This Diwali to remain lite for D-Street

Markets faced a mix week with investors flocking in and out of bourses over the Vidhan Sabha Elections. The Brexit deal was no peacemaker either as the ruling party couldn't reach the intended conclusion which caused certain affected stocks to react negatively. Moreover, FPIs and DIIs have been marginally net sellers in the cash market this week. The week started on a gloomy note as the whistle blower letter on Infosys surprised the Street. The ADRs and stock reacted immediately with a knee jerk reaction. However, the entire outperformance of Infosys due to the result and the re-rating has now been nullified which has brought the valuation gap between TCS and Infosys to its last year's average which leaves little room for a downside at the moment. The audit committee's reaction will be a wait and watch for the stock.

But the week had one more negative surprise this time from Supreme Court, the old telcos faced a big blow when the Supreme Court backed the DOT view that telecoms have to pay revenue share on a larger pie to the Government. It won't just be Vodafone and Airtel who will be the biggest losers in this battle but it can impact the banks too who have lent to these telcos. Such a stressful scenario with IUC charges, 5G spectrum auctions coming up, market share loss due to competition by Jio will definitely be a drag on this sector and might increase systematic risk to the market itself.

Events of the Week:

The result season unfolded at a neutral pace with some companies such as Avanti Feeds, SBI, ITC, HDFC Life surpassing expectations with strong growth numbers while two-wheelers and passenger vehicles continued to underperform with slower volume growth. The ground level slowdown seems easing for now, but may take time to pick up pace, however, till that time investors will have to keep patience.

Technical Outlook:

Nifty50 has entered a consolidation phase after facing resistance at 11720. Nifty has formed a small doji pattern in the weekly time frame indicating a pause in the unfolding uptrend. Market will gain momentum the moment Nifty crosses 11750 which will then take the market to 12000 swiftly. Buy on dips should be the strategy for the traders.

Nifty50 Update 25 October 2019

Expectations for the Week:

The coming week, certain results can surprise bourses which will keep markets buoyant. The festive season will bring some cheer as consumers increase spending which will aid in ramping up sales. With Government's efforts to improve sentiment and rate cut expectations by a further 0.25 bps, the financial results for the next quarter should show further improvement. Since there is a lot of uncertainty right now, investors should pick stocks with a basket approach. Metals and mining, pharmaceuticals, agriculture, infrastructure are some beaten down sectors which should be considered from a stock picking perspective. These "so called untouchables" are cheaper from a valuation perspective and hence are value buys at this point. Nifty closed the week at 11583, down by 0.66%. Happy Diwali and a prosperous New Year to everyone.


Bulls to dominate this Diwali

Markets witnessed buying from FPIs and DIIs on improved sentiments and better prospects going ahead for the economy. FPI shave initiated buying equities aggressively and have covered their short positions which has relieved Mr. Market and cleared a major overhang. Therefore, new highs are expected sooner than earlier estimates. Ministry of Railways run IRCTC witnessed a bumper listing of 101.25% over its issue price which has signaled that people are ready to assume risk and increase their equity exposure in the market. This in turn helps our Government's initiative to quickly divest some of the companies that are up for strategic disinvestments. Monies in the hand of the Government will eventually help in bridging fiscal deficit and will boost infrastructure spending necessary to fuel the growth in economy.

When IMF and World Bank beats the drum of slowdown of any economy, means that the phase is already over and better times are ahead. Recently, IMF as well as World Bank trimmed India's GDP growth prospects by a whopping 0.9% and 1.5% respectively which when historically seen acts as a good indicator to identify bottoms. Considering aholistic perspective of corporate tax cuts, recapitalization of PSU Banks, FPIs paring their short positions, continued domestic inflows - all point to one thing that maybe the worst is behind us. But unless something dramatically goes haywire on a global front, Nifty50 is all set to touch new highs before Christmas.

Events of the Week:

The Q2 result season continued with a bang as Mr. Market felt the glitters and jitters of results such as HUL and ZEE Entertainment which were announced during the week. HUL reported a strong set of numbers where PAT was seen up by nearly 21% YoY which was fueled by controlled costs and margin improvement. Whereas, ZEE Entertainment reported a disappointing marginal increase in PAT of 6.87% which was mainly due to the one-time loss of Rs. 170 Crs raising issues of corporate governance.

Technical Outlook:

Nifty50 is likely to face resistance at higher levels. 11950 levels will act as strong resistance; however, some profit booking is expected at 11700 levels in the near term. There is marked weakness in Bank Nifty as compared to Nifty50 which makes this rally a fractured one susceptible to sharp dips in the short term. Traders to wait for correction before buying long.

