INSUBCONTINENT EXCLUSIVE:
The market was relatively flat during the week gone by and it looked like Nifty exhaust its upward move and could be ready for a downward
drift soon.
Generally, the market takes support of an external event to begin a correction
However, there is a stark divergence in the smallcap and frontline indices
In the last 10 days, the smallcap and midcap indices have refused to go up along with Nifty50, which means the fall is coming soon
Investors are, therefore, advised to remain cautious and take decisions wisely only after considering all the fundamental and qualitative
They can also consider booking profits at this juncture.
Currently, the Nifty500 and SP500 indices share the same anatomy, which is rare but
important for us to understand the way forward, as India does have the history of mirroring the US market
The Trump-Xi trade war, conviction of his two key men, a rising dollar and the possibility of further Fed rate hike do not augur well for
These issues have made investors wary and they are looking for right avenues to park their money and place fresh bets
This pause-like feeling in the market will soon end and it will begin a downward journey.
Events of the weekThere was news that BG Asia
Pacific Holding has reduced its stake in MGL by a whopping 14 per cent
This might be a good opportunity to accumulate this secular business for the long term, as BG Asia may have other compulsions to sell
On the other hand, when insiders such as the experienced Tatas themselves increase stake in their own company, it can be assumed that the
worst is over for Tata Motors
Tata Sons increased its stake in the company by acquiring shares worth Rs 2.61 crore from the open market recently, which might again be a
good opportunity.
Although both promoter actions were contrasting, investors must assess each event separately
But both offer opportunity to accumulate shares.
Technical OutlookBroader market barometer Nifty500 index has made a double top, indicating
that the odds of a fall from here on are far higher than that of a rise
Even the US market’s benchmark SP500 index reflected the same anatomy of double top, which indicated that more often than not the market
would be heading downwards.
In case a failure occurs on the upside, this would further confirm the probability of a fall in the indices
Once the fall begins, it will be across the board
Traders are advised to keep a trailing stop loss for positional trades at 11,300 on the Nifty50
Short-term traders can keep a trailing stop loss at 11,450 and not initiate fresh long positions at these levels
Expectations for the WeekAt present, the market is in a state of confusion, hesitant to move in one distinct pre-set direction
Credit Access Grameen’s poor opening indicates that market is weak
However, such situations arise often and get resolved quickly, with the market marking its direction
We expect the market to remain under pressure in the broader sense, as the internal strength weakens as evident from the huge divergence
between smallcap and midcap shares and their largecap peers
On the sectoral front, private banks look weak and could be shorted.
Similarly, realty and metals also seem ready for a downward drift
It is advisable to book profits from a short-term perspective
Nifty closed the week 0.75 per cent higher at 11,557.
