NEXT WEEK: EARNINGS, MACRO DATA WILL DICTATE THE TREND FOR MARKETS

Benchmark equity indices rebounded in the second week of 2019 with small weekly gains over last Friday’s close. Investors sentiment was strong amid a firm trend overseas, supported by rising hopes that the US and China would strike a deal to end their trade war.

On weekly basis, Sensex rose 0.88%, or 314.74 points, to ending at 36,009.84, while Nifty surged 0.63%, or 67.6 points, to close at 10,794.95.

Broader market front, S&P BSE Midcap and S&P BSE Smallcap Index rose 0.64% and 0.41%, respectively. In the sectoral space, nine out of 11 sectoral advanced this week, lead by the Nifty FMVG up by 1.9%, followed by Nifty Pharma up by 1.3. On the flip side, the NSE Nifty Metal Index fell the most at 1.0%.

GST RELIEF FOR MSMEs

On the macro front, the GST Council on Thursday decided to double the exemption threshold to Rs 40 lakh and hike the limit for composition scheme to Rs 1.5 crore from Rs 1 crore with effect from April 1 which will relief to Micro, Small and Medium Enterprises (MSME) (including small traders) among others.

Special category states would decide, within one week, about the composition limit in their respective states.

INDUSTRIAL GROWTH SLOWS TO 17-MONTH LOW OF 0.5% IN NOV

India’s industrial output growth rate slowed to 0.5 percent in November as compared to 8.4 percent in October 2018, its lowest rise since June 2017, the outcome of an unfavorable base effect as well as contraction in manufacturing. The previous low was in June 2017, when IIP growth fell to -0.2%.

A decline in the manufacturing sector especially that of capital goods, contributed to this decline. Manufacturing production shrank 0.4%, while electricity and mining output grew 5.1% and 2.7%, respectively. After the initial turbulence following the introduction of the goods and services tax (GST) in July 2017, when factories reduced their stocks, growth in the IIP recovered in November that year to hit a robust 8.5% as factories restocked during the festive season. This acted as a negative base for the November IIP growth in 2018.

RUPEE IS ASIA’S WORST PERFORMING CURRENCY THIS WEEK

Rupee becomes the worst performing currency among Asian basket on rise in demand for the American currency from exporters coupled with unabated rise in global crude oil prices. On a weekly basis, the rupee depreciated 1.10 percent (Rs 0.70) against the dollar as it ended at 70.49 on January 11 against January 04, closing of 69.72 against the dollar.

US STOCK MARKETS ROSE ON EXPECTATIONS OF POSITIVE TRADE TALKS

U.S. market indices poised to post its biggest three-week gain since the period following the 2016 election, a dramatic bounce back from its late-December selloff. Investors may also have found a modicum of cheer on the U.S.-China trade front after U.S. Treasury Secretary Steven Mnuchin told reporters Thursday night that Vice Premier Liu He, the most senior economic policy adviser to President Xi Jinping, would travel to Washington later in January to continue trade negotiations, talks that have been seen by markets as gaining momentum this week. All three major U.S. indexes ended the week at least 2 percent higher, their third consecutive week of gains. The Dow Industrials are up 10% since their Christmas Eve trough, rising 6.9% over the past three weeks.

OIL PRICES GAIN FOR A SECOND STRAIGHT WEEK

Crude oil prices fall for first time in ten days on Friday by around 2% but end week higher. Despite the dip, both benchmarks ended the week with gains for the second week running. Brent rose 6 percent to settle at USD 60.48 a barrel while WTI saw gains of 7.6 percent to settle at USD 51.59 a barrel. It was the first time that Brent and WTI had seen nine days of consecutive price increases since 2007 and 2010 respectively.

COMING UP NEXT WEEK!

On the domestic economic front, the inflation data based on wholesale price index (WPI) for December 2018 will be announced on 14 January 2019. On the global front, China exports and imports data for December will be declared on 14 January 2019.

Internationally,US Balance of Trade data for November data will be declared on the same day. US Retail Sales for December will be declared on 16 January 2019. US Federal Reserve issues the Beige Book of Economic Condition on 17 January 2019.

Next week Key companies results: Zee Entertainment, Hindustan Unilever, Wipro and Reliance Industries.