Continued bad news from China, and weak earnings of large caps caused correction in Nifty, as Nifty cracks below 8500, and closes at 8462. On the international front, The People’s Bank of China (PBOC) allowed the yuan to depreciate almost 2 percent against the US dollar to levels last seen 3 years ago, sending a shock through global Forex markets. Indian investors are worried about impact of devaluation of Chinese currency. India’s largest bank State Bank of India (SBI) reported a mixed set of results. Net Profits beat market estimates but NPAs were a bit higher than last year. SBI Chairperson Arundhati Bhattacharya is confident that there will be a decline in NPAs. She pointed towards certain cyclical factors that affect SBI in the first quarter (April-June), and that NPAs have always shown up in the first quarter and going forward SBI is seeing reduction of stressed loans. SBI stock fell by 5% and closed 269. As expected, it was a high volume day for SBI. At P/E 11, the stock is attractively valued for investors who believe economic recovery is possible in 1-2 years from today.
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Google Stock Update – 19July2015
We have been long on Google stock for a long time, and the stock has consistently rewarded our buying at lower level. Google was the super-star of the past week, going up 26% like a rocket launched into space, rising from $532 on Monday to $672 on Friday, a gain of $140 of 26.3% in the week, with most of it coming on Friday. It feels like a very strong short-squeeze because investors rarely bid up stock prices so rapidly. Therefore, whether this sharp vertical move will sustain or get sold will be determined by global market mood in the coming days. Google has shown the ability to hold large gains in the past, and it has also lost large gains rapidly many times because of profit booking. Based on Momentum indicators, this vertical rise is most likely to be sold into, and we should see correction in the coming days. Investors must consider booking some profits in Google stock. Its a windfall gain, and some profits must be taken home. Fresh stock buying in Google at current level is not advisable. Let it stabilize first. Nasdaq also has run up rapidly from 4900 to 5200, so there may be a 100 point correction this coming week to 5100, before an upmove can resume. Traders can book profits on Nasdaq Futures, and consider buying 80-100 points lower.
US Markets Review -17July2015
US markets opened on a positive note as the week began amid news that Greece and its international creditors have reached an agreement on a new bailout for the debt-laden country. The US markets maintained strength despite the retail sales falling by 0.3% in June versus expectations of a 0.3% increase. On the US economy front, the Producer price index rose by 0.4% in June following a 0.5% increase in May and expectations of a 0.3% increase. The Industrial production increased by 0.3% in June after edging falling 0.2% in May. The markets ended the week on a positive note owing to the news that the Greek parliament voted to approve the tough austerity measures. Upbeat earnings news from some influential companies also aided the investor sentiment. The initial jobless claims fell to 281,000 versus expectations of a level of 285,000. Nasdaq hit a new high on the back of stellar upmove by Google during this week.