INSUBCONTINENT EXCLUSIVE:
The domestic market had a roller-coaster week with Monday starting deep in the red as recession fears gripped the entire globe
News of an inversion in the yield curve in US created a gloomy atmosphere with the markets tanking
But Mr Market never likes consensus and has a mind of his own
These fears got dismissed the very next day and Indian bourses, like many others, 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 market breadth is for
All sectors are one by one gaining strength and participating in the rally, which confirms that February was the bottom for midcaps and
smallcaps, which had faced investors’ wrath for the whole of 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 US central bank’s dovish stance is helping attract foreign flows into Indian equities.
But there is a famous saying: “Be careful
when all is well.” The ground reality is different, as concerns over consumer slowdown continue to deepen
Weak dispatch volumes in the auto sector along with a reduction in import demand for electronics point out that the slowdown in consumption
will impact the overall growth in the economy
And pickup in investments as depicted by our indices is insufficient to offset these factors
This indicates that if the market goes up strongly, then there can be sharp corrections for realignment.
Event of the WeekThe primary market
is looking up again, especially after the dismal listings seen last year
Chalet Hotels got listed at a 5 per cent premium over issue price in February, MSTC got listed this week at a 7.5 per cent discount to issue
price, Rail Vikas Nigam issue has hit the market, Metropolis Healthcare and Polycab have lined up issues for the days ahead.
IPOs tend to
slow down in bear markets and see a pickup in bull markets
A revival of the IPO market is a good sign for the secondary market.
Technical OutlookThe Nifty50 is on its way to test a double top
Momentum is at its best, suggesting a euphoric atmosphere which can drive the market to touch the previous high of 11,750
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 the 70 mark, which isn’t per se dangerous but needs
to be watched closely
for any sign of trend reversal
However, traders should ride the wave but protect their long positions by maintaining daily trailing stops.
Expectations for the WeekThe
forthcoming week should not bring any new surprise at the macro level
However, market participants must start gearing themselves up for the annual earnings, which will be out very soon
With the start of the results season, volatility in stocks will double as politics will also cast its shadow on the indices
The pre-poll rally is quite strong and is here to stay for some more time
The broader market will try to play catch-up with the frontline stocks, which will continue to show their strength
Certain pockets are ripe for good investment opportunities like in FMCG and metals
Investors must start looking for quality stocks that are undervalued.
Nifty50 ended the week 1.46 per cent higher at 11,624
