Bulls are taking control of Market

The market opened the week strongly by shrugging off negative global cues from international markets. The smart comeback of the indices was aided by heavy short covering coupled with FIIs buying interest after a long time. FIIs have been net weekly buyers for the first time after a lag of many weeks is an indication that rally is likely to sustain and propel itself to new highs on the back of renewed foreign funds inflow. The government has taken proactive steps with regards to GST by awarding contract to Infosys to develop a central software platform. It is a loud indication that the policy will be implemented though the timing could be slightly delayed. New IPOs of Alkem and Dr Lal Path listed at a whopping 30% and 50% premium over their issued prices respectively signaling the beginning of vibrancy in the primary market, a pre cursor of an impending bull market.

Events of the Week:

Rcom and Aircel are likely to merge which will create a formidable 4th largest player in the Indian Telecom space marking the beginning of consolidation in the industry. Bankruptcy code which was passed in the Lok Sabha clearing the way for speedy recovery of defaulted loans in a time bound manner will notch India higher on the ranking for ease of doing businesses. Adani Enterprises finally got a conditional nod from the Australian government to set up port and rail links for high potential Carmichael mines thus ensuring shareholder value creation in the long term.

Technical Outlook:

Nifty 50 has made a solid bounce back arresting the down ward momentum. Nifty 50 levels of 7550 have acted as strong buying levels for the market. Double bottoms are high probability trend reversal patterns. There is every indication that the markets have made a bottom of major significance especially in the middle of persistent negative news flow. Breakout above 8000 would be the first confirmation of the resumption of the uptrend at least for the medium term. Nifty 50 is expected to rise with regular corrections. Traders are advised to take long positions on dips whereas investors should stay fully invested in quality stocks.

Indian Stock Market Updates

Nifty 50 Daily Chart

Expectations for the week:

The bounce of the previous week testing Nifty 50 levels of 7550 has further strengthened its momentum. Led by short covering and renewed buying by FIIs the markets have firmly found support at these levels. The negatives of FED increasing the interest rates, postponement of GST and paralysis of the functioning of the government has been priced in and discounted. The market is now looking forward for cues to move ahead, however as the year is heading toward December 31st people are in no moods to commit, markets are thus expected to be range bound for the last week of the calendar year. Nifty ended the week up by 1.49% to close at 7861. We wish all our esteemed readers a Merry Christmas.

Major bottom in place, the big rally begins!

The market opened the week with intense negative sentiments reacting to the overnight fall in international markets but quickly shrugged off the fears and started to rise in an indication that it is in no mood to fall any further. Later in week when the US FOMC raised the interest rates by 0.25%, the market bounced back with a vengeance, giving a loud and clear signal that the bulls are back in charge. The commentary of the FED that the US economy is robust in terms of all round progress on all economic parameters gave the added boost to the markets. FIIs are still sellers in the Indian market but selling this week has dramatically reduced though short bets in the derivative segment still remain high creating possibilities of a swift rise in the market in the short term. However on the legislative front the winter session too looks completely wasted in terms of opportunity to pass key bills. The market had however not built in those expectations and therefore any delay in passing of the bills will not cause a set back to the market.

Events of the Week:

US surprisingly doubled the visa cost to $4000 per applicant for H1-B and other categories of visas causing substantive cost hardships to the Indian IT industry. Maruti’s minority shareholders voted in favor of the resolution allowing its parent company to invest in wholly owned subsidiary to set up large manufacturing facilities in Gujarat, potentially creating fears that the parent will skim away all the incremental benefits that may otherwise accrue to Maruti ltd. Supreme Court banned the registration of diesel powered engines above specified levels of the private cars and brought in restrictions for entry of diesel vehicles in the city limits rattling the entire auto industry and in particular companies heavily into diesel powered vehicles. Many companies will now have to rework their strategies.

Technical Outlook:

Nifty 50 has made a smart and quick reversal after testing its previous levels of 7550 and formed a powerful double bottom formation which indicates reversal. The pattern of lower bottom formation has been paused for the first time potentially giving an indication that the market is changing its course from bear to bull. Nifty 50 bounce coming in the middle of negative news is all the more convincing that the bounce is for real and the bottom has been formed. Nifty 50 is expected to rise subject to intermittent pauses. Traders are advised to take long positions on dips whereas investors should stay fully invested in quality stocks for long term.

Indian Stock Market Updates

Expectations for the week:

Market testing previous bottoms and bouncing back inspite of negative global cues is in itself an indication that at least a bottom of major significance is in place. The correction or the so called bear market that started in March of this year could have bottomed and the year 2016 would be a beginning of new stock rally. Huge short interest in Nifty 50 futures would act as a spring board for a rally in the coming week coupled with no major news, market will sail its own path. Market was technically oversold and therefore a bounce is natural. The response to IPO of Narayana Hrudayalaya is expected to be lukewarm in view of expensive valuations but short term gains can be made on listing. The market is expected to be net positive for the week with bouts of profit booking at higher levels. Nifty ended the week up by 2.7% to close at 7761.95

Downward momentum still continues

The market opened the week with negative under tone largely due to ongoing pessimistic sentiments on the local and global financial markets. OPEC maintained its stance to abandon the oil output targets leading to a further drag in oil prices by 10% on concerns of oversupply. FIIs have been negative week after week which also weighed heavily on the sentiments of the street. FIIs have sold stocks worth Rs 1000 Crs during the week but DIIs have patiently lapped up the blue chip shares that are being sold by FIIs. IPOs of Dr Lal PathLabs and Alkem Laboratories got an overwhelming response and were oversubscribed by 33 and 44 times respectively, reinvigorating the lethargic new issues market. Vibrant primary IPO markets are an indication that the underlying mood is positive though the secondary market is just dragging its feet in a negative vicious circle waiting for a positive spark to re-start the upward journey. Reminding us the Newton’s law “every object in a state of uniform motion tends to remain in that state of motion unless an external force is applied to it”. The external force could be the GST bill, the FED meeting or the budget. Only time will tell.

