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Weekly Wrap: All eyes on the fate of key reform bills

HDFC Sec | 22 Dec, 2014  | Follow Author | Add to my Favourites 
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Outlook for Week Ahead                                                                      


The market may remain volatile this week as traders roll over positions in the futures & options (F&O) segment, as the near month December 2014 derivatives contracts expire on Wednesday, 24 December 20014. The stock market remains closed on Thursday, 25 December 2014, on account of Christmas.

 

All eyes are on the fate of key reform bills pending in parliament. With just two days left for the winter session of Parliament to end (on 23rd December 2014), the chances of the passage of the Coal Mines (Special Provisions) Bill, 2014 in the Rajya Sabha and the passage of the Insurance Laws (Amendment) Bill, 2008 in both the houses of parliament, look bleak.

 

Deregulation of diesel price announced by the Indian government in October 2014 and a sharp decline in global crude oil prices over the past few months will help reduce the government's fuel subsidy burden and help contain its fiscal deficit. However, a weakness in rupee against the dollar will restrict the benefit of falling global crude oil prices to that extent. In Europe, Greece's parliament holds a second vote on Tuesday, 23 December 2014, to choose a new president, with a two-thirds majority required for the election of Prime Minister Antonis Samaras's nominee, Stavros Dimas.

 

Concerns on Global growth and movement of crude oil prices will be important events to look for. The markets will look out for any economic reform announcements or bills passed in the winter session of the Parliament. We expect the BSE Sensex to trade in the range of 26900-27800 for this week.


Key benchmark indices ended on a flat note in the week ended Friday, 19 December 2014. Market slumped in the first three trading sessions of the week as prospects of higher interest rates in the United States and a sharp fall in global crude oil prices weighed on sentiment. Losses were, however, wiped off in the last two trading sessions of the week driven by a broad-based rally, mirroring gains in global equity markets, triggered by signals from the Federal Open Market Committee that the US central bank isn't in a hurry to raise interest rates in the United States. The barometer index, the S&P BSE Sensex, reclaimed the psychological 27,000 mark after slipping below that level during the week. Small and mid-cap shares tumbled in a broad-based sell off. The S&P BSE Sensex rose 21.16 points or 0.08% to 27,371.84. The 50-unit CNX Nifty rose 1.10 points or 0.01% to 8,225.20. The S&P BSE Mid-Cap index fell 108.19 points or 1.07% to 10,000.41. The S&P BSE Small-Cap index fell 146.27 points or 1.32% to 10,922.21. Both these indices underperformed the Sensex.


Key Highlights during the week:


- India's trade deficit widened to one-and-a-half year high of $16.86 billion in November 2014 due to over six-fold jump in gold imports even as merchandise exports grew by 7.27%. Trade deficit in November last year was $9.57 billion. Gold imports stood at $5.61 billion in November this year as against $835.83 million in the corresponding month in 2013, according to the data released by the Commerce Ministry.


- India's WPI showed no increase in Nov for the first time in near 5-1/2 years as oil prices tumbled, building a case for the Reserve Bank to start lowering interest rates early next year to help prop up economic growth.


- The GST Bill, which will bring the "single biggest tax reform since Independence", will be taken up in the next Parliament session, Finance Minister Arun Jaitley said while asserting that concerns of all states have been take care of in the new measure.


- The finance ministry pegged economic growth at around 5.5% for the current financial year, after two years of successive sub-5% economic expansion. RBI had forecast growth to be 5-6%, with a mean of 5.5%.


- The private equity funds pumped in $ 11 bn in Indian companies, up 11% as compared to last year's $10 billion investment. The total M&A volumes was $48 billion in India including $5 billion of QIPs and initial public offers.


- India’s foreign exchange (Forex) reserves grew by $2.17 billion to $316.83 billion for the week ended Dec 12, Reserve Bank of India (RBI) data showed. In the previous week (Dec 5), the reserves had fallen by $1.64 billion to $314.66 billion.


Key benchmark indices ended on a flat note in the week ended Friday, 19 December 2014. Market slumped in the first three trading sessions of the week as prospects of higher interest rates in the United States and a sharp fall in global crude oil prices weighed on sentiment. Losses were, however, wiped off in the last two trading sessions of the week driven by a broad-based rally, mirroring gains in global equity markets, triggered by signals from the Federal Open Market Committee that the US central bank isn't in a hurry to raise interest rates in the United States. The barometer index, the S&P BSE Sensex, reclaimed the psychological 27,000 mark after slipping below that level during the week. Small and mid-cap shares tumbled in a broad-based sell off.


The S&P BSE Sensex rose 21.16 points or 0.08% to 27,371.84. The 50-unit CNX Nifty rose 1.10 points or 0.01% to 8,225.20.


The S&P BSE Mid-Cap index fell 108.19 points or 1.07% to 10,000.41. The S&P BSE Small-Cap index fell 146.27 points or 1.32% to 10,922.21. Both these indices underperformed the Sensex.


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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor IndiaNotes.com accept any liability whatsoever arising from the use of any of the above contents.




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