Market to remain indecisive this week

Market to remain indecisive this week

This week too, the domestic stock markets will continue to be influenced by global trade wars, volatility in global stock markets and crude oil price fluctuations. Thus combined with domestic factors such as the stress in the banking sector, direction of foreign fund flows and the rupee's movement against the US dollar, will also impact stock movements.

Technical charts showed a bearish outlook for the National Stock Exchange's (NSE) Nifty. The Nifty remains in downtrend and further downsides are likely early next week once the immediate supports of 9,952 points are broken. Immediate resistance is now at 10,227 points.

The key Indian equity indices – the BSE  Sensex and the NSE Nifty50 -- closed last week at 5-month low levels on the back of trade protectionist measures, apart from the ongoing turmoil in the domestic banking system as well as the uncertainty on the political situation in the country. The Sensex lost 579.46 points or 1.75 per cent to 32,596.54 points -- its lowest closing level since October 23, 2017. Similarly, the Nifty ended below the psychologically important 10,000-mark level and closed last week's trade at 9,998.05 points -- down 197.1 points or 1.93 per cent -- its lowest closing level since October 11, 2017.

The week is a short week with three trading sessions as Thursday and Friday are public holidays on account of Mahaveer Jayanti and Good Friday. Besides there is F & O expiry.

Investors will continue to keep close eye on further actions byDonald Trump and the reaction of the Chinese government. In addition, parliamentary proceedings, macro-economic points like Index of Eight Core Industries (ECI) figures, along with the country's fiscal deficit numbers up to February and its external debt data will be keenly watched by investors. 

The near-term outlook for the equity market remains unclear. While traders should remain cautious, the decline in good fundamental stocks would offer buying opportunities for long-term investors. Once the new financial year begins, people may take a fresh view on India. The markets may go through the pain for a few more sessions. Though markets are looking bad, corporate earnings are improving. Markets will ultimately determine which companies are doing well, which companies are expanding. This quarter when the results come out, the markets will make a decisive move.

Market movement to be led by global cues, volatility to persist

After a good previous weeks, stock markets failed to build on the momentum as indices erased all its gains to close almost unchanged. The possibility of four rate hikes this year in the US, rising crude oil prices and rising bond yields were among the major concerns that dragged the markets lower once again.

Even promising quarterly GDP numbers failed to cheer the sentiment on the street.The pace of economic growth in India is pretty much in line with expectations as captured by the latest GDP estimates. Indian economy extended the recovery during Q3, with GDP growing at 7.2% year-on-year (Y-o-Y), compared with 6.5% a quarter prior.Estimates project FY18 GDP will expand by 6.6%. While, core infrastructure sectors during January grew at a faster clip at 6.7% (Y-o-Y). India's fiscal deficit on the other hand, stood at Rs 6.77 lakh crore at the end of January, much above the target for the entire fiscal.

The previous week was a short week as markets were shut on Friday on account of Holi festival. The Sensex ended 137 points down or 0.40% at 34046.94, while the Nifty was down 34.50 points or 0.33% at 10458.40. The market breadth favoured the declines as 1163 shares advanced, against a decline of 1532 shares, while 207 shares were unchanged.In terms of stock movements, Coal India, IndusInd Bank, BPCL and AurobindoPharma were the top gainers among all indices, while ICICI Bank and SBI were the top losers.

Experts believe that volatility in Indian markets may continue for some more time due to both global events and domestic factors. The results of state elections in Tripura, Meghalaya and Nagaland with BJP set to come to power in Nagaland and Tripura should aid positive sentiment.

The automobile sector is expected to be in focus next week as the companies release sales figures for February 2018. Among other sectors, a rise in prices of steel post the release of strong economic data in China boosted buying in shares of metal companies.

As long as the market consolidates without such a breakdown, chances of a breakout will remain higher with a target of 10,900 levels. So how is the coming week expected to pan out for investors? Going by theweekly charts markets appears to be in a consolidation mode in the larger zone of 10630 – 10300 levels.

As long as the market consolidates without such a breakdown, chances of a breakout will remain higher with a target of 10,900 levels.

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Stock Market Update

Market Volatility to Continue This Week

Continuing on the trend last week, expect a volatile week this time around too due to expiry of derivatives contracts on Thursday. Investors will also be watching for global cues and the developments in the PNB fraud case. The last few weeks of correction in Indian markets has resulted in massive losses, especially for retail investors who were chasing momentum in mid and small-caps. There seems to be a pattern of distribution where frontline indices are holding steady within a band while the mid and small-caps continue to correct heavily. However, this should provide a good opportunity for an entry in the near future.