Nifty50 Update 18 October 2019

Expectations for the Week:

Mr. Market's rally is currently in a catch-up phase and is likely to percolate to individual sectors which were largely underperformers. Small and Midcaps are likely to witness buying interest. India's two respected mammoths namely Reliance Industries and HDFC Bank's quarterly results will set the ball rolling for the end of Samvat 2075. International metal prices have bottomed out after few quarters of steady price declines. Precious metals are also showing signs of consolidation and can move higher in the near future. Hence, investors may deploy fresh funds at current levels keeping in mind appropriate diversification and individual risk-taking abilities.Nifty50 ended the week at 11661.85up by 3.2%.


IMF's Gloomy Outlook means Boom Days are Coming!

Markets during the week saw a paradigm reversal of sentiments. Government's all out efforts in striking the right cords is indeed paying off whether it being in form of increase in dearness allowance to 17%, corporate tax cuts, interest rate reduction, timely tax refunds as well as nudging capital expenditure from PSUs have all reflected in the confidence of domestic bourses. Steady inflows of SIP in mutual fund at around Rs. 8,200 Crs for the month of August 2019 have indeed supported to build the strength in our stock market. On the other hand, FPI data shows that outflows have also reduced nearly by half which in a way indicates that they can soon turn bullish now, given increased optimism in Indian economy.

TCS reported weaker growth on a YoY basis of negligible 1.65%, largely indicating the fact that all is not well in the US. The year being an election year in the US where GDP run rate has fallen from 3.1% to 2% suggests that President of the United States (POTUS) will have to crack the code of US-Sino trade war. Failing which, we believe that the US may enter into severe recession, implying major fall in US bourses which would reduce President Trump's chances of reelection. Hopefully, POTUS will act wisely to resolve these conflicts immediately in the interest of the global economy.

Events of the Week:

A humongous figure of Rs. 19,000 Crs of online sales in six days by two dominated e-commerce company is highly celebrated and is being interpreted as Indian consumption demand reviving. However, we guess this is coming at the cost of the brick and mortar retailer. As the famous adage aptly goes, 'One man's loss is another man's gain'. Concentration of business in hands of few giants is considered as a bad growth prescription for India, given the huge population and SME's across centre. We believe that if these SMEs do not grow in real sense, India's consumption story may not play out.

Technical Outlook:

Nifty50 bounced back after correcting 50% of its previous rally. The upward assent is likely to continue but the velocity would be lower compared to the previous rally. All the indices are depicting the same lock step rally indicating that there are high chances that Nifty 50 will again test 11670 in the medium term. Buy on decline should be the strategy for the trader keeping stop below 11000.

Nifty50 Update 11 October 2019

Expectations for the Week:

We certainly believe corporate number will largely guide mood of the market for the coming week. To begin with, TCS growth numbers and outlook have largely disappointed the street whereas IndusInd Bank's number brought mixed tides in sentiments. When checked on an overall basis, we see a mixed bag of numbers where revenue growth will be slower than the previous year. Since, the market has well corrected in time and price, the same may not be taken negatively by the market. Hopefully this earning season will revive investors' sentiments in the market and will bring back long forgotten bull spirit of FPIs. The apex bank rejected merger of Indiabulls Housing Finance and Lakshmi Vilas Bank thereby carving out entire NBFC space from the dictated mainstream banking business. Given the liquidity crunch and trust deficit, housing finance businesses should come back to our biggies namely HDFC and LIC Housing Finance which makes them a compelling proposition at current valuation. Bearing this in mind, we believe investors should selectively place monies in private sector banks, metals along with consumer discretionary for constructing a relatively safer portfolio. Nifty 50 ended the week at 11301.25 up by 1.13%.


IMF's Gloomy Outlook means Boom Days are Coming!

Markets during the week saw a paradigm reversal of sentiments. Government's all out efforts in striking the right cords is indeed paying off whether it being in form of increase in dearness allowance to 17%, corporate tax cuts, interest rate reduction, timely tax refunds as well as nudging capital expenditure from PSUs have all reflected in the confidence of domestic bourses. Steady inflows of SIP in mutual fund at around Rs. 8,200 Crs for the month of August 2019 have indeed supported to build the strength in our stock market. On the other hand, FPI data shows that outflows have also reduced nearly by half which in a way indicates that they can soon turn bullish now, given increased optimism in Indian economy.

TCS reported weaker growth on a YoY basis of negligible 1.65%, largely indicating the fact that all is not well in the US. The year being an election year in the US where GDP run rate has fallen from 3.1% to 2% suggests that President of the United States (POTUS) will have to crack the code of US-Sino trade war. Failing which, we believe that the US may enter into severe recession, implying major fall in US bourses which would reduce President Trump's chances of reelection. Hopefully, POTUS will act wisely to resolve these conflicts immediately in the interest of the global economy.

