Latest Indian Share Market Updates & News in Jun 2019


Reforms are Raining - First SEBI now over to Govt
 
This week, markets continued its snail pace without any clear direction.Looking at the much talked about debt crises and defaults, SEBI recently tightened reigns with stricter disclosures and stringent regulations to discipline investments by mutual funds. This regulatory move will indeed create a listing boom in India as it will be harder for private companies to raise money directly via debt or equity, capital scarcity will lead them towards the capital markets for raising funds for growth and expansion. Although in the short term, it will accentuate the problem of credit availability to the private unlisted sector but in the long term it will be beneficial for the growth and development of vibrant capital markets in India. Exchanges will prosper, Credit Rating Agencies will prosper as their pool of income will increase. For investors, a whole lot of opportunities will emerge to channelize their savings in listed securities (debt and equity) wherein there will be heightened transparency and regulatory oversight which will protect their long-term interest. This is a step towards further formalization of the economy.
 
While SEBI is taking initiatives for India to become a developed country, the global scenario is becoming gloomy.The trade war situation has intensified between US and China and the oil related rift has also deepened. With the uncertainty in equities and debt, investors are moving to safer havens such as gold and the recent gold rally is the proof of risk aversion. Bitcoin is also another asset class which has again suddenly gained interest of investors, may be due to the same reason that equities are richly valued and therefore little scope for fresh investments which is why people are taking bets on Bitcoins.
 
Events of the Week:
 
Recent bout of IPOs with oversubscription in IndiaMart's case might seem rosy from the outside but on deepdiving, the oversubscription funds is roughly ₹ 17000Crs which is not significant when compared to bigger IPO issues. Also, KPR Agrochem's IPO was cancelled one day before its issue date, this is indicating that IPO market is not in good shape, implying subtly that current state of the market is like a mini bear market and historically IPOs are cancelled during bear market bottoms. IPOs many times correctly depict the true state of the market.
 
Technical Outlook:
 
Nifty50 is oscillating along its mean trend line indicating that the trend is up but currently the market is undergoing correction. There are currents and cross currents happening in various sectoral indices. Auto Index is in down trend and IT is in uptrend. Nifty50 is therefore not clearly showing any trends as to which way it will unfold. However, closing below 11600 would suggest further weakness with can take the market down all the way to 11400 swiftly. Traders should not take any short term positions till budget post which a reactive trade can be initiated after the budget is announced.
 
Nifty Today
 
Expectations for the Week:
 
The election outcome is more of an emotional event while the Budget has more rational reactions in the market. The lackluster vibe before the Budget can be the calm before the storm and markets are expected to remain muted and sideways but there is likelihood of downward pressure. The auto sector is at the tipping point. Depending on how the Government provides support, these stocks will either revive or fall off the cliff. Other sectors which are likely to benefit from the Budget would clearly be low cost housing, agriculture and infrastructure as the Government knows very well the multiplier effect to attain the growth and employment targets. Investors should still follow a wait and watch approach.Nifty50 closed the week at 11789 up by 0.55%.

All is not well for Equities
 
This week markets witnessed the biggest speculative diaspora incertain stocks like JetAirways which otherwise were fundamentally weak but witnessed nerve killing movements in both directions - due to the demand supply, greedfear, hopes and expectations i.e. the emotional side of investors surfacing all at once. To add to it, NBFCs were not far behind and joined the convoy. Volatility in such debt laden companies was unheard of and in a way record breaking. Jet rose over 120% inspite of having negative equity shareholders value and this is how equity markets behave. On a macro perspective, a massive rally in gold in the international markets throw a signal that is prima facie bearish for equities. When investors become risk averse, that's the time a shiftin gold happens and that's the time equities start falling. Though currently, equity markets are not pricing in certain risks which the gold investors are aware of and have started to price in, there will be a time when either oneof them will be proved wrong.
 
Bond prices too are indicating that the preference for equities have lowered. NBFCs are likely at the end of the capitulation stage atleast for now. The famous Piramal Enterprises had to sell their stake in Shriram Transport which speaks a lot about how the NBFC space is undergoing crises. Nonetheless, when such transactions happen it also gives an indication that the culmination of pain is at its peak. Just like investors sell shares at the bottom, similarly corporates too sell assets at or near the bottoms.
 
Events of the Week:
 
An interesting fact was observed in the Nifty Smallcap index which recently breached the Modi 2.0 election day gap. Previously in 2014, the gap had taken 2 long years to fill but surprisingly this time within one month, the gap was filled which may be a precursor to an underperforming equity markets going ahead.
 
Technical Outlook:
 
Nifty50 is continuing its corrective fall with intermittent rallies which is later met by declines. Once 11600 is broken, the next likely support point would be 11400 in Nifty50 which is also the gap which should get filled for the markets to again begin a healthy rally. Time Cycle correction suggests that budget could be a turning point for the markets which would coincide for the market taking support at the lower trend channel. Avoid trading in this corrective market.
 
Nifty Today
 
Expectations for the Week:
 
Next week, markets will start speculating on the outcome of budget policies which is usually magnified more by media but stocks may not really swing in the samemanner. International factors may affect domestic markets and any confrontational stance in Middle East would be a dampener for equity markets. Investors and traders are advised to maintain status quo and avoid highly volatile sectors such as airlines, NBFCs and other debt laden companies.From a valuation perspective, quality large cap stocks which showed a massive rise in the past few months have now turned expensive and therefore currently should also be avoided. Nifty50 closed the week at 11724, down by 0.83%.

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%.