stockaxis Market Intelligence (Commentary for April 2018; Outlook for May 2018)

We are pleased to present to you our monthly market commentary and outlook for the forthcoming month. The ‘stockaxis’ Market Intelligence’ is a quick update on the markets for the month gone by and our view for the next month. Use our sharp and crisp synopsis to continue building your wealth!

Global Trends

• The International Monetary Fund (IMF) has revised global growth upwards by 0.2% to 3.9% for both 2018 and 2019.
• The US Federal Reserve (Fed) stated that inflation was close to its target and announced its decision to continue gradually tightening monetary policy. The dollar declined and Asian stocks moved southward.
• US President Donald Trump announced tariffs of $60bn on Chinese imports.
• Amazon is looking to upset Walmart’s bid for Flipkart in order to increase its penetration into the Indian consumer segment.

Domestic Trends

• The International Monetary Fund (IMF) has forecasted India’s growth rate at 7.4% in the current fiscal, which is expected to accelerate to 7.8% in FY 20 making India the world’s fastest-growing major economy.
• The Nikkei Manufacturing PMI in India rose to 51.6 in April 2018 from 51.0 in the previous month. Sentiment was at its highest post implementation of GST; output and new orders rose at higher rates.
• India’s Consumer Price Index (CPI) increased to 136.5 in March 2018 from 136.4 in February 2018. The CPI forecast for the quarter-end is 138.73 (Trading Economics global macro models).
• The Indian Rupee depreciated vis-à-vis the dollar over the month ending April at 66.4367 (65.0746 at end-March).

Market Trends

• Fourth quarter of FY18 results announcements indicate rural demand recovery. Real estate and construction too appear to be looking up.
• TCS created history by becoming the first Indian company to reach the $100 billion market capitalisation (m-cap) mark after announcing its Q4FY18 results.
• FIIs recorded a net outflow in Indian equities of Rs. -5,552.21 crore in April against a net inflow of Rs. 13,372.40 crore in the previous month.
• The Nifty closed at 10739.35 on 30th April, 2018, having risen 527.55 points over the previous month.
• The Nifty 50 P/E ratio was at 26.66 at end-April 2017. The average P/E ratio for the past 12 months is 25.66.

Highlights

• The Good: Good monsoons predicted by MET, rural economy pick-up, GST established, demonetisation impact fades away
• The Bad: Crude price rise, telecom and banking sector stress continues

stockaxis’ Outlook for May 2018

With the Indian Meteorological Department (IMD) forecasting normal monsoons (with expected rainfall of about 97% of the long-term average) and a strong likelihood of the government raising the minimum support prices (MSP) for agricultural produce, the rural sector is on the threshold of a period of strong growth. The government has announced a minimum 50% margin to farmers and has budgeted for a 20% increase in the allocation for food subsidies in Budget 2018. Additionally, a number of states have announced waivers for farm loans amounting to about US$19bn, which, in turn, will increase the disposable income in farmers’ hands. The consumer sector earns about half its revenues from the rural economy. Companies with high rural exposure are expected to see robust growth in top line and profitability as a result of increasing rural prosperity.

We, at stockaxis, are constantly on the lookout for great businesses run by honest promoters that are available at the right price with sufficient margin of safety. Our stringent stock selection guidelines and clearly stipulated entry and exit points make equity investing a ‘rich’ experience for our investors!

Follow our WhatsApp channel