Stock Market

Is there a hurry to buy stocks Wait till May 23 for your shopping spree

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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.




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Category: Stock Market


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