Latest Indian Share Market Updates & News in Feb 2019

A Range-bound index - What's next for Nifty?
 
Bulls and bears are taking turns to show their might; however, no-one is appearing to outdo the other and lead the indices decisively on a path. This week, markets made a technical bounceback from a trading range post a 9-day consecutive fall. The sentiment is sluggish which can be mainly attributed to the domestic feud between India and Pakistan, rising outflows by foreign portfolio investors, uncertainty due to the upcoming elections and the steep valuations. Also, to add to it, the problem of liquidity concerning the NBFCs is another major issue causing fear amongst the market participants, in addition Mutual Funds inflow in lumpsum category is at multiyear low. Approximately Rs 2.5 Lakh Crs worth of shares are estimated to be pledged by the promoters - this is one worry that is hanging over the marketand hopefully things are settling down for the moment but if market cracks deeper more skeletons will be expected out in the open. The Government is trying all means to neutralize and stabilize the situation which had caused a temporary pause in the credit system.
 
Zee Limited, ADAG Group stocks, Apollo Hospitals all these companies had a majorportion of their shares pledged and had experienced a hard time due to the crack in the leverage game. But now the situation is under control as they are all trying to restructurelike Rel Capital is selling RNAM, DHFL is also planning to sell its non-core strategic assets which will further clear the mess and make companies more robust in the long term. There seems to be buying emerging in deeply oversold mid and small cap stocks which are now available at cheaper valuations. This indicates a bounceback rally for atleast a few more weeks in the small cap space.
 
Events of the Week:
 
Buybacks have been a regular phenomenon especially in the IT sector, and now it is Tech Mahindra's turn.The Company's board approved a buyback of 2.05 Crs shares at Rs 950/share, its first buyback ever. With a premium of 15% to its CMP, this move will be positive for the minority shareholders, a win-win situation, as after the buyback, the returned quantity will also appreciate in the long term because the Company will strive to capture a huge market share in the upcoming 5G telecom services.
 
Technical Outlook:
 
Nifty 50 is still trading in the sideways band giving no clear signal. Given the breadth of the broader market is weak, there is every likelihood that higher levels will not sustain. 10,600 is a strong support for the index and if it is broken, markets will fall violently. Traders can go short on every rise and not bet aggressively considering the lackluster scenario. Investors can cherry-pick small and mid-cap stocks but only from a long-term perspective.
 
Nifty Today
 
Expectations for the Week:
 
With the earnings season now over, the macros will take charge. Global as well domestic factors have a higher probability of driving the Indian bourses going ahead, but uncertainty will prevail given the political scenario in the country. Market participants are eagerly waiting for the announcement of election dates the next week.Profit booking can be witnessed in certain counters such as DHFL, Canfin Homes, Indiabulls Housing Finance as they have recorded smart gains post deep corrections.The Government's move to infuse Rs. 48,239 in 12 PSU banks will keep the banking sector afloat but on the whole,the markets will continue to remain tepid. Nifty 50 ended the week at 10791.65, up by 0.6%.

Government on a healing spree before elections

This week, markets steadily fell everyday inspite of positive global cues. Despite good numbers from Sun Pharma (PAT up by 75%), United Breweries (Profit jumps up two-fold to Rs. 109 Crs), MMTC (348% growth in PAT), markets succumbed to profit booking on political uncertainty and higher valuation in frontline stocks like Asian Paints, Reliance, Nestle, HUL - all met with selling pressure which kept the bourses lower. RBI's sudden change of stance on Yes Bank has raised many eyebrows but the clean chit given to the bank has been widely cheered by the market participants. However, investors should wait for a correction before entering Yes Bank as one-off events cannot change the underlying trend of the stock.

Moreover, surprisingly, the volatility on D-Street was extremely low which indicates that the bears are losing their grip and bulls are gaining strength. Market-wide open interest is on the lower side as major participants are out of the market awaiting clear direction. Additionally, crude oil is rising since the last few weeks, but such a bounce will eventually resolve into lower prices again which will later help the bulls to take the indices higher.

Events of the Week:

IBC is indeed helping banks to recover their dues from corporate sharks. One more example being Jet Airways wherein banks in all likelihood will take control of the company, but if they do, then such an action can lead to faster recovery of NPAs and most importantly it will act as a deterrent for other doubtful accounts which will bring in a lot of prudence in the credit market.

Technical Outlook:

Nifty 50 after witnessing heavy selling recovered by the close of the week after taking support at the lower trend line. A 50% retracement will take Nifty 50 back to 10870, after which the trend is expected to resume lower. Too much pessimism has created a short-term emotional bottom for the time being but when the level of 10600 is broken, Nifty50 will fall violently. In the meantime, traders can go short on rise and take aggressive short positions only when Nifty50 decisively falls below 10600.

Nifty Today

Expectations for the Week:

Since the earning season is nearing its dull end, markets will most likely remain rangebound with a lower bias. However, some bounces are expected after the current week's fall but they will only prove to be a dead cat bounce and therefore should be ignored. The political climate is expected to further alleviate the pitch for the parties given the terrorist attack in Jammu and Kashmir. Whatever be the responses, the market will be impacted negatively. Investors are advised to remain on the side lines till a decisive direction is visible while traders can avoid trading. Nifty 50 ended this week lower at 10724, down by 2%.

