INSUBCONTINENT EXCLUSIVE:
The domestic stock market was in for a rollercoaster ride during the week gone by with a disappointing first half, while sentiment improved
after the US Fed decided not to raise interest rates, indicating a pause for a reasonable period.
The Fed’s decision had a cascading
effect on the Indian indices
This will be good for equity markets in the medium term, but nonetheless, concerns of a slowdown across the world will have an over-arching
effect to keep the market in a non-trending (corrective) phase
The latest economic numbers from the Indian government indicate that India’s economy expanded at a much faster rate than initially
estimated in the last two financial years
This boosts optimism in the market
However, given the drastic drop in the number of IPOs and a warm response from retail investors to the recently-concluded IPO of Chalet
Hotels, it is likely that the indices are nearing a bottom, which is expected sometime before elections.
In quarterly earnings, there is
strong resistance at the support levels, as the market is trying hard to go down but is unable to
The earnings are proof enough: – 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 the confused state of the market
on the upside, but unwillingness to go lower at the same time.
Event of the WeekThe much-awaited Interim Budget was a populist one with a
focus on farmers and the salaried middle class
It is expected to give a good boost to the consumption and affordable housing
Fiscal deficit target of 3.4 per cent is more or less in line, it will have no drastic implications on the economy.
Markets reacted
positively intraday immediately post Budget
However, they will eventually lose steam and glide lower.
Technical OutlookNifty50 made a V-shaped recovery last week, indicating that the
market is in no mood to go down for now and has taken strong support at 10,605
Such non-trending phases of the indices are considered the worst for traders
The bulls are unwilling to commit and at the same time lower prices are unsustainable
The market is currently in a confused state and is waiting for a major trigger to go higher.
Expectations for the WeekSince the Interim
Budget is over, which has time and again proven to be a non-event, all eyes will be on the political battlefield
The sixth bi-monthly monetary policy next week is expected to bring down interest rates by 0.25 per cent to boost spending
However, the market might be in for a positive surprise if the MPC reduces rates by 0.50 per cent, which will take Nifty to test the 11,000
level after which profit booking will emerge at higher levels.
Moreover, share 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 the PCA framework sends out a positive
signal of recovery in the banking sector.
The Nifty50 closed the week 1 per cent higher at 10,893.
