24.Aug.2015 - 28.Aug.2015 - Weekly Indian Market & Sectorwise Stocks Outlook

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Metal Stocks Outlook for the week – 24 to 28.08.2015 Seen range bound with a positive bias


Concerns over slowdown in the global economy will continue to weigh on market sentiment in the coming week, with benchmark indices likely to fall further. Amid the persisting weak sentiment, one stock that will be in the limelight on Monday is Indian Oil Corp, in which the government will divest 10% stake through an offer for sale on Monday. Yesterday, stocks of Indian Oil ended down 0.7% at 394.85 rupees. The uncertainty in the global markets seems to have offset the news of government considering giving relief to foreign institutional investors on the minimum alternate tax issue.

The news is unlikely to soothe market sentiment in a big way. It will provide initial support but if the macro overhang continues, not too much positive will come out of this. Moreover, expiry of the August futures contracts on Thursday will keep trade volatile during the week. We expect the August futures contract of the National Stock Exchange's Nifty to expire around 8300 points. The likely weakness in the rupee will also weigh.

Yesterday, the rupee ended at 65.8250 per dollar, its lowest closing since Sep 5, 2013. Worries that a slowdown in the Chinese economy will translate into slower global growth saw the Nifty and the S&P BSE Sensex falling 2.6% and 2.5%, respectively, this week.

The benchmark indices have effectively erased all the gains made this year. Besides global concerns, persisting worries over lack of progress on key legislations and pick-up in earnings growth, and uncertainty over the US Federal Reserve's rate hike move have led to the gradual weakening in domestic equities. Year to date, Nifty is up 0.2% and Sensex is down 0.5%.

Yesterday, Nifty and Sensex ended at a two-month low. Nifty closed at 8299.95, down 72.80 points or 0.9% and Sensex ended at 27366.07, down 241.75 points or 0.9%. Banks and Metal stocks are likely to extend losses and a stock-specific approach next week.
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FMCG Stocks Outlook for the week – 03 to 07.08.2015

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Stock indices are seen trading with a positive bias next week after they ended at a one-week high yesterday but the sustainability of these gains will depend on the outcome of the Reserve Bank of India's monetary policy on Tuesday. According to a Cogencis poll of 40 economists, treasurers, bankers and fund managers, 88% expect the Indian central bank to keep the repo rate unchanged at 7.25% due to uncertainty surrounding the monsoons and timing of the US Federal Reserve's interest rate hike. The rest expect a 25-basis-point cut.

However, on Monday, domestic equities may be range bound owing to weak Apr-Jun earnings from index major Larsen & Toubro. Post market hours yesterday, L&T reported earnings for the quarter ended June which misses analysts' expectations on the net profit and sales front. L&T's consolidated net profit dropped 37% on year to 6.06 bln rupees, missing analysts' estimate of 7.92 bln rupees. Order inflows fell 21% on year to 264.00 bln rupees.

Consolidated net sales at 202.5 bln rupees were up 7% on year but lower than forecast of 203.20 bln rupees. Operating margin declined to 11.3% from 13.2% a year. The company has maintained its order inflow growth and revenue growth guidance of 15% for the current financial year. Yesterday, the stock ended up 1% at 1,791.25 rupees. Apart from L&T's numbers, update on the southwest monsoon forecast on Sunday by the India Meteorological Department will also lend direction to equities on Monday.

Apart from the RBI policy, market participants will track Apr-Jun earnings as well as progress of key bills such as the Goods and Services Tax bill in Parliament next week. On the earnings front,
Bharat Heavy Electricals, Tata Motors, Bharti Airtel, Mahindra & Mahindra, Grasim Industries, Hero MotoCorp and HCL Technologies are the major companies reporting Apr-Jun results next week.

Among sectors, automobile stocks will be in focus as their July sales numbers are released and
public sector banks are seen trading with a positive bias after the government detailed its capital
infusion plan for PSU banks for the next few years. As a lot hinges on RBI policy outcome, market participants peg initial resistance for the National Stock Exchange's Nifty at 8600 points. Looking at the price action and that market has given a closing right near the highs of the week indicates that market is poised to go higher.

Flows from Employees' Provident Fund Organisation which yesterday said that it would start
investing in the equity market from Aug 6, will keep the downside limited in equities. Yesterday, the Nifty surged 111.05 points or 1.3% to close at 8532.85 points and the S&P BSE Sensex jumped 409.21 points or 1.5% to end at 28114.56 points.