Sensex Finishes on a Firm Note; Software & Capital Goods' Stocks Rally

Fri, 22 Dec Closing

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Indian share markets continued to trade on a firm note in afternoon session and hit an all-time high in today's session.

At the closing bell, the BSE Sensex closed higher by 184 points and the NSE Nifty finished higher by 53 points. The S&P BSE Mid Cap finished up by 0.1% while S&P BSE Small Cap finished up by 0.6%. Gains were largely seen in software sector, capital goods sector and energy sector.

Asian stock markets finished mixed as of the most recent closing prices. The Hang Seng gained 0.72% and the Nikkei 225 rose 0.16%. The Shanghai Composite lost 0.09%. European markets are mixed. The FTSE 100 is higher by 0.05%, while the DAX is leading the CAC 40 lower. They are down 0.17% and 0.11% respectively.

Rupee was trading at Rs 64.04 against the US$ in the afternoon session. Oil prices were trading at US$ 58.02 at the time of writing.

At the time of writing, gold prices were trading on an encouraging note. Returns from gold have been anything but flattering. Mainly a hedge against market volatility, gold prices have remained at roughly the same levels since 2013.

On the contrary, share market in India has been on a constant upward trajectory during the same period. The only blip seen was in 2016, when gold prices gave healthy returns.

Gold Returns : 2013 - 2017

One more reason for the lackluster returns has been the global economy. US interest rates have been on the rise since 2014. This has swayed investors' interest towards government bonds, subsequently reducing demand for gold.

While the US Federal Reserve is also expected to raise interest rates next year, current gold valuations seem to have factored that in.

Volatility in Bitcoin prices continued on Friday, with the value of the cryptocurrency or digital currency falling below US$13,000 at day's low on Bitstamp, a cryptocurrency exchange based in Luxembourg. Bitcoin prices have swung wildly this week. From a record high of US$19,666, hit on Sunday, bitcoin prices fell over 36%, losing more than one-third of its value, to hit US$12,560 at day's low.

In news from software sector, TCS share price is among the top gainers on the bourses today after the company won a record outsourcing contract.

India's leading IT exporter Tata Consultancy Services bagged a US$ 2.25-billion outsourcing contract from Nielsen, a television rating measurement firm.

The partnership, signed in October this year, is a renewal of TCS' existing collaboration with Nielsen. The two companies had struck a 10-year deal in 2008 for US$ 1.2 billion, which was expanded to US$ 2.5 billion in 2013.

Under the new deal, the terms of the agreement have been extended for an additional five years so as to expire on December 31, 2025, with three one-year renewal options granted to Nielsen.

The latest deal brings cheer to the Mumbai-based IT behemoth as it assures US$ 320 million worth of business annually in the 2017-2020 period.

TCS share price finished up by 1.8%.

Meanwhile, Infosys share price surged 1.7% and hit its highest levels since October 2016 in today's trade.

Infosys has joined Hewlett Packard Enterprise (HPE)-driven Cloud28+ community and digital platform. By leveraging the Cloud28+ community's vast network of service providers, Skava, a wholly owned subsidiary of Infosys, aims to expand its market presence in countries where business and regulatory considerations call for private and hybrid cloud deployments working with local partners.

In another development, Tech Mahindra share price finished the day in green after it was reported that the company has entered into partnership with global management consulting firm Gao Feng Advisory Company to set up a joint Artificial Intelligence (AI) lab in Shanghai.

The lab will work in the areas of futuristic digital technologies including AI chatbot Services, smart process automation, Neuro-linguistic programming (NLP), image recognition and processing, Machine Learning (ML) and Predictive Analytics.

PSU bank stocks finished the day on a strong note Allahabad Bank share price and Bank of Maharashtra share price leading the gains.

The Reserve Bank of India (RBI) in its half-yearly Financial Stability Report (FSR) has warned against further downside risk for banks, as asset quality concerns are far from resolved. RBI has said that the gross non-performing assets (NPAs) in the Indian banking sector shot up to 10.2% as of the September quarter, primarily led by private sector lenders.

RBI's stress tests suggest that in the baseline scenario, gross NPAs of the banking sector may rise to 10.8% in March 2018 and further to 11.1% by September 2018. However, it added that stress in the Indian banking sector remains high but it may be close to bottoming out.

Public sector banks (PSBs) registered Gross NPA ratio at 13.5% and stressed advances ratio at 16.2% in September. It also noted that if the macro conditions deteriorate, CRAR or capital-to-risk (weighted) assets ratio of SCBs goes below the minimum regulatory requirements.

The central bank further said that the recent capitalisation plan announced by the government for PSBs is expected to significantly augment capital buffers of affected banks as also the credit growth.

The report also said that the overall investment climate remains challenging despite registering an improvement from the first quarter of the current fiscal. RBI added that the global economy has picked up steam and the growth momentum appears sustainable.

And here's a note from Profit Hunter

The Nifty 50 Index traded on positive note during the week. On Monday, it opened 70 points gap down and plunged to a low of 10,075. However, it swiftly recovered to end the session 55 points up.

The volatility was seen on back of Gujarat and Himachal Pradesh election results. The index continued the bullish momentum, and it surprised investors with a new life-time high of 10,494 mid-week. It witnessed minor profit booking towards the end of the week.

Finally, on Friday, the index up move continued till it touched a fresh life-time high of 10,501 and ended the weekly session 1.55% up.

For past few week, we have mentioned that 10,000 - 10,100 level is a strong support level for the stock. Despite the index sliding more than 250 points on Monday, it did not go below the 10,000 level. And showed strong resilience when it bounced back to a tough a new life high mark. Now the 10,500 level, November 2017 high, could prove to be an important resistance for the stock.

So, will the stock break above the resistance point and continue with its upside momentum or will it have to see the 10,000 level once again?

Nifty Index Hits a New Life-time High

 

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