Last week saw Nifty trading in a range between 10,450 and 10,600, and the Bank Nifty index being dragged down by the Rs 11,000 crore Punjab National Bank fraud case. The rupee ended at 64.21 against the dollar, compared to 64.39 last week. FIIs were net sellers to the tune of 28.5 billion rupees ($44 million) while DIIs were net buyers to the tune of 23.7 billion rupees.

The highlight of the week was the bank fraud case involving jeweller Nirav Modi. The case may have a wider impact on the banking sector given the possibility that other jewellers could have exploited the letter of credit and bank guarantee facilities to fund their business operations. A pertinent point to note here is that the quantum of fraud is so huge that the likely recapitalisation amount that PNB is supposed to receive (54.7 billion rupees) from the government may be completely wiped off.

On the macro front, CPI inflation for January eased to 5.07 per cent, compared to a 17-month high of 5.21 per cent in December. Factory ouput continued to record strong growth for a second straight month at 7.1 per cent in December. IIP growth is expected to trend higher in January as commercial vehicle sales have expanded by 36.6 per cent. The positive contribution of cement, diesel and even two wheelers augurs well for growth recovery, especially for the rural economy.

Merchandise exports increased 9.1 per cent to $24.38 billion in January compared to a year ago, while imports surged 26 per cent to $40.68 billion. Trade deficit jumped 64.6 per cent to $16.30 billion in January.

With the results season almost over, all the focus will continue to remain on the global cues. Last week, the Dow Jones increased by 4.5 per cent and recovered 50 per cent of its recent losses. Hence, once the domestic concerns settle, Indian indices are likely to take part in global rally.

Posted by Digamber 

Market Volatility

Volatility to continue for some time led by global factors

Domestic equities markets have gone through nearly 10 % correction in the past week riding on the back of several factors – following global markets fall and domestic events (Union Budget, Long Term Capital Gains tax etc. Hardening of bond yields globally is one of the key factors driving the market correction. In the Indian context too Bond yields have increased from 6.3% in July 2017 to 7.6% now.

Many stocks which were quoted at higher valuations have been moderated and present an investment opportunity. Overall the economic outlook is favourable and a further consolidation in corporate earnings will give investors a decent earning opportunity.

There is consumption recovery – both urban and rural, savings as well as structural changes like GST which should boost economic sentiments.

Other factor that will play out are the on-going quarterly results season and crude oil price fluctuations, combined with the direction of foreign fund flows and the rupee's movement against the US dollar. All these will also impact investors’ decision to enter the market in one way or the other. Thus equities market this week will focus on earnings, macro-data and, of course, global cues.

If the global markets remain volatile, it might spill over to Indian markets. FPIs (Foreign Portfolio Investors) have been net sellers; hence support from DIIs (Domestic Institutional Investors) remains important in event of global volatility.

Barring today’s (Monday’s) rise in indices, in the past few weeks, a massive sell-off in the global markets has pulled the Indian equity indices deep into the red. Since February 1, 2018, the Bombay Stock Exchange (BSE) Sensex has shed around 1,900 points and the National Stock Exchange (NSE) Nifty50 over 500 points. Market regulator is of the view that Indian stock market volatility may continue for some more time due to global factors. However SEBI feels that there is no cause of worry in terms of volatility, as the country has a robust risk-management system and that there is no issue in terms safety of contracts or enforcement of contracts.

Apart from global cues, the on-going quarterly results season assumes significance as major firms like GAIL, Indian Hotels, DLF, Fortis Healthcare, GMR Infra, Welspun India, Idea Cellular, Jet Airways, Nestle India and Sun Pharma are expected to announce their quarterly results in the this week. The current earnings season is likely to provide strong signs of revival in corporate earnings, underlining the long-term growth prospects.

Besides the Q3 results, investors will keep a close watch on the upcoming macro-economic data points such as the Index of Industrial Production (IIP), Consumer Price Index (CPI), Wholesale Price Index (WPI) and Balance of Trade figures. The Central Statistics Office (CSO) is slated to release the macro-economic data points of IIP and CPI on February 12.

Technically Nifty has immediate supports at 10,276 points and any pull-back rallies could find resistance at 10,703 points.

Success Story : Bank Nifty was good buying on 25180 Level on 06.02.2018. Chart was telling us oversold zone as from last 2 session world market crashed heavily, bears were very strong  as we seen reversal we grabbed the opportunity by taking risk of Rs. 300 with 900 point rewards.
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