Events of the Week:

A humongous figure of Rs. 19,000 Crs of online sales in six days by two dominated e-commerce company is highly celebrated and is being interpreted as Indian consumption demand reviving. However, we guess this is coming at the cost of the brick and mortar retailer. As the famous adage aptly goes, 'One man's loss is another man's gain'. Concentration of business in hands of few giants is considered as a bad growth prescription for India, given the huge population and SME's across centre. We believe that if these SMEs do not grow in real sense, India's consumption story may not play out.

Technical Outlook:

Nifty50 bounced back after correcting 50% of its previous rally. The upward assent is likely to continue but the velocity would be lower compared to the previous rally. All the indices are depicting the same lock step rally indicating that there are high chances that Nifty 50 will again test 11670 in the medium term. Buy on decline should be the strategy for the trader keeping stop below 11000.

Nifty50 Update 11 October 2019

Expectations for the Week:

We certainly believe corporate number will largely guide mood of the market for the coming week. To begin with, TCS growth numbers and outlook have largely disappointed the street whereas IndusInd Bank's number brought mixed tides in sentiments. When checked on an overall basis, we see a mixed bag of numbers where revenue growth will be slower than the previous year. Since, the market has well corrected in time and price, the same may not be taken negatively by the market. Hopefully this earning season will revive investors' sentiments in the market and will bring back long forgotten bull spirit of FPIs. The apex bank rejected merger of Indiabulls Housing Finance and Lakshmi Vilas Bank thereby carving out entire NBFC space from the dictated mainstream banking business. Given the liquidity crunch and trust deficit, housing finance businesses should come back to our biggies namely HDFC and LIC Housing Finance which makes them a compelling proposition at current valuation. Bearing this in mind, we believe investors should selectively place monies in private sector banks, metals along with consumer discretionary for constructing a relatively safer portfolio. Nifty 50 ended the week at 11301.25 up by 1.13%.


Normal Correction underway - No need to worry

Mr. Market dried up in the last days of the week; going hand in hand with the global bourses which cracked almost 2-3% this week. Bulls are grueling to get their MOJO back with vigor given the fact that government is trying all out efforts to turnaround the economy along with RBI acting as catalyst for this turnaround. This downturn should be seen as an accustomed correction of the rally witnessed during the tax rate cut and Nifty50 correcting to the levels 11000-11100 should be considered as normal. For the first time the market witnessed frenzy in IPO segment although IRCTC was oversubscribed around 112 times, the retail portion got only 15 times oversubscription. This means retailers are still not convinced about the future prospects of the economy. Nonetheless, this also indicates that a bigger bull market is ahead of us because unless retail investors turns super bullish, a top cannot be made.

Government machinery is working overnight to raise funds to finance growth which seems quite logical given the corporate tax hit it has taken. BPCL which is known as one of the crown jewel of government is out for a grab. As we had witnessed a decade ago, IBP which had petrol pumps chain was divested for double the amount than prevailing listed price by government. And as Mark Twain has said, "History doesn't repeat itself but it often rhymes". Markets are trying to draw a similar analogy that BPCL would also command a hefty premium. Therefore, we are witnessing stock price surging relentlessly.

Events of the Week:

Yes Bank and ZEE Entertainment saga is not new where promoter's pledged holding are sold off by the lender in open market which gives a great buying opportunity to risk takers during such relentless sell off. Fortis Healthcare's lenders too invoked and sold massive pledged shares but since the underline operating business was quite decent enough, buyer came at Rs. 110-115 and therefore price reverted to normal valuation at around Rs. 140. Hence, the risk taker out there may consider buying selectively in small quantities in a staggered manner ZEE Entertainment in their portfolios with the understanding that it can still go down further but eventually will revert to mean in the medium term.

Technical Outlook:

Nifty50 moved lower near its 50%-60% retracement levels which should act as good consolidation levels. After a sharp rally of 1000 points a swift correction is but natural, however time correction might last little longer which can test the patience of bulls in the short term. Buy on dips only those stocks that are trading above 200 EMA would be a safer strategy for the traders.

Nifty50 Update 04 October 2019

Expectations for the Week:

Broader markets including local bourses will await Feds policy decision which will set the tone of market for next few weeks depending majorly on the Chairman comments and rate deduction, if any. Vibrancy is slowly being visible at ground level in terms of retail sales of consumer durables and automobiles. Auto numbers have slightly improved on a month-on-month basis but on a year-on-year comparison numbers are still ugly. Given that voluntary vehicle scrap page policy is likely to be announced by government any time this month; auto sector can witness stability in the stock prices going ahead. Investors should selectively accumulate quality stocks at lower levels currently. Nifty50 closed at 11174 down by 2.93 % for the week.