INSUBCONTINENT EXCLUSIVE:
The Indian stock market moved at snail’s pace this week, giving no clear sign on the way forward
FIIs and DIIs also signalled a confused state, as there was no aggressive buying
However, institutional investors have turned bullish on infrastructure, power, metals, realty and cement segments, probably in anticipation
of the forthcoming Budget sops.
But among all of this, midcaps have finally started picking up pace and frontline stocks have started
The mean reversion nature of Mr Market is finally acting on the much-talked-about divergence in the returns of midcaps and largecaps in last
one year.
In fact, midcaps have shown a decisive leadership position in certain pockets, which is what will spearhead the rally on Dalal
Street until the Union Budget in early February.
To add to this, Dalal Street seems to have already priced in all the positives, and that
makes a good case for the largecaps to correct now
Investors can turn towards value picking from the midcaps space to ride the rally.
Historically, it has been observed that initial rally
days in a New Year augurs well for the full-year ahead
Green offshoots are visible among midcaps and smallcaps, which will set the tone for the market in 2020.
Momentum should also pick up at the
ground level, given the timely boosts from the government
The latest Rs 102 lakh crore infrastructure injection plan may take a lot of time to show actual results, but it will definitely help growth
to pick up in the debt-laden beaten-down space.
Event of the WeekDecember auto sales numbers have been a mixed bag with two-wheelers and
commercial vehicles reporting heavy drop in volumes, while passenger vehicles and tractors reported marginal dents.
Seasonality and
inventory management before the shift to BS-VI in April and year-end shutdowns have all added to the auto woes and it seems the pain is not
Despite having come up from their lows, auto stocks will still take some more time before they actually pick up momentum for a sustained
rally.
Technical OutlookNifty50 is showing signs of fatigue, which can be observed from the declining volumes and, therefore, a break of the
12,100 level in Nifty50 can kick off a correction of the entire rise since October
However, the midcap index is giving a different picture all together
It has clearly broken its downward sloping trendline, which has most likely signalled a sustained rally in the making for the broader market
Buy on dips in the broader market should be the strategy for traders.
Expectations for the WeekNext week, the market is likely to witness
momentum from the midcap bulls, while largecaps may experience a correction
Certain sectors such as infrastructure and cement should continue to see action until the Union Budget
Pharma, on the other hand, looks attractive
However, it seems flow of smart money hasn’t begun yet, but the traction will start showing soon
The steel space is also showing strength, as there is an increase in dispatches and a higher selling price, and this sweet cyclical rally
has more legs albeit with intermittent minor corrections.
Investors can start cherry-picking quality companies from midcaps and smallcap
Nifty50 closed the week 0.15 per cent down at 12,227.