Events of the Week:

Cabinet cleared the Real Estate Regulatory Bill 2015 giving far reaching rights and redressals to the consumers thus ending decades of Builders’ dominance thereby creating an equitable platform for orderly growth of the entire real estate sector in the country. Essar Oil came out with a delisting offer with a floor price of Rs.146 giving an opportunity to the minority shareholders to exit at the discovered price which could be in the vicinity of the current market price. GST panel finally suggested the rate of 18% for a more fair and equitable tax incidence rate, clearing an important hurdle for passage of the Bill in the Parliament.

Technical Outlook:

Nifty 50 kept the free fall momentum during the week. The downward pressure in the short term is expected to continue and Nifty 50 is expected to go all the way up to 7550 levels where it may slightly penetrate but will finally find a strong support. Nifty 50 is expected to remain weak with higher amount of volatility before it calms down, a signal that the bottom is being made. It is expected that the NIFTY 50 will trade with negative bias for the week, however the reaction to FED FOMC meeting outcome could change the course of the market mid week. Traders are advised to stay on the side lines prior to the announcement. Sometimes trend reversals happen on important events.

Indian Stock Market Updates

Expectations for the week:

Pessimism is reaching alarming levels; the downward momentum is being accentuated by inaction on the legislation front. Panic selling was visible in many of the blue chip heavy weights, a first sign that the bottom is nearer than before. Signs of capitulation are clearer than any time in the past 9 months. The urge to sell now and buy back later when the prices fall is far more intense than ever before, indicating that the formation of major bottom is in the making. In the short term, the market will go into wait and watch mode prior to the FED meeting which can be a major cause for trend reversal. FIIs which were hitherto in the sell mode can change their stance after the commentary of the FED Meeting, which could kick start the next wave of buying opportunity. The trading axiom “be reactive rather than be proactive” are the most appropriate wisdom words this week for safety of the traders. Let the FED decide what it wants to do, traders have ample time to react. Nifty ended the week down by 2.65% to close at 7609.50.

Lack of trigger dragging markets lower

The market opened the week with an anemic bullish undercurrent awaiting some fireworks from RBI but nothing transpired thereby shying away bulls. However the monetary policy at least ensured that the transmission of rate reduction should happen as soon as possible and gave deadline of 2017 to clean up all the books before the next wave of lending begins. Q2 GDP numbers were encouraging at 7.4%, with agriculture giving a positive surprise due to growth of 2.2% brushing aside weak monsoon woes. Agriculture as a sector looks promising as there was lot pessimism built into it. Four wheelers kept the scorching pace of growth while two wheelers fainted in their numbers. FIIs have been negative continuously since last few week and have sold stocks worth Rs 2500 Crs during this week, however DIIs have been net positive for the week. Green shoots have started to appear in the realty sector post the festive discounts where sales have increased by 10-15% in the budget category of housing inventory. The economy is marching ahead slowly but the mood in the stock market is still somber waiting for some positive trigger. 

Events of the Week:

SEBI has proposed in the investors’ interest that if the newly listed company does not utilize its IPO proceeds in the manner stated in the offer document, then investors have a right to exit with no loss on their shoulders. IFC is in the advanced stage to pick up 15% stake in IDBI Bank, paving the way for professional management in the public sector banking space. Bharti Airtel rattled the entire telecom industry by announcing its plan to invest Rs. 60,000/- Crs over a three year time span potentially indicating a tectonic shift in the industry dynamics and at the same time throwing questions in the minds of the investors of how the telecom sector can thrive with so much investment and intense competition, and Reliance Jio just waiting at the door steps.     

Technical Outlook:

Nifty 50 had mildly rebounded until the middle of the week as expected and then later plunged. The downward momentum in the short term and in the medium term will continue and Nifty 50 is expected to go all the way up to 7700 levels first and 7550 levels later wherein it is likely to find a strong support. Nifty 50 is expected to hover around these 250-300 points range for some time before finding any meaningful direction.  It is expected that the NIFTY 50 will test its first support area of 7700 during the week which after a brief pause will again test the lower levels of 7550. The market to remain choppy with a bearish bias for the week ahead.

Indian Stock Market Updates

Nifty 50 Daily Chart

Expectations for the week:

GST expectations are getting louder and louder with each passing day. The difference of opinion between the parties is converging and it is expected that the bill will be cleared in the winter session of the parliament. Market will go into wait and watch mode prior to the FED meeting outcome causing the market to oscillate in a narrow range. The FIIs are still on the bearish side of the market. OPEC’s decision will also have a bearing on the market in the short term. Commodity prices at record lows is a boon for a consumption economy like ours’ wherein lower commodity prices with lower inflation and beginning of interest rate reduction cycle by the RBI are all factors to sustain a massive bull market in the long term. However in the short term the markets are guided by the sentiments which currently don’t favor bulls. Nifty ended the week down by 2.02% to close at 7781.90.