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Equity Market - A Big Picture

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Pragmatic Wealth's Bi-Weekly Newsletter

The Indian stock market has been among the best performing markets in the world, with Sensex rising by 26 %, index being 22386 on 1^st April 2014, and 27957 on 31^st March 2015. The Nifty rose by 27%, index being 6704 on 1^st April 2014, and 8491 on 31^st March 2015. I believe, this enormous massive run of the Indian markets will continue in the coming years on the backdrop of pending reforms, just concluded Telecom Spectrum Sale and Coal Block Auction. Immense drop in the Crude oil prices have played a positive role for the Indian economy in form of savings of foreign reserves. RBI has been playing a major role for pushing the economy to up-ladders by stabilizing the Rupee versus the dollar. Furthermore, The Reserve Bank has also very well managed the inflation and interest rates, by cutting down some very important rates from time to time being Repo Rate or Statutory Liquidity Ratio (SLR). This move of the RBI has managed to maintain enough liquidity in the economy. The BJP-led Union Government has managed well with control in fiscal consolidation, and bringing in some required reforms such as FDI in insurance sector up to 49%. However, the pending GST Bill and Land Reforms Bill are yet to make their mark in the economy.

The some-what stabilized US Economy gives a sense of relief as far as global markets are concerned, however, the Euro Zone still seems to be a concern with Greece unable to cope-up with the rising debt, and the Middle East war-rift still on a rise. Macro economic problems such as corporate earnings not expected to do well in the near term, unseasonal rains affecting the crops may arise. The Bleeding Non-performing Assets (NPAs) of the public sector banks comes forth as a macro issue concerning the economy, since banks with higher NPAs would be reluctant to reduce the interest rates for their customers, even though RBI lowers the rates by some basis points. Pharmaceutical companies may get a hit-back due to reasons pertaining to patents or drug contents by FDA, US. Information Technology companies may get affected if rupee appreciates or falls below 61.

Market Technical's

Analysing the markets from a PE (Price to Earnings per share) perspective, the markets (Nifty) are currently trading at a PE multiple of 23.5 (Nifty 8700 / Earnings 373), a year forward i. e 2015-16, expected PE looks around 20.5 for Nifty, and for 2016-17, its trading around a multiple of 17. Hence, market looks rightly priced. Historically, we have observed that markets are reluctant to go below a PE multiple of 17 and hence, with the current earnings, in the worst case possible scenario, the Nifty is not likely to go below 7300. However, in the intermediate term, a PE of 19 seems to be a good floor and Nifty may find support around 8100.

Whereas charts are concerned, all the major price trends for the Markets are up, and currently in absence of any major triggers, markets will remain in a broad range between 8500 and 9000 on the Nifty. Technically, trade and close below 8500 will see sharp corrections in the markets and Nifty would test 8000 levels. However if Nifty holds 8500 and convincingly breaks out above 9000 with volumes on close basis, it will witness a sharp rally and in that case it would test 9400 initially, and perhaps 10000 plus going into next year.

Take-away 

Going forward, markets will be very stocks specific. Healthcare and Information Technology sectors were the star performers in past. They may also do well but not as much as it did in the past and could at best be market performers, reason being slow down in Europeans markets and strength in rupee. This will keep the sectors under check. However a turnaround in Oil & Gas, Capital Goods and Infra structure sectors is very likely. These are good times to remain invested in equity markets. Long term investors will certainly get good returns, far more than the Bank deposits and other Debt instruments. 

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Contact Us at:

PRAGMATIC WEALTH MANAGEMENT PVT. LTD.

Head Office:

102, 1st Floor, Topaz Society,

Dr. Nair Road, Agripada, Mumbai Central (E), Mumbai 400011

Tel: +91-22-23001290 / 23007290/ 8108178683

E-mail: contact@pragmaticwealth.net

Market Brief

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Pragmatic Wealth's Bi-Weekly Newsletter

After the collapse for a subsequent 5-day long stretch, the fall of the markets have been arrested, mainly due to reasons pertaining to the maintained stance of Credit Suisse for India at 10%, buoyed by the nation’s economic recovery and falling inflation, and the Union Government tabling the Goods and Service Tax Bill (GST) in the parliament. Because of the above mentioned reasons, the market has been able to sustain its vital support of 8240, from where it bounced back sharply to close in the positive territory. Markets are not out of the woods, as there is an overhang of weak monsoons, corporate results, and uncertain global markets, and geopolitical conditions. All this will keep the markets jittery and volatile. In the absolute near term, a dead-cat bounce is quite possible, and Nifty would attempt to test 8500 to 8600 levels on an initial basis and in a better case scenario, it may attempt to test 8700.

