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HDFC Securities' Monthly Strategy report - February 2018 -
HDFC Securities' Monthly Strategy report - February 2018
HDFC Sec | Published: 05 Feb, 2018  | Source :

The Month Gone By

In the month of January 2018, the S&P BSE Sensex and CNX Nifty rose 5.6% and 4.7% respectively. The indices have posted their best one-month pre-budget gain in 13 years. Abundant liquidity and expectations that the budget will boost the rural economy and revive private investment, without compromising on fiscal prudence, have aided the run-up. The one-month gain has come despite a pullback in the last two sessions following a sell-off in US and Asian markets over valuation concerns. Since 2000, the index has gained only eight times in the month leading up to the budget presentation, and rose as much as 11.7% in the run-up in 2002. The sell off in mid- and smallcap shares did not impact sentiments because of the record breaking run in benchmark indices during the month.

Key positives during the month

- The Nikkei India Manufacturing Purchasing Managers' Index (PMI) rose to 54.7 in Dec 2017 from 52.6 in Nov 2017, marking a three-year high.

- The Nikkei India Services PMI Business Activity Index rose to 50.9 in Dec 2017 from 48.5 in Nov 2017 on the back of stable new orders and improved output requirements.

- India’s Index of Industrial Production (IIP) grew 8.4% in Nov 2017 from downwardly revised 2.0% in Oct 2017 (2.2% originally reported) and 5.10% in thesame period of the previous year.

- Sales of domestic passenger vehicles grew 5.22% to 2,39,712 units in Dec 2017 from 2,27,823 units in the same month of the previous year.

- Wholesale Price Index (WPI)-based inflation slowed to 3.58% in Dec 2017 from 3.93% in the previous month.

- The direct tax collections has jumped by 18.2 per cent during the first nine months of current fiscal at Rs 6.56 lakh crore.

- Goods and services tax (GST) receipts rose in December 2017, reversing the decline seen in the previous two months.

- Bank loans rose in double digit growth rate in December'17, highest since more than 15 months.

Key negatives during the month

- Growth of Consumer Price Index (CPI) based inflation or retail inflation surged to a 17-month high of 5.21% in Dec 2017 from 4.88% in the previous month and 3.41% in the same period of the previous year.The Consumer Food Price Index grew 4.96% in Dec 2017 from 4.35% in Nov 2017 and 1.37% in the same period of the previous year.

- India’s trade deficit expanded to US$ 14.88bn in Dec 2017 (highest in more than 3 years) from US$ 10.55bn in the same period of the previous year and US$ 13.83bn in the previous month.

- Growth in India's infrastructure sector slowed to a five-month low of 4% in December on the back of declining steel and crude oil output.

- India reported a fiscal deficit of US$ 97.27bn for April-December or 113.6 percent of the budgeted target for the current fiscal year that ends in March.

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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor accept any liability whatsoever arising from the use of any of the above contents.