Weekly Market: Budget updates, next weeks events, and technical levels of Nifty and Bank Nifty

 

Market & Budget Updates: The Indian stock market closed on a negative note last week. The markets were volatile throughout the week due to Coronavirus, monthly expiry and Union Budget updates. The global market was also not supportive in the last week due to the fear of coronavirus which killed around 300 people in China.

 

Market & Budget updates:

A sharp fall was seen last Saturday due to the disappointment in the 2020 Budget updates. The benchmark indices fell more than 2.5% on black Saturday, it was the biggest single-day fall in the last five years. The Finance Minister is confident that the stock market will recover on Monday when Bonds and Currency market will open.

On a weekly basis, the Nifty fell 586.4 or 4.90% and at 11661.85 while Sensex was declined 1877.66 points or 4.70% and at 39753.53. The Bank Nifty fell 1420.85 points or 4.74% in the last week and closed at 29820.90.

The Nifty midcap 100 index also declined 836.55 points or 4.65% and closed at 17520.55. The Nifty smallcap 100 index was down by 288 points or 4.8% and closed at 6057.05.

On a weekly basis, the top five gainers in the Nifty50 stocks are Dr. reddy’s Lab, Tech Mahindra, Bajaj Auto, Bajaj Finance, and Bharti Infratel. The top losers in the Nifty50 stocks for the market last week were Vedanta, Tata Steel, ONGC, Yes Bank, and Tata Motors.

In the Nifty midcap space, the gainers in the last week were Castrol India, Escorts and the losers are Max Financial, Bharat Electron. The gainers in the Nifty smallcap were Workhardt, Stride Pharma and the losers are Dewan Housing Fin, Godfrey Phillips.

Among the sectors on a weekly basis, IT & software, FMCG, Realty, Consumption, and Media were closed in green. Whereas Banking & Finance, Pharma, Energy, Metal, and Auto were closed in the red.

On a weekly basis, FIIs sold Rs 9151.61 crores and DIIs bought Rs 6388.54 crores in the cash segment.

 

Last week’s news in the market.

The initial days of the last week were trading negatively due to the fear of the spread of Coronavirus in China. Total of 300 people killed so far due to coronavirus in China so far.

Mid of the week market was volatile due to the monthly derivative expiry and Q3 earnings of heavyweight stocks. Then the market reacted to the economic survey and disappointed in the 2020 Budget updates.

The key takeaways & highlights of the 2020 Budget updates are as follows

1. Finance Minister Nirmala Sitharaman had presented the Budget on Saturday 1st of February on the basis of three themes –aspirational India, economic development for all and caring society.

2. The Budget presented a mega 16-point action plan for farmers, the govt has committed to doubling farmers’ income by 2022. The FM has proposed to allocate Rs 2.83 lakh crore for agriculture and rural sectors like irrigation on the budget 2020.

3. The FM proposed to abolish Dividend Distribution Tax (DDT) on companies, and henceforth the tax will be borne by the recipients at the applicable rate. 

4. The 100% stake of government owns LIC will be listed as part of the government disinvestment initiatives.

5. In Budget 2020, FM raises Insurance to protect bank depositors to Rs 5 lakh from Rs 1 lakh.

6. Budget 2020 pegs nominal GDP rate of growth for 2020-21 at 10%.

7. Budget 2020 offers cuts on income tax; a 10%-rate for the income of Rs 5-7.5 lakh against earlier 20%. tax rates are going to be significantly reduced for those that forego reliefs, exemptions.

8. Budget 2020 offers instant generation of PAN online.

9. Government to introduce new and simplified GST Return from April 1.

Other Budget Highlights:

10. Government to bring new education policy; allocates Rs 99,300 cr for the sector in FY21.

11. Budget 2020 revises FY20 fiscal deficit target to 3.8% from 3.3%.

12. Tax on cooperative societies reduced to 22% without exemptions.

13. A scheme to supply subordinated debt to MSME entrepreneurs soon to be enacted.

14. Kisan rail PPP mode for the cold supply chain to move perishable goods was proposed.

15. FM proposed to allocated Rs 1.7 lakh crore for the development of transport infrastructure. FM also proposed 100 airports will be developed by 2025 to support the UDAN scheme and 1150 trains will run under the Public Prive Partnership (PPP) model. Along with these four-stations will be redeveloped under the PPP model.

16. An allocation of Rs 30,757 crore for Jammu and Kashmir, and Rs 5,958 crore for Ladakh for fiscal 2020-21 is proposed.

