Latest Indian Share Market Updates & News in Jun 2019

Market Breadth is Chaotic
 
This week, Mr. Market was dominated by NBFCs recording one the highest turnovers on the exchanges. Rumoursand conjectures were overshadowing stocks such as Indiabulls Housing Finance, DHFL, Yes Bank, IndusInd Bank etc. which is a sign that the pain is nearing an end. Sectorally, markets are divergent and chaotic and no single inference can be drawn upon.FMCG is in a sideways to consolidation phase, pharma is in a downtrend but bottoming out, IT is into a topping process, metals are bottoming out and oil and gas as well as realty are in an uptrend but are now correcting. Above all, mid and small caps are still under pressure. Such a divergent behavior signals one thing that markets are unwilling to move either way. Nifty could test the gap created by election day results in a worst case scenario, which could be a good starting point for the bulls.
 
Globally too, the mood of the market is similar to India - not responsive to news events, sideways to consolidation phase and awaiting big triggers. Energy based commodities are experiencing continuous selling pressure. Crude and natural gas hopefully have begun their larger multi-year downtrend which can even halve the oil prices. That being the case, equity bulls will rejoice worldwide and India will not be far behind.
 
Events of the Week:
 
Auto giants like Tata Motors reported a massive decline of 23% in global sales, Indian passenger vehicles and 2-wheelers too are reducing production in double digits and inventories are at record levels. Despite these moves, the stock prices are refusing to go down which indicates that the stock prices have already factored in the weakness in numbers. Therefore, very little room is left for a downside potential for the time being.
 
Technical Outlook:
 
Nifty50 is moving lower steadily, after making failed attempts to rise intermittently during the week. Volumes and volatility were low throughout the week indicating that this is only a corrective fall and not a beginning of a bear market cycle. The gap of past month is the most likely support area. 11650 -11450 is a good support area for the market to find its feet. Current fall may not offer shorting opportunities but traders should be watchful for any buying setups at lower levels.
 
Nifty Today
 
Expectations for the Week:
 
Next week, US Fed is likely to announce their interest rate policy and President Donald Trump's reaction to this would bring some stir in the global investor community and inturn markets. Growth is the backbone behind any investment and a weak commentary on growth although a positive for the interest rates to come down further, is bad for global markets which are mainly riding on growth expectations. Investors are going around in circles trying to figure out a strategy to play this lackluster market. Buy on dips should be undertaken in FMCG and good quality private sector retail focused banks.Nifty50 ended the weak lower at 11823, down by 0.4%.

Caught in thecurrent Dow Googly?
 
Markets had a turbulent week as skeletons further emerged in the ongoing liquidity crises that the financial markets are undergoing. Given DHFL's default on a portion of interest payments and the difficulty in rolling over the commercial papers, gives a glimpse of what happened in the US a decade ago with the subprime crises. Can this be dubbed as the Indian version of subprime crises is the question the Street is grappling with. The malaise was caused due to the rather illiquid nature of assets which the lenders had agreed to finance. But since lenders are no longerable to rollover their bonds/commercial papers, they have no option but to sell the mortgaged assets which has become quite difficult in the current market. This temporary funding gap mismatch, unless the RBI proactively helps them, can snowball into a bigger-crises of confidence that can lead equity markets to roll down further.
 
Since years, the Street has presumed that Indian markets move in tandem with the US bourses but this time investors got caught in the Dow googly. Our market has its own economic lifecycle, demographics, physiology and many timesmoves independently compared to the US indices. While the US markets rallied, our markets faced the heat mainly due to the domestic factors such as slowing growth which caused many traders to fall into the trap that if Dow is up, Indian markets will follow.
 
Events of the Week:
 
3rd June was a historic day with Nifty touching lifetime highs and that very day, FIIs too made one of their biggest purchases of Rs 3068 Crs. However, FIIssometime behave like retail participants and buy at the top of the cycleand since then the markets have tanked and erased all the gains made in the past week. This just proves that blindly following particular investors/institutions without self-application of mind can have harmfulrepercussions.
 
Technical Outlook:
 
Nifty50 has made a dark cloud formation on the weekly chart indicating a beginning of a deeper correction cycle. On daily chart, volumes have been higher on down days then on rising days which further confirms that there is limited upside and more room for downside. The upper trend line indeed acted as a resistance and since now the validity of the trendlines are established, a target of 11400 seems quite likely on the lower side. Sell on rise should be adopted by the traders and all long trading positions may be squared off.
 
Nifty Today
 
Expectations for the Week:
 
Markets will calmly digest the past result season in times to come. Many of the corporates have delivered returns below expectations. Additionally, earnings will be impacted due to international conflicts and what the budget might hold in the future. The indices will not be in a hurry to move higher but will sensibly correct to reasonable levels, which can then enable them to be ready to ride the next wave of upside if the Budget policies are progressive and growth oriented. Investors must not panic in debt mutual funds and withdraw their corpus but simply stay invested and let the tide heal itself with time. Nifty50 closed the week at 11870.65, down by 0.43%.