Winning Strokes

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Today the Nifty as expected got support around 10400 range and closed at 10,492.85 down 61.45 points or 0.58%. The U.S. stocks gained Wednesday afternoon as Wall Street attempted to shake off a selloff in the previous session amid data that were seen as underlining strength in the economy, which is a good sign as the US is one the most powerful engines of world growth. I feel it is pertinent to mention here that the US interest rates will rise if and only if there is sudden uptick of the inflation, otherwise CY18 will be as usual with around 2-3 rate hikes by the US Federal Reserves. Therefore, all those talks that the US Federal Reserve may turn more hawkish and increase corporate borrowing costs to much higher level will not carry any value if the inflation remains steady.

Meanwhile, the Indian economy grew at 7.2% in October-December 2017, and is likely to expand by 6.6% in 2017-18, latest official estimates said on Wednesday, amid strong revival signs in consumption spending and investment activity. This is the best growth rate recorded in this year and much better than the Reuters poll of 6.9%. This has helped India regain the status of the world's fastest-growing major economy, replacing China. The Indian Economy is poised to move in a faster lane in the days ahead, recovering from the effects of demonetization and GST. The manufacturing sector grew 8.1% in the third quarter of 2017-18, from 6.9% in the previous quarter, and 8.1% in the same quarter of the previous year. The sector is projected to expand at 5.1% during the full year, inching towards last year’s 7.9% growth, indicating that factories and firms have moved on from the irritants caused by GST. We will definitely see positive movement in the markets tomorrow, especially in the auto sector due to such encouraging data.

#Those who are holding the shares of Tata Motors Ltd (Rs.370.20) should continue to add the scrip on every decline, because the transportation sector best mirrors the growth of any economy; as mentioned in my earlier write up. In Q3FY18, though it came out with disappointing set of Jaguar Land Rover earnings, it's standalone performance was strong. Analysts retained their ratings but slashed earnings estimates. It is to be noted that 85% of Tata Motors' revenues comes from its Jaguar Land Rover (JLR) unit. Tata Motors' passenger and commercial vehicle business performance was strong for the December '18 quarter, as standalone profit stood at Rs.183.7 crore in Q3 against loss of Rs.1,045.9 crore in same period last year.

#Today, a Buy was initiated in MCX Ltd at around Rs.780, SL: Rs.762,  T: Rs.820 on T+4 basis. Mrugank M Paranjape, MD & CEO of Multi Commodity Exchange of India (MCX) said that the bourse has started to witness positive increase in volume in the 45-50 days of Q4. He further said that volumes up 16% so far and Q4 average volume is close to pre-demonetisation levels.

“We used to clock about Rs 9,800 crore on bullion per demonetisation and that number throughout 2017 was roughly in the range of Rs 5,000 crore and that number has picked up by about Rs 1,000 crore in last 45 days. However, we have a good mix where we have energy, we have base metals and these two segments have done very well for us,” he said. Talking about products, he said we are hoping to get two more approvals from Sebi before end of FY18. We will look to launch two more products in April 2018, he added.

#Those who are holding the shares of Aban Offshore Ltd (Rs.171.05) can look for targets of Rs.191/206/218/230/247 in the coming days, as the strength of the US economy is likely to push up the crude oil prices above $65 per barrel within a short term.