Latest Indian Share Market Updates & News in Mar 2019


Buying frenzy further heats up on Dalal Street
 
Indian markets had a roller-coaster week with Monday starting in deep red as recession fears gripped the entire globe. News of an inversion in the yield curve created a gloomy atmosphere with the markets tanking but Mr. Market never likes consensus and has a mind of his own. The very next day these fears were dismissed and Indian bourses like other countries rallied to attain their past peak levels since August last year. The advance decline ratio is also currently around 1.7 which shows that the bullishness and the strength in the breadth of the market is for real. All sectors are one by one gaining strength and participating in the rally which confirms that Feb was the bottom for mid and small caps which had faced wrath the entire last year. We would call this the “Twin Boost” as the Street expects the incumbent Government to have higher chances of winning the seats again and the dovish stance by the US Central Bank aided in attracting foreign flows to Indian equities. But there is a famous saying - “Be careful when all is well.”
 
The ground level reality is different as consumer slowdown concerns continue to deepen. The weak dispatch of volumes in the auto sector along with the reduction in the import demand for electronics point out that the slowdown in consumption will impact the overall growth in the economy. And the pickup in investments as depicted by our indices is not sufficient to offset these factors. This indicates that if markets go up strongly then there can be sharp corrections for realignment.
 
Events of the Week:
 
Primary markets are booming again especially after a dismal listing of IPOs the previous year. In just 3 months, MSTC got listed at a 7.5% discount to issue price, Rail Vikas Nigam Limited issue is out, Metropolis Healthcare and Polycab will come out soon and Chalet Hotels already got listed. It has been observed that when times are good IPO listings will be in galore otherwise who buys IPOs in bear markets. Revival in IPO market is a good sign for secondary markets.
 
Technical Outlook:
 
Nifty50 is on its way to test a double top. Momentum is at its best suggesting an euphoric atmosphere which can drive the markets to touch previous highs of 11750. The one-sided runway rally can be bracketed in the narrow trend channel the break of which should be used as a signal to book profits. Technical indicators such as RSI are hovering around levels of 70 which isn't per-se dangerous but needs to watch closely for any reversal signals. However, traders should ride the wave but protect their long positions by maintaining daily trailing stops.
 
Nifty Today
 
Expectations for the Week:
 
The upcoming week should not bring any new surprises on a macro level, however, market participants must start gearing themselves for the annual results which will be out very soon. With the start of the result season, the volatility in the stocks will double as politics will also maintain its shadow on the indices. The pre-poll rally is quite strong and is here to stay for some more time. Broader markets will try to catch-up with the frontline stocks which will continue to show their strength. Certain pockets are ripe for good investment opportunities in FMCG and Metals space; investors must start looking for quality stocks which are undervalued. Nifty50 ended the week at 11624, up by 1.46%.

Indian Markets Aligning to the Global Run-up
 
Markets this week rallied with higher velocity and greater depth squeezing out shorts while at the same time delivery-based buying occurred in both frontline and midcap stocks, thus a full-throttle rally was witnessed after a long time. FPIs spearheaded this rally to play the global arbitrage theme which exists as developed countries such as US and Asian giants have risen by around 15-22% in the current calendar year but India has risen by only 7% in the corresponding period, courtesy political upheavals and the Pulwama attack. FPIs have indeed sensed this underperformance of the Indian markets and are buying aggressively. Everytime there is a pre-election rally, market participants are all in consensus to ride the rally and pass statements to justify this surge in movement, however, the real reason is not the chances for re-election of the NDA Government but India's underperformance to its global peers. Options data also suggest that currently optimism is building, although not at extreme levels, but one should be cautious at current levels.
 
The anatomy of the current rally seems to suggest that infra, private banking, realty and financial services were the strongest sectors that witnessed buying and therefore it can be reasonably concluded that these sectors will be part of the ensuing bull market rally. Nonetheless, pricey sectors like FMCG and consumer durables indeed underperformed and therefore are likely to be laggards in the future.
 