However, due to high vulnerability, any major bad news can bring down the markets sharply and in event of Nifty closing below 8240, would prove catastrophic and sizeable downside in the market can be witnessed. So in the near term, market at best can be range bound or drift downwards. Investors should remain cautious and wary about the markets, and it is advisable to exit weak and under performing stocks in the rally. The longer term investors can use sharp declines in the market to buy selected stocks in sectors like Capital goods, Healthcare, Oil and Gas, and Infrastructure.

For Bi-Weekly Newsletter of Pragmatic Wealth Management Pvt. Ltd. Click Here

Contact Us at:

PRAGMATIC WEALTH MANAGEMENT PVT. LTD.

Head Office:

102, 1st Floor, Topaz Society,

Dr. Nair Road, Agripada, Mumbai Central (E), Mumbai 400011

Tel: +91-22-23001290 / 23007290/ 8108178683

E-mail: contact@pragmaticwealth.net

Market Brief

Invest the Halal Way!!!

Pragmatic Wealth's Weekly Newsletter

Amid high volatility markets ended this week with marginal gains (Nifty) of 15 points, volatility was also witnessed in stocks across the board. BJP’s poor performance in the by-polls further weighed down the sentiments in the earlier part of the week, however better news flows in the later part of the week in terms of huge  investment commitments by China raised the hopes and markets recovered. For the week ended September 19, both the benchmark indices rallied 0.1-0.2 percent. AUTO, IT, PHARMA and Banking Sectors performed well. Industrials and Infrastructure/Construction sector took a back seat. Pharma index and auto gained 1-1.4 percent. Capital goods, infra slipped 1.6-2 percent this week, metal index was down 3 percent.

Going forward markets are likely to remain volatile in the near term and a range bound is expected next week. Technically, 8000 on the lower side is a strong support area and on the higher side 8200 is a supply zone, since the undertone is bullish a break-out above 8200 on close basis will trigger a sharp rally and soon 8400 plus levels will be on card. On the other hand, hugely negative news flows and a close below 8000 on the Nifty would call for a deeper correction and 7800 can be tested.

Investors should stay cautiously optimistic on the markets. Short-term investors should be little wary and have a stop-loss discipline, nonetheless the long-term investors can use declines to buy quality bullish stocks particularly from AUTO, HEALTHCARE, Information Technology, CONSUMERS and CEMENT sectors. We advise investors to stay away from high-leveraged companies particularly from sectors like CONSTRUCTION, METALS, POWER and CAPITAL GOODS.

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TCS attains Rs 5 lakh crore market-capitalization

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Pragmatic Wealth’s Weekly Newsletter 

Thursday, 4th September 2014.

Tata Consultancy Services (TCS), the country's largest software services exporter, on Wednesday, attained a market valuation of over Rs 5 lakh crore after over a month.

At the end of today's trade, the market-capitalization (m-cap) of TCS soared to Rs 506164.69 crore, the highest for the company since its listing in 2004. Shares of the outsourcing giant ended the day at Rs.2584.15, today below by  0.66% on the BSE.

In dollar terms, TCS' market valuation rose to $84 billion.TCS, the first Indian company to achieve the feat, had earlier crossed Rs 5 lakh crore market capitalizations in July this year.

The IT bellwether is also currently the country's most valued company in terms of market valuation. TCS is followed by state-run ONGC whose m-cap stood at Rs.374388.25 crore, Reliance Industries (Rs 331218.71 crore), ITC (Rs 279295.48 crore) and Coal India (Rs 238790.16 crore). 

The market valuation of other big IT players such as Infosys stood at Rs 212929.64 crore, Wipro (Rs 142280.71 crore), HCL Technologies (Rs 116227.17 crore) and Tech Mahindra (Rs 57916.95 crore). 

Shariah Compliant Status   (IT SECTOR)

Company		Size		Sector	Shariah Rank	Shariah compliant Ratios
						Debt to MC*	Receivables to MC*	Cash to MC*	Interest Income to MC
TCS		Large Cap		Information Technology	01	0%	4%	4%	2%
INFOSYS		Large Cap		Information Technology	04	0%	4%	14%	5%
WIPRO		Large Cap		Information Technology	08	5%	7%	6%	2%
HCL TECHNOLOGIES		Large Cap		Information Technology	11	1%	3%	3%	1%
TECH MAHINDRA		Large Cap		Information Technology	27	4%	4%	1%	0%

    

*MC= Market Capitalization

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