on Chinese goods by targeting high-value
American exports — including farm products, cars, and crude oil — bringing the
world's two biggest economies closer to an all-out trade war. Shortly after the
Trump administration unveiled plans Friday to impose tariffs of 25% on US$50
billion in Chinese products, China's State Council announced it would levy
penalties of the same rate on the US goods of the same value. In striking back
at the US action, China expanded the list of US products that would be subject
to tariffs to 659 types of goods, from some 106 types it originally disclosed
in April. Most of the added goods on China's retaliatory list are agricultural,
seafood and energy products. President Donald Trump said earlier Friday that
the US would respond with more tariffs if China retaliated.
also has submitted a revised list of 30 items -- including motorcycle, certain
iron and steel goods, boric acid and lentils -- to the WTO on which it proposes
to raise customs duty by up to 50 per cent. As duties hiked by the US on
certain steel and aluminium products would have implications of about $241
million on India, the raise in tariffs proposed by New Delhi too would have an
equal implication on America.Earlier in
May, India proposed to raise duties by up to 100 per cent on 20 products such
as almonds, apple and specific motorcycles imported from the US. The additional
duty proposed to be hiked on these items ranges from 10 per cent to 100 per
US Federal Reserve, on Thursday, had raised interest rates and took a more
hawkish tone in forecasting a slightly faster pace of tightening for the rest
of the year.
the Asia Pacific MSCI index ex-Japan edged down 0.3 per cent and was set for a
weekly loss of more than 1 per cent.
shares were set for their best week in more than three months as investors
pushed back expectations for an interest rate increase after Thursday's
European Central Bank meeting. The pan-European STOXX 600 index fell 0.2
percent, up 2.2 percent on the week, as recovering euro weighed. The euro was
headed for its worst weekly loss in 19 months after the ECB signalled interest
rates would be left at record lows into at least mid-2019. The common currency
shed 1.9 percent to the dollar, its biggest daily decline since Britain voted
to quit the EU in 2016. The drop in the euro gave a lift to the dollar, which
hit its highest against a basket of currencies since November 2017. While the
Federal Reserve and the ECB provided much of the week's central bank fireworks,
the Bank of Japan produced no surprises at the end of a two-day policy meeting
on Friday and looked set to continue its asset purchases for some time.
stocks led the losses, with the benchmark Shanghai Composite index plumbing a
20-month low, as investors worried about the economic damage from the trade
tensions with the US. Japan's Nikkei average closed up 0.5 per cent.
prices were little changed as investors eyed a key OPEC meeting in Vienna. Saudi
Arabia and Russia, architects of a producer deal to cut output, have indicated
they want production to rise.
At Ajcon Global,
we believe most of the quality names are available in large cap space. Midcaps
have been witnessing consistent hammering post Union Budget 2018-19 and SEBI
re-allocation dictum for Mutual Fund industry. No doubt, midcaps and smallcaps
have delivered excellent set of returns before this downfall. However,
investors need to be careful while selecting stocks in midcap space as any
unfavourable result in state elections would result in a drastic fall in
midcaps and smallcaps space.
At present, we
believe stocks from PSU Banking space and defensive space like Pharma can do
well as we feel this sector has bottomed out.One can accumulate companies in pharma for
2-3 years horizon as it will get rerarted when earnings become visible. Shares
of pharmaceutical companies were on a roll last week with the Nifty Pharma
index posted its biggest weekly gain in 15 years following the positive news
flow from the corporate levels with regard to US regulatory issues.