Weekly Market View – 18th January 2020

Indian Market Outlook:

The Key Benchmark indices inched higher during the week gone by, but this time around, midcap and small cap joined the rally. The earnings season has set in and the early numbers look encouraging on a year-on-year basis. In the week ended on Friday, the Sensex rose 345.65 points or 0.83% to settle at 41,945.37. The Nifty 50 index rose 95.55 points or 0.78% to settle at 12352.35. Broader markets outperformed as the BSE Mid Cap Index rose 550.05 points or 3.63% to settle at 15708.97 while the BSE small Cap index rose to 3.97% to settle at 14708.70. FIIs bought equities worth Rs.63.78 crore over the week while DIIs sell Rs.3104.52 crore. In the Week US-China trade deal give boost to the market irrespective of the high inflation rate. Cement and infrastructure stocks rallied sharply in anticipation of revival hopes from the Budget. Small industries like paper, shoes, rubber, and sugar will witness upward movements ahead of the Budget on expectation that import duty might increase in certain categories. Infrastructure and Agriculture sector would be in the limelight of budget to revive demand and boost the gross domestic product (GDP). The telecom industry may be headed for a duopoly comprising Bharti Airtel and Reliance Jio after a Supreme Court decision to dismiss a petition seeking a review of its judgment on adjusted gross revenue.

Latest Spot Price (in US $)

Global Weekly Events

Domestic Economy Indicators

Economic News:

• India’s wholesale inflation accelerated to 2.59% in December, driven up by food articles especially onion. Inflation in onions accelerated 455.8% last month from 172.3% in November while those in vegetables gained 69.7%. In potato, the rate surged almost 45% compared to an 8.51% decline in November. Retail inflation accelerated to 7.35% in December on the back of rising food prices. However, core inflation comes in at 3.7 per cent, a slight increase from November, 2019.As per the government data, the food inflation rose to 14.12 per cent in December as against (-) 2.65 per cent in the same month of 2018. It was 10.01 per cent in November 2019.

• India’s exports declined 1.8% in December to $27.36 billion as 19 of the 30 exporting sectors showed a decline in outbound shipments. The rate of decline is imports was sharper at 8.83% at $38.61 billion which helped narrow down the trade deficit to $11.25 billion last month from $12.12 billion in November, data released by the commerce and industry ministry showed on Wednesday. Among imports, the decline was led by transport equipment, gold, precious stones, electronic goods and petroleum. Electronic goods, drugs & pharmaceuticals, marine products, readymade garments and cotton yarn were the major commodity groups of export which showed growth. The trade deficit in December 2018 was $14.49 billion.

 Industry News:

• The Supreme Court recently quashed the review petition filed by incumbent operators Vodafone Idea and Bharti Airtel on the AGR (adjusted gross revenues) dues. The apex court’s October judgement has affected 15 telcos but only five of them are operational right now. Out of these five, nearly 60 per cent (of Rs 1.47 lakh crore) is due on incumbents. As per reports, these telcos would likely seek an extension of the payment deadline (January 23) or file a curative petition with the court. Under such petition, the petitioner will have to prove that the court’s decision would have a humanitarian impact and severe repercussions on GDP.

• The secondary sales (sales made by distributors to chemists) in the Indian pharmaceutical market (IPM) moderated in the December quarter of 2019. It fell 2 percentage points from 11.5 per cent in the September quarter of 2019 to 9.5 per cent in Q3FY20, on year-on-year (y-o-y) basis. In December, secondary sales of Dr. Reddy’s, Emcure and Pfizer delivered the highest y-o-y growth of 22.8 per cent, 17.2 per cent and 15.6 per cent, respectively. Sun Pharma’s sales dipped to 8 per cent in the month from 14.5 per cent in November 2019, mainly due to muted performance of major therapies, except for anti-infective, which grew 22.8 per cent y-o-y in December 2019. Secondary sales declined for Sanofi at (-) 2.9 per cent and Biocon (-) 8.4 per cent, dragging overall growth of both companies.

Company News:

• Reliance Industries reported a 13.5 per cent rise in net profit for the quarter ended December 31, 2019, after a turnaround in oil refining business coupled with the continued rise of retail and telecom arms. It declared consolidated net profit of Rs 11,640 crore for the quarter under review, as opposed to Rs 10,251 crore in the corresponding quarter last year. This is the highest quarterly net profit earned by any private company, surpassing its own previous best of Rs 11,262 crore in the July-September 2019 period. In Q3 of FY19, RIL posted consolidated revenue of Rs 1.68 lakh crore in comparison to Rs 1.71 lakh crore in the same period last fiscal.

• Vodafone Idea may offer the government a small part of its statutory dues by January 23 to ensure it doesn’t get a defaulter’s tag or incur the displeasure of the Supreme Court, and then seek some relief, in a bid to bring back the telecom company from the jaws of insolvency, three people familiar with the matter said. Simultaneously, the telco plans to seek an extension of the January 23 deadline from the Supreme Court. The top management has chalked out the next steps after the apex court dismissed the telco’s review petition.

• HCL Technologies, the country’s third-largest information technology services firm, reported a 16.3 per cent annual rise in net income in the quarter ended December 31, 2019, (Q3) of financial year 2019-20 (FY20) to Rs 3,037 crore. The company’s profit before tax in the December-ended quarter was Rs 2,991 crore. The Noida-based company raised its full-year revenue forecast to a growth of 16.5-17 per cent from 15-17 per cent in constant currency range earlier.

Global News:

• China’s GDP grew by 6.1 per cent last year, the lowest in 29 years, the government said on Friday, as sluggish domestic demand and the bruising 18-month trade war with the US seriously impacted the world’s second-largest economy. The new GDP data released by the National Bureau of Statistics (NBS) comes a day after China and the US signed a long-awaited phase one deal, marking a ceasefire in the 18-month trade war which saw the world’s two largest economies slap 25 per cent tariffs on about half a trillion-dollar worth of each other’s exports.

• The United States and China signed an initial trade deal on Wednesday that will roll back some tariffs and boost Chinese purchases of U.S. products, defusing an 18-month row between the world’s two largest economies but leaving a number of sore spots unresolved. The centerpiece of the deal is a pledge by China to purchase at least an additional $200 billion worth of U.S. farm products and other goods and services over two years, above a baseline of $186 billion in purchases in 2017.

(Source: Economic Times, Business Today, Business Standard, Investing, Moneycontrol)

Forthcoming Corporate Actions (20^th January to 25^th January)

Source: BSE, Elite wealth Research

Upcoming Board Meetings (20^th January to 25^th January)

Source: BSE, Elite wealth Research

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Elite Wealth Advisors Limited does/does not do business with companies covered in its research reports. Investors should be aware that the Elite Wealth Advisors Limited may/may not have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as read more

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