StockAxis Market Intelligence (Commentary for March 2018; outlook for April 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!
- US trade deficit widened to $57.6 billion in February from a revised $56.7 billion in January.
- In the case of the China-U.S. squabble, US announced 25% tariffs on $50 billion to $60 billion in Chinese exports to the U.S., including aerospace, information and communication technology, and machinery. China in turn imposed fees on a wide range of U.S. products, including scrap aluminum, sparkling wine and apples.
- US gross domestic product climbed by 2.9% in the fourth quarter, the GDP growth in the fourth quarter reflects only a modest slowdown from the 3.2% jump in the third quarter.
- Producer prices in Japan were up 0.6% on year in February, the Bank of Japan said.
- A sharp increase in long-term US bond yields heralded the stock market stress. Bond yields, which had steadily increased by about 35 basis points from mid-December, rose sharply over the last two months.
- Crude oil prices fell by 10.7% in March from $69.33 per barrel to $61.90. This was primarily driven down due to increase in production in OPEC countries. U.S. crude production from major shale formations is expected to rise by 131,000 bpd in April from the previous month to an all-time high 6.95 million bpd.
- The Reserve Bank of India (RBI) six-member monetary policy committee (MPC), announced its bi-monthly monetary policy kept the repo rate unchanged at 6% and the reverse repo rate at 5.75%.
- Passenger vehicles have shown a good growth during March 2018.
- The two-wheeler and commercial vehicle (CV) segments have also continued their growth trajectory with the CV segment expecting to record peak sales after 2011-12. Additionally, improvement in crop production in rural regions has placed additional disposable income in the hands of the rural populace that forms a large customer base for two-wheelers, especially motorcycles. Further, improvement in construction and mining activities as well as restrictions on overloading in states like Rajasthan and Uttar Pradesh have given a fillip to fresh demand for trucks.
Domestic sales for March 2018
| Maruti Suzuki
| Tata Motors
| Honda Cars India
| Ford India
| Hero Motocorp*
| Suzuki Motorcycles*
| Royal Enfield
| Tata Motors
| Ashok Leyland
| SML Isuzu
| Bajaj Auto
| Maruti Suzuki
| * includes both domestic and exports
- Oil prices have been on the upmove in the last 2 quarters. This could weigh negatively on easing monetary policy stance of RBI. Further, increasing oil prices could impact the profit margins of companies across sectors such as refining, airline, paints, tyres, footwear, lubricants, cement, logistics, construction materials and chemicals for whom crude or its derivatives are major inputs/costs.
- Indian authorities have issued a lookout notice to all airports against ICICI Bank MD and CEO Chanda Kochhar, her husband Deepak Kochhar and Videocon Group promoter Venugopal Dhoot in connection with ICICI Bank's Rs 3,250 crore loans to the Videocon Group in 2012. The news could add to the volatility already present in the market.
- The markets reached high of 10,525.50 on 1st March, 2018 and low of 9951.90 on 23rd March, 2018.
- FIIs recorded a net outflow from the Indian stock markets to the tune of Rs. 7,904.85 crores in March 2018 against a net outflow of Rs. 18,619.15 crores in February 2018.
- On the last day of trading in March 2018, the Nifty closed at 10,331.60 which were down by 161.25 points over the previous month-end of 10,492.85.
- The Nifty 50 P/E ratio was at 24.66 at the end of March 2018.
- The Good: Indian car makers Maruti Suzuki, Hyundai, Tata Motors and Toyota reported sales growth of 11.7% in March 2018, supported by boost in semi-urban and rural demand.
- The Bad: The long term repercussions of the ongoing trade war between US and China could dent the growth of global economy which would be detrimental for equity markets in India.
StockAxis’ Outlook for April 2018
Stock market corrections, an inescapable part of investing, are playmates of long-term investors. In other words, bear market situations are gold mines waiting to be explored by the opportunists who foresee potential multi baggers at rock bottom prices. This is the time to increase allocation to equities. However, one must hold a magnifying glass to find fundamentally strong companies with immense growth potential for long term investing. Thus, with the prevailing slippage of the markets into the bear mode and knowing that this is another fleeting drop that the markets shall soon recover from, we highly recommend buying on the dip to milk the bear market situation and make humungous returns. And our investors do not need to worry about WHAT TO BUY? We here at stock axis are here to save the day as we shall mine these stocks for you and make your portfolios shine bright!