Markets closed the week up about 1%. Sentiment was sluggish throughout the week. Moody’s upgrade did lift sentiments a lot. However, markets seem to look forward to other triggers now. Result season is almost on the end and all major earnings have come out. Between RCOM’s negative news and Moody’s positive upgrade, participants in markets seem confused. Midcaps and Smallcaps continue to attract a lot of attention and sentiment seems very bullish there. IPO frenzy seems to have subsided as tepid listings gave a bad rub off to sentiments. Markets move into perhaps a very critical trigger mode – Gujarat elections.
Technically speaking, Nifty has rebounded from crucial supports. Its 50D EMA stands at 10186 which was the double top it broke. 10100 is your medium term support. A break down of that will trigger the much awaited deep correction. On the upside 10500 needs a clear breakout. Over the short run, Nifty kept oscillating between 10300-10380. Momentum was very sluggish as traders perhaps do not want to punt on either side of the market. A slow move towards the 10500 is expected as clarity emerges on election sentiments.
Fundamentally, like before markets are over valued. Multiples are stretched beyond imagination. Sentiment is such that people are comparing the situation to pre 2008 crisis. Results have been ordinary, some pockets although have given green shoots. GDP numbers and monetary policy will give further fundamental triggers. FII’s have been passive sellers and DII’s continue there dream run of collecting domestic money and pumping it in the markets. Value is scarce in the market.
Globally, thanksgiving played out nicely in US. China did scare Asia as stocks took a hit due to some bubble commentary. Overnight sentiments remain stable and no major fundamental reason exists. Globally markets should continue to scale new highs. Dow sits pretty at 23500+, NASDAQ above 2600. VIX is at all time near low and complacency has set in. A word of caution needs to be sent here.
Sector views – Nifty Energy index looks to hit new highs and should hit 14600+. Keep an eye on its constituents. Nifty IT is at a critical junction. Sentiment can take it above 11300 towards 11500.
