Weekly Indian Sector Outlook -3.10.2016 - 7.10.2016
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Indian Market Outlook for the week – 03 to 07.10.2016
Positive next week; RBI policy, auto sales eyed
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Share prices are likely to rise next week, even as the market focuses on the Reserve Bank of India's
monetary policy, and automobile sales numbers for September. While concern over border tension
with Pakistan will likely persist, the fact that share prices yesterday saw a recovery, albeit a mild one,
indicates that the worries will not be in the limelight. Analyst recommends utilising the recent fall in
share prices as opportunity to buy shares of large-cap companies. They recommend staying away
from shares of mid-cap companies because these may succumb to profit booking if geopolitical
tensions flare up. Share indices ended lower for the first time in seven months yesterday on a monthon- month basis as flows from foreign institutional investors showed signs of slackening.
The fall in shares of telecom companies after the launch of Reliance Jio Infocomm services, concern
over Donald Trump being elected as the US President, and the possibility of a financial crisis due to
Deutsche Bank's inability to pay a $14-bln fine weighed on share prices. As a result, investors have
not aggressively rolled over long positions to the October futures and options series.
The RBI will detail its monetary policy on Tuesday at 1430 IST, with the central bank expected to
leave interest rates unchanged, and maintain a dovish stance. This will be Urjit Patel's policy debut.
The lower-than-expected inflation has opened up room for an interest rate cut, but the RBI may not
do so because of the upside risks to inflation, sticky core inflation, and foreign currency non-resident
(bank) redemptions. Stocks of automobile companies will be in focus next week, as they detail their
sales numbers for September. While the first half of September witnessed strong sales due to Ganesh
Chaturthi and Onam, the second half was muted because of the Shradh season, considered an
inauspicious period for purchase of new vehicles.
Stocks of fuel-related companies will also be in focus in the week ahead. The central government,
after market hours yesterday, cut the price of domestically produced natural gas on a gross-calorificvalue basis to $2.50 mBtu for Oct-Mar from $3.06 mBtu in Apr-Sep. The government is also
scheduled to revise prices of petrol and diesel, done every fortnight. Yesterday the 51-share index
ended at 8611.15, up 19.90 points or 0.2% from the previous close.
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