Events of the Week:
 
"Problems in a company are like cockroaches in the kitchen. You will never find just one" This famous quote by Warren Buffett rightly depicts the state of Jet Airways. Earlier this week, Ethiad was expected to refuel Jet with Rs. 3.8K crs along with NIIF but towards the latter half news surfaced that Naresh Goyal doesn't want his stake to be capped at 22% in perpetuity which was Ethiad's initial condition for infusion. Just when one feels that all the problems are about to end for Jet a new one emerges. Hence, it is best to avoid this kitchen full of cockroaches for now.
 
Technical Outlook:
 
Nifty 50 has recorded the fastest upswing of 880 points in just 17 trading days, a record in the recent past. However, such swift movements often get corrected when a shooting star is formed. By Friday's closing, Nifty50 made a shooting star pattern which is a strong indication that correction is about to set in. Aggressive traders can initiate short positions with Friday highs as stops, whereas for long trading positions profits can be booked at current levels as indicators have returned to overbought levels.
 
Nifty Today
 
Expectations for the Week:
 
Momentum of the market seems to be strong but there is weakness emerging slowly in the near term. There will be enough stock specific opportunities for going long for traders. For example, the catchup rally which unfolded in IndusInd Bank is likely to happen in various sectors. IndusInd Bank has moved inline with its leaders such as HDFC Bank and ICICI Bank along with others. Stocks will try and catchup to the likes of its sectoral leaders. Similarly, opportunities are emerging in realty and infra wherein traders can take positions in underperforming stocks. Investors can start doing regular SIPs every week till elections by distributing their lumpsum investments in 2-months timeframe. Nifty50 closed the week at 11426.85, up by 3.5%.

1st Offshoot of Bull Market visible

Market's current week behavior seems to be indicating the beginning of its 1st leg in the bull market. Massive buying emerged in small and midcap stocks which spilled over to largecaps which indicates that green shoots of the bull market are slowly visibleconsidering the movement upwards was very sharp and quick but nonetheless, swift profit booking and corrections are bound to occur going ahead. Moreover, the global economic scenario doesn't seem very encouraging as ECB has recently changed its stance from hawkish to dovish. This means that the European economy is likely to show suboptimal growth which doesn't augur well for the world economy.

There seems to be no end to the US-Sino trade war. Although the details are still under wraps but given the Huawei's intention to take on the US Government head-on is a hidden signal that relations between the 2 superpowers isn't amicable. This doesn't spell good for the global equity markets and D-street will also be in no hurry to move ahead but would drag and correct till the election outcomes.

Events of the Week:

It being an election year, the middle and lower strata of society were the receivers of bountiful benefits doled out by the Government which although may look pleasing in the first instance but the axe is likely to fall in the full-fledged budget of the new Government. Direct tax collections were estimated at Rs. 12 lakh Cr but for 9 months ended the collection is just Rs. 8 lakh Crs, some estimates show that the shortfall is likely to be 1 lakh Cr by the close of the year. This deficit is unseen in the recent past. Larger repercussions lay ahead in the economy in terms of the Government borrowing programs, the interest rate cycle and the Government's ability to spend on infra which will adversely affect the equity markets in the second half.

Technical Outlook:

Nifty50 is facing resistance at the upper channel of the trendline. The underlying stance of the market is still sideways which can be seen from the flattish slope of the trend lines. Since the market is facing resistance at the upper end of the trend channel, a correction is expected to the levels of 10900 in Nifty50. Formation of small bodies in the price action also indicates exhaustion, but a spike above the resistance levels and then a fall, will confirm that the up move has ended for the time being and the market can go back to 10900 and in worst case scenario up to 10600. Traders can initiate shorts on weakness only.

Nifty Today

Expectations for the Week:

Mr. Market is mesmerized in the hope that the ruling Government has increased its chances of forming a strong Government and expectations of a coalition Government are receding, but in politics anything is possible before the actual outcome. Just like Bloomberg's fear and greed indicator for the stock market, politics is guided by sentiment of expectation of a stronger Government or coalition Government which will oscillate the markets accordingly. However,reasons can emerge which may again shift the opinion of the markettowardsformation of a weaker Government coming to power; the markets will drift lower in that scenario. Therefore, investors are advised to stay on the sidelines and keep ready a war chest of money to be invested in good quality small and midcap shares after a correction. Also,allocation to frontline stocks should be made at or around the election month for building a portfolio at reasonable valuations. Nifty 50 closed the week at 11035, up by 1.58%.