INSUBCONTINENT EXCLUSIVE:
The domestic equity market crawled up slowly amid war-like threats between the US, its allies and Russia during the week gone by
Certain stocks remained muted with virtually no strength to inch higher and remained rangebound throughout the week in spite of bullish
global cues.
When global cues were positive, Indian markets were lethargic, which indicated that the market has reached plateau and is in a
wait-and-watch mode.
Even when the market has begun to discount the fears, early Saturday’s air strikes on Syria by US, British and French
forces have completely changed the equation
This will now be a key trigger determining market direction in the forthcoming weeks
The Dow closed 100 points down in Friday’s trade just before the air strikes
By Saturday morning, Dow futures traded over 100 points down, signalling bearish sentiment across markets.
Besides the ‘Missile mania’,
March quarter earnings will sway the market through the week
The Indian market had a streak of positive news this week, like favourable IIP and CPI numbers for March and companies like Goa Carbon
reporting double profits this year.
However, there wasn’t any drastic move in the stock price
There is a chance that the commodity cycle has peaked and this can threaten the bull market in some of the cyclical stocks in the long
run.
Analysts estimate that the earnings growth may lose steam in their Q4 results and expect Nifty50 firms’ combined net profit to grow
at 10.9 per cent YoY.
Events for the WeekA sharp $5 a barrel increase in crude prices over the past few days with Brent crude’s rise to a
three-year high of $72 a barrel have caused fears among consumers
The trigger for this significant rise in oil prices was worsening of tensions in West Asia with Saudi Arabia having intercepted missiles
over Riyadh.
In the midst of this uncertainty, the government asked the OMCs to absorb the Re 1 per litre price hike
Although the OMCs denied this, but the market seems to have got a whiff of early elections and, therefore, started to punish public sector
undertakings on fears that their profits will be impacted in the election year.
Technical OutlookThe market has lost the momentum on the
Indicators like MACD are indicating a possibility of a correction
Open interests and volumes are low, which is positive in the medium term
Low volume and low open interest mean that the down side is capped and the upside is open till 11,100 on the Nifty50 in the medium term and
Buy on dips should be the strategy for the traders.
Expectations for the WeekThe market will be reacting to US-France-UK joint strike on
Syria and also quarterly earnings, which could play a significant role in providing a jumpstart to the indices
Key events to watch out for during the week are the earnings numbers from private banks, which are expected to be healthier.
Also, the
latest twist on the Fortis deal with Munjals and Burmans joining the race along with IHH and Manipal Hospital should benefit minority
This will be like an IPL match for the stock market audience
Be cautious on cyclicals but positive on private sector banks, housing finance companies, NBFCs and fertiliser and consumer durables
firms.
Investors should continue to look for quality stocks and should adopt a buy-on-dips strategy.
The Nifty50 ended the week 1.44 per
