INSUBCONTINENT EXCLUSIVE:
The domestic equity market traded largely sideways with an upward bias all through the week and Nifty ended higher
But smallcap and midcap indices still languished, indicating that the market is in no hurry to set a decisive path for itself yet.
Such
divergent behaviour of the Indian bourses will generate no meaningful direction for the market
However, in the meantime, there are certain risks emerging from global markets
In the US itself, there is such divergence
Dow Jones is sitting near its all-time high with far lower momentum while SP2000, the smallcap version of the US market, is far below its
all-time high level, showing the unlikeliness that the bull run will continue in the US.
Despite months of efforts, China and the US still
have not been able to resolve their trade dispute
Additionally, the US blanket sanction on Iran is also a destabilising initiative, which can derail global bull markets if the conflict
escalates, and most likely it will.
Economically, the world is at its best time but politically, we are in our worst phase
This is the biggest risk to the bull market, which no one is factoring in currently.
Events of the WeekA mixed sentiment from the quarterly
earnings kept the market on its toes during the week
Among the banks, HDFC Bank, Axis Bank and AU Small Finance Bank showed strong bottom line growth
Sterlite Tech reported a 68 per cent year on year PAT growth and Ultratech Cement 131 per cent
There were certain companies which belied analyst expectations, such as Maruti which experienced a degrowth of around 5 per cent, while ACC
grew only 38 per cent and ICICI Securities degrew 11 per cent.
Technical OutlookNifty50 is trading cautiously near its all-time high level
Nifty50 had made a failed attempt to cross its all-time high mark, but since then it has been languishing around those levels
Such consolidation is expected to last longer, but
any decisive breakout above 11,900 level will signal a resumption of the uptrend
However, in order to protect the long positions, one needs to keep a stop below 11,500 in Nifty50, which can take the market much lower if
the support is broken.
Expectations for the weekOpen interest is consistently reducing in the futures market given the already elevated
levels and the uncertainty over the election outcome
Status quo is expected to be maintained going forward
Therefore, the market is expected to move either 2/3 per cent up or down from the current level.
At the sectoral level, FMCG, capital goods
and healthcare are largely moving sideways with very little volatility
Whereas, realty, midcap, auto, metal, power and smallcap stocks are in a corrective mode with further downward pressure going ahead
This vindicates our stance of a non-bullish case for the market in the immediate time frame
Investors must not rush into the market in this indecisive phase and go shopping, at least not till May 23, when the election results will
come out.
Nifty50 ended the week flat at 11,754.
