Rupeedesk Consultancy

Indian Market Weekly Outlook & Sectorwise Stocks Outlook for the Week - 8.Aug.2016 to 12.Aug.2016

Indian Markets Outlook for the week – 8.Aug.2016 to 12.Aug.2016
(Positive; RBI policy, earnings key next week) )


Auto Stocks Outlook for the week – 08 to 12.08.2016 To take cues from Jul sales data, companies' earnings


Indian Market Outlook for the week – 08 to 12.08.2016 Positive; RBI policy, earnings key next week

With the Reserve Bank of India's monetary policy scheduled for Tuesday and a bunch of Nifty 50
companies detailing their Apr-Jun earnings next week, action in equities will be largely stock-centric.
The underlying bias remains positive as indices are likely to test new highs, but gains will be followed by bouts of profit booking. Views on the monetary policy action of RBI are mixed. Some see scope for a 25 basis point cut in repo rate in view of the good progress in monsoon rains and passage of the crucial Constitution Amendment Bill for goods and services tax by the Rajya Sabha.

Cumulative rainfall in the country during Jun 1-Aug 4 was 499.1 mm, 2% above normal, and barring
east and northeast India, all the other subdivisions received above normal rainfall. Besides, the government has set the inflation target for the next five years at 4% in a band of 2-6%. The fiveyear
target is unchanged from the oneset for March 2018. This is also one of the reasons why some see room for a rate cut next week. A few others, though, expect a 25 basis points cut in repo rate only in the coming months.

The passage of GST bill has certainly paved way for a rate cut, but not necessarily in the short-term.
Given the accommodative monetary policy stance of other central banks, and expectations that
softening of commodity prices will keep food inflation moderate, a 25 basis points rate cut is likely by October. If RBI surprises the market with a 50-basis-point repo rate cut, it will result in a sharp jump in share prices, with the possibility of Nifty 50 testing 9000 points. Now, if RBI cuts interest rates, it will lead to a sharp rally, while a status quo may lead to a short-term correction.

Yesterday, the index ended at 8683.15, up 132.05 points or 1.5% from the previous close, while
Sensex closed at 28078.35, 363.98 points or 1.3%. Nifty 50 companies detailing their Apr-Jun
earnings next week include Hindalco Industries, Adani Ports and Special Economic Zone, Hero
MotoCorp, Cipla, Lupin, Mahindra & Mahindra, State Bank of India, Sun Pharmaceutical Industries,
Bank of Baroda, Bosch, Grasim Industries, and Idea Cellular. Next week, stocks of information
technology companies may extend losses as investors move out of 'defensive' companies, and as
Cognizant Technology Solutions Corp has cut its sales guidance for 2016. )