17. NARVIK scheme to supply high insurance cover and reduce the premium for little exporters.

18. Taskforce to be found out for recommending the marriageable age for ladies.

19. A proposal to extend the turnover of the GeM platform to Rs 3 lakh crore was moved by the FM.

20. Manufacturing is the key sector for economic growth, has not gotten much from the 2020 budget except the proposal to start out a scheme for manufacturing cell phones, semiconductors, and electronic devices.

 

Stocks were in the news last week:

JSW Steel Q3 numbers missed the street estimate as per the report announced last week. Its net profit has declined by 88% to Rs 187 crore as compared to Rs 1603 crore in the same quarter last year. The share price reacted negatively last week in the market.

Dr. Reddy’s Lab has reported a net loss of Rs 569.7 crore in Q3 result as against Rs 485.2 crore profit last year same period. The revenue grew 13.86% during the quarter on YoY to Rs 4383.8 crore. The share price reacted positively.

The investor Rakesh Jhunjhunwala was probed last week by SEBI for insider trading for trading in Aptech. The share price of Aptech reacted negatively last week.

HDFC has reported 296% YoY growth in standalone net profit at Rs 8372.5 crore in Q3 earnings. The share price reacted positively on Q3 earnings.

HUL reported 12% raises in net profit in Q3 result at Rs 1616 crores as against Rs 1444 crores in the same quarter last year. The sales for the quarter rose 3.62% to Rs 9696 crore from Rs9357 crore in the same quarter last year.

 

Auto stocks in the news last week

Maruti Suzuki reported a 5.1% increase in its Q3 net profit at Rs 20707 crores as compared to Rs 19668 crores on a YoY basis. The company’s EBITDA grew by 8.9% on a YoY basis. The share price reacted negatively last week on the news

Bajaj Auto beats the market estimates for Q3 earnings. Its net profit zoomed to 15% driven by an improved operating margin. Its net profit rose to Rs 1262 crore as against Rs 1102 crore in the same period last year. The share price reacted positively to the news last year.

 

Banking & Finance News last week

ICICI Bank has reported 158.4% growth in December end the quarter, its net profit ais at Rs 4146.46 crore as compared to Rs 1604.91 crore in last year the same period. The share price reacted positively last Monday.

Bajaj Finance has reported a 52% rise in its net profit in December end the quarter at Rs 1614 crore as against Rs 1060 crore. The company’s NII was gone up by 42% at Rs 4537 against Rs 3206 crore on YoY basis. The share price reacted positively to the news last week.

SBI reported 41.17% YoY jumps in net profit at Rs 5583 crores in Q3 earnings as compared to Rs 3955 crore in the same period last year. Bank’s gross NPA has fallen to 6.94% as compared to 8.71% in the same period last year. NII has increased to 22.24% during the quarter.

 

Next week market events:

 

Next week on 3rd February Manufacturing PMI data, Auto sales numbers will be announced. On 5th February Service PMI, data and on 6th February, RBI Monetary policy decision will be announced.

Other than the above events, the Indian market will react on Q3 earnings on Nifty50 stocks like Adani Ports, Bharti Airtel, Titan, Cipla, Hero Motocorp, Britannia, NTPC, Tata Steel, UPL along with 800 plus midcap and small-cap stocks.

The global market may react negatively if the death toll mounts further in China for the coronavirus. The fear of spreading coronavirus can keep pressure in both global as well as domestic equity markets next week.

 

Next week Technical Levels of Nifty and Bank Nifty share price

Primary Trend Nifty Futures: Volatile

Range-Bound Trend of Nifty Futures: Nifty future will range from 11500 – 12020 during the week 

Primary Trend of Banknifty Future: Volatile

Range-Bound Trend of Bank Nifty Future: Bank Nifty future will move in the range of 28950- 30950 during the next week.

 

Crude and rupee updates

The crude oil prices tumbled last week due to fear of coronavirus in China. The Brent crude oil future price corrected more than 4% last week. It has touched week’s low at 56.65 on the last day of the week. 

The Indian rupee has become weak by 0.32% against the US dollar in the last week. It has touched week’s low at Rs71.67 against the US dollar and closed at Rs 71.56.

 

Conclusions:

The Indian equity market will remain volatile in the coming week. The market reaction on the 2020 Union Budget updates mentioned above will continue on Monday. We may see some up move in the market on Monday. 

The equity market will also react to the Q3 earnings of the Nifty50 stocks next week. The market will also react on Auto sales number, PMI data and RBI Credit policy next week. Traders are advised to follow our daily Nifty and Bank Nifty technical views and trade with strict stop loss.

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Editor’s Desk