Last Chance to Get out from Market
 
Markets opened on Monday in high spirits with an optimistic view that Nifty will finally cross its long-time resistance level of 11,000. However, this happiness eventually fizzled out as the index made a U-turn due to lack of follow up buying, non-supportive fundamentals and global uncertainties. Breadth of the Indian bourses has also been negative since the last few months and more so in the current month, wherein Nifty50 optically made a 5-month high but none of the other small and midcap indices marked such high levels. This was a clear symptom of a corrective bounce. Mr. Market is now expected to head lower as all good news seems to be over and the political hussle will come in the foray which will keep the stock prices under pressure. It is better to get out now and wait for lower prices.
 
The storm in the NBFC space is nowhere close to the finish line especially in DHFL which has been struggling with some issue or the other since September last year. It seems like the economy is really starved with liquidity as one-third of the credit is generated by them and these very same NBFCs are undergoing crises.Therefore, the economy is facing problems at the ground level generating consumption led growth, though RBI has made little effort in containing their problems.
 
Events of the Week:
 
The Sixth Bi-monthly monetary policy this week came out with a 25bps rate cut and a neutral stance. However, this reduction could be a one-off event and should not be considered as a new trend of dovishness because a lower inflation rate causeda ratereduction this time. No sooner the inflation starts rising again, monetary loosening might not happen.
 
Technical Outlook:
 
Nifty50 formed a doji pattern on daily charts on Thursday after a strong up move,therefore, the current fall indicates an evening star or a reversal of the uptrend. Other indices such as Nifty500, mid and small cap are in divergence with Nifty50 which means that there is weakness on the Street which will take the prices back to the levels of 10633very quickly. On weekly chart Head and Shoulder pattern is developing which if breaks the neckline will be a start of major bear market. Traders are advised to go aggressive shorts with weekly high as stop loss levels.
 
Nifty Today
 
Expectations for the Week:
 
Result season is almost over now, therefore, corporate numbers will not drive the prices but one must look out for international events for any relevant clues. Markets will steadily move lower due to lack of positive triggers. Profit booking should be considered in the IT sector and some of the pharma stocks which have rallied on the back of good numbers. Risk taking investors may consider investing in the chemical sector as some of the stocks in this sector have corrected very heavily by around 50-70% and now is the time to dive into them. As Warren Buffett rightly says "Opportunity comes infrequently. When it rains gold, put out the bucket and not the thimble." Nonetheless, investors are advised to stay on the side lines until a definitive opportunity of gold emerges as suggested by Warren Buffet. Nifty50 ended the week at 10943.60, up by 0.46%.

Will Mr. Market cross the 11000 mark before elections?
 
Markets this week were in for a rollercoaster ride with a disappointing first half but the sentiment improved as the US Fed did not raise interest rates indicating a pause for a reasonable period of time. The Fed's decision had a cascading effect on the Indian indices. This will be good for the equity markets in the medium term but nonetheless concerns of a slowdown across the world will have an over-arching effect to keep markets under the non-trending (corrective) phase. The latest economic numbers by the Indian Government indicate that India's economy expanded at a much faster rate than the numbers initially estimated in the last two fiscal years. This boosts optimism across the masses, however, given the drastic reduction in the number of IPOs and awarm response by the retail sideon the recently closed IPO of Chalet Hotels, it is seen that the indices are nearing a bottom, which is expected sometime before elections.
 
On the quarterly numbers front, we believe that there is strong resistance at the support levels as markets are trying hard to go down but are unable to. Results are enough proof - Vinati Organics delivered spectacular numbers but still there was no significant impact on its share price which has an upper cap. At the same time, Thirumalai Chemicals reported a bad quarter but the stock bounced back. This indicates a confused state of the market on the upside but unwilling to go lower at the same time.
 
Events of the Week:
 
The much-awaited Union Budget is a populist onewith focus on farmers and the salaried middle class. It is expected to give a good boost to the consumption and affordable housing space essentially. While the fiscal deficit target of 3.4% is more or less inline it will have no drastic implications on the economy. Markets reacted positively intraday immediately post the Budget, however, they will eventually lose steam and glide lower.
 
Technical Outlook:
 
Nifty50 has made a V-shaped recovery this week indicating that the markets are in no mood to go down for now and have taken strong support at 10605 levels. This non-trending phase of the indices is considered the worst for traders. Bulls are unwilling to commit and at the same time lower prices are unsustainable. Markets are currently in a confused state and are waiting for a major trigger for a BUY.
 
Nifty Today
 
Expectations for the Week:
 
Since the Union Budget is now over, which has time and again proven to be a non-event, all eyes will be on the political battle field. The Sixth Bi-monthly monetary policy next week is expected to reduce rates by 0.25% to boost spending. However, markets might be in for a positive surprise if the MPC reduces rates by 0.50% instead, which will take the Indian bourses to test 11,000 levels after which profit booking will emerge at the higher levels.Moreover, buybacks will also act as a positive to boost market sentiment which will improve liquidity in the system. Additionally, the central bank's move to remove BOI, Bank of Maharashtra and Oriental Bank from PCA indicates positive sign of recovery in the banking sector. Nifty50 closed the week up by 1.0% at 10,893.65.