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Strong Start to the Week; L&T at 18 Month High
Mon, 3 Apr Closing

Indian share markets continued to witness buying momentum in the afternoon session and finished on a strong note. At the closing bell, the BSE Sensex stood higher by 290 points, while the NSE Nifty finished up 64 points. Meanwhile, the S&P BSE Mid Cap and the S&P BSE Small Cap finished up by 0.7% and 1.3% respectively. Gains were largely seen in capital goods stocks, pharma stocks and energy stocks.

Asian stock markets finished higher today with shares in Hong Kong leading the region. The Hang Seng is up 0.62% while Japan's Nikkei 225 is up 0.39% and China's Shanghai Composite is up 0.38%. European markets are mixed today. The DAX is up 0.29% while the FTSE 100 gains 0.12%. The CAC 40 is off 0.05%.

The rupee was trading at Rs 64.91 against the US$ in the afternoon session. Oil prices were trading at US$ 50.69 at the time of writing.

Construction & engineering companies were in focus with the BSE Capital Goods index surging more than 3%, up for the fifth straight trading day. L&T share price rallied 5.3% to Rs 1,660, its highest level since August 28, 2015 on BSE. The company bagged new orders worth of Rs 142.23 billion during the last week.

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According to a leading financial daily, Finance Minister Arun Jaitley has expressed his confidence that India's GDP will grow at 7.2% in 2017 and at the rate of 7.7 per cent in 2018. He also pointed out that global growth is moving upwards but emerging market economies (EMEs) face newer challenges from growing protectionism of some economies, global financial condition, policies of the United States and increased geopolitical tension.

The Minister has stated that India has sought US$2 billion loans for various projects from the New Development Bank (NDB), whose core mandate is sustainable infrastructure development and which is set up by the emerging countries such as India, China, Brazil, Russia, and South Africa.

He also pointed out that in next five years, the country would require Rs 43 trillion or US$646 billion for modernizing its infrastructure from highways to urban infrastructure. He added that funding needs for building infrastructure in India and other emerging nations offers enormous opportunity to an institution like NDB.

Jaitley further added that growth in emerging and developing countries is picking up and news from economies of BRICS countries is encouraging. He hopes that NDB will help in funding of emerging economies. He added that India was looking to have a mutually beneficial partnership with the bank.

Moving on to news from banking sector. Axis Bank share price surged 1.6% in today's trade after it was reported that the bank has signed an agreement with GUS Holdings BV to sell 14 million equity shares or 10% of total outstanding shares of Rs 10 a share face value of Experian Credit Information of India. Gus Holdings BV will buy the shares at Rs 45.7 a share, resulting in a total cash consideration of Rs 640 million.

Meanwhile, the bank also announced a strategic partnership with Wells Fargo & Company to offer seamless remittance facility to their NRI customers from the US. The US is one of the key corridors to receive remittances to India, which contributes to more than 30% of total remittance volume to India.

In news from the steel sector, Tata Steel share price finished on an encouraging note (up 0.6%) after it the company reported a 17% increase in Q4FY17 sales to 3.17 million tonne (MT) compared to 2.71 MT in Q4 FY16. On a sequential basis, the company saw sales jump 6.11% in the third quarter this year over Q3FY17.

Meanwhile, the company has reported a 24% growth in saleable steel production at 3.1 million tonnes (MT) for the fourth quarter of FY 2016-17. Its crude steel production during the January-March quarter of 2016-17 also grew to 3.2 MT from 2.5 MT a year-ago. Furthermore, the company's hot metal production was up at 3.5 MT, as compared to 2.7 MT in the same quarter of the 2015-16 fiscal.

No Takers For Domestic Steel

The government's proposal to give domestic steel makers a preference in government projects should protect them from cheaper imports. But in the meanwhile, the steel makers are chasing imports out by ramping up production. In February, domestic steel output rose by 12.9% YoY, as large private steel producers such as Tata Steel and JSW Steel ramped up output. Imports during the first eleven months of FY17 dropped by 39% YoY.

However, the consumption data over the past few months clearly show that there are no takers for domestic steel. So steel makers have been forced to export more, with overseas shipments up by 78% YoY in the fiscal till February.

Bajaj Auto share price finished down by 0.9% on the BSE after the automobile company reported a 10.98% decline in total sales to 2,72,197 units in March compared to 3,05,800 units during the same month last year.

Infosys share price fell 1.2% in today's trade as promoters continue to be unhappy with some decisions made by the board of India's second largest software services company. Most the promoters did not vote for a resolution seeking a salary increase for chief operating officer UB Pravin Rao.

And here's a note from Profit Hunter:

The 200-day exponential moving average (EMA) is widely used by the financial market fraternity as a 'support and resistance' tool.

Although the 200 EMA does not work for every stock in the market, it works amazingly for some of them. And Larsen and Toubro (L&T) is one such stock that respects the 200 EMA very well (see arrows in the chart below).

We showed you in an earlier note, that the stock was trading very close to the 200 EMA and a sustained close on either side of the average could show us the next trend.

The stock gave a sustained close above the 200 EMA and it rallied 18% from there. Today, the stock is up 5.5% and has hit a new 52-week high.

Now, whether the stock continues with its upside momentum or it quickly reverts to its mean (200 EMA) remains to be seen.

L&T Hit 52-week High
L&T Hit 52-week High

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Jan 22, 2018 (Close)