The week opened with Black Monday and fell by 2% reacting to the Chinese SSE Composite fall of around 8%. The China mayhem rattled markets across the globe. But during the week market stabilized and recovered all of the fall of the week shrugging aside negatives and marching ahead in response to inherent fundamentals of its own.
US FOMC meeting this week gave no hints when the prevailing low interest rate regime would end. The street is expecting a rate hike but the uncertainty on its timing continues.
Back home results season gave the indication of how the economy performed. Sectors like PSU Banks across the board reported dip in net profits on the back of increase in provisioning of bad loans in Steel and Infra sector, Bank of India reported 84% PAT fall, Dena bank profits down by 81%, Bank of Baroda PAT down by 23%, OBC PAT down by 30%. Contrastingly the private sectors peers like the Yes Bank, IndusInd Bank, HDFC Bank reported healthy 20% - 25% growth in profits. Instead of value buying in PSU Banks, it would be far more profitable to invest in established good quality businesses of Private sector Banks. ITC numbers for FMCG vertical were encouraging but Cigarette business showed 1.2% fall in revenues QoQ. The stock price is expected in remain mildly bullish. Godrej Consumer reported excellent PAT growth of 39%.
The overnight notice of disinvestment as per new guidelines resulted in FPO of PFC on Monday which was a big success drawing good response of investors and FIIs alike in-spite of the Black Monday event due to China mayhem. PFC has high dividend yield of 3.77% with 5 year profit CAGR of 17% operating with one of the best ROE of 20% in the industry, were offered to public at P/E of 5.75 and P/B of 1.25x making PFC a great value buy.
The IPO of Syngene was another attraction drawing oversubscription close to 32 times. The stock should give listing gains to investors in the short term as it is the only consistently profitable company with high growth and high operating efficiency in the category of outsourced research in biosimilar space.
Commenting on the technical outlook, Jimeet Modi, CEO, SAMCO Securities said, ''Higher tops and bottom is still intact in Nifty index. For short to medium term the trend is up. 8300 Nifty level is key support which if broken will push the markets to lower levels, but seems unlikely. However Small Cap and Mid Cap Indexes are showing resilience and are inching higher indicating the support at 8300 Nifty will hold true in the coming weeks. The upward journey in the market to continue in the week ahead.''
''Inspite of bad results from PSU Banking space, the stock prices bounced back vigorously clearly indicating that the market is not going down any more and the stocks are deeply oversold implying a bounce back this week. Further in the RBI Meeting on Aug. 4 2015, if the interest rate is reduced and it is expected so, this would act as a short term trigger for a strong bounce back for the entire PSU Banks pack. On the legislature front, looks like, Real Estate Bill will see new life as Parliamentary Standing Committee has finalized the bill with pro buyer stringent clauses. Real Estate sector in the long run will get boost. The mood of the markets to remain positive in the coming weeks. Nifty opened the week at 8,492 and closed at 8,532 net gain of 0.47%, Modi added.
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