Markets Sentiment_24.02.2018

Markets staged a smart comeback from the start of this week. Nifty tested the 10300 level and closed smartly near 10500. Week on week close although flat – sentiment improved owing to Friday rally. Caution is still the word on the street. Small and mid caps continue to under-perform. PNB scam is still being digested as the nation comes to senses after the recent jolt. Banks are still the focus. Sentiment remains soured as far as bulls are concerned. FII is still a regular seller in our markets. DII keeps absorbing the selling.

Technically Nifty is long way away from being safe. This is the longest period in recent past it has failed to re-conquer 50d EMA. 10550 will be key along with its last high 10600. It is nearing the supply zone. Sell on rally will still be the catch word as long as 10600-650 is not covered. On the down side the line of last support clearly stands at 10300-250. Below this further selling can be expected. Starting of the new F&O series has been on the lighter note as well.

Fundamentals have not changed. Some green shots here and there but still market is pricing a growth which has not come. Correction has been deeper in some stocks which may have provided good openings. Over all sense is still overvaluation. At north of 25x PE future returns have not been that great historically. Hence a bit of caution is still advised.

Sector speak – Keep an eye on Pharma stocks. The index has shown good bounce near its last support. Nifty pharma can scale another 5% if the lows of last week hold. As expected NIFTY IT continues to do well. Can see some minor pull back – however is strongest of the lot. Keep an eye on its constituents.