Markets were up about 1.2% for the week. Sentiment has turned cautious if not negative. As expected, Nifty did show a good dead cat bounce for the week. However it failed to close above 9900 firmly. Cut short by a holiday and a long holiday weekend, markets managed to stay in the green for the week. The close could have been better but for the Infy saga. The fundamental news flow was the reason markets took a tanking on the last day. Street is nostalgic again with the Infosys board room war drama. October had seen Tata Group wage in a battle that dragged for months. This time it is the IT giant. Buyback of 13k crore was approved and Mcap of 22k+ was eroded.
Technically speaking, soured sentiment will have a fizzle out effect. Sell on rallies is the rumor. 9900 is pivotal resistance and 10k is a distant dream. Those trapped will wait and new entrants are likely to come in at a lower range. The recent sub 9700 lows are bound to be tested again. Sentiment is not bullish and bottom seems far away. 9500 has seen aggressive writing and should act as a base. It is crucial that Nifty defend its 50-DMA around 9800 for short-term balance.
Fundamentally speaking, after the recent fall, we are still expensive. Results were mix pack and not that great. Fund flows continue from the domestic investors. DII keeps pumping in the SIP and retail money. FII is a strong seller. Barring one odd bulk deals, they sold every single day to the tune of 1000cr! Time will tell who will have the last laugh but for now liquidity is gushing and supporting the market.
Globally, uncertainty continues to grip markets. White House drama held the US markets in the negative zone with Dow below 22k. The tensions of Korea are still clear and present. Markets there too have a liquidity support. Jobless claims in US came in at the lowest in a long time.
Sectors to watch for the next week – Pharma. Continue to bottom pick individual stocks, Nifty Pharma should find its bottom soon. Better be a buyer of the last 10% fall than the last 10% rise. Metals should continue to do well. World over metal prices are rising. Nifty Metal should hit a new high given the momentum. All other sectors are wait and watch. Sell on rise is the theme.
Markets finally gave into the hands of the bears. Sentiment all of a sudden turned for the worse. Nifty cracked over 3.5% for the week. Sensex is down over 1400 points. For reasons one can think of this correction was coming. However the manner in which it has come is shocking for many. Midcap/Smallcap have take a beating that was not envisaged. Some of the names have fallen 15-20% in a week. Results seasons continue unwind. Banking space – BoB/SBI continue to bleed with no improvement in NPAs and slippages. In the auto space Tata Motors came out with disappointing numbers and got punished.
Technically we has mentioned 9900 as critical support. This broke effortlessly. 9800 broke as effortlessly and Nifty tested 9700. Put writers had to unwind a lot of positions. Call writing increased and now 10k becomes a hurdle – one that will not be crossed with ease. The intermediate bottom at 9450-9500 will be tested. A very short-term dead cat bounce or some consolidation can be expected.
Fundamentally speaking markets after this brutal fall is still overbought. This can be the starting of a deeper correction. Too early to call bottom but there is enough steam on the way down. SEBI order, N. Korea war, China etc are all excuses and post-facto events. At this juncture we are at a crossroads. Results are not supporting valuations and one will see its consequences.
Globally markets mirrored one another. Dow fell considerably before stabilizing on Friday. Global situation had always been soft. May be the August fallacy plays out and world over the markets fall another 3-5%. Geopolitical tensions are prevalent. They were earlier as well and are still today. The markets may have a reason to fall now.
As one would expect IT should do okay in this bloodbath. Pharma is on a new low – keep your eyes open for capitulation and pain to do some bottom fishing. Strongest sectors is the metals and commodity space. Watch for some of the front line names in that sector as they will lead the recovery. In the after math of this correction – remember – good quality will always bounce back.
Markets ended the week on a flat-positive note. Nifty managed to defend 10k after briefly losing ground in the middle of the week. The sentiment remains bullish. Participants are being overly cautious now. Although no euphoria is being sensed, markets continue to get support from liquidity. Result season continues to unwind with pressure mounting on Pharma stocks. PSU banks also did not come out with that great results. Auto numbers stand out as monthly sales were reported mostly in line. One dominant leader – Maruti continues to do well. The stock is probably running as fast as its cars – if not more.
Technically speaking on weekly charts Nifty looks to be overbought. It can, however, continue to grid upwards given the “unlimited money” that keeps coming in. 10000 is a key short-term defending level where the Nifty is likely to bounce around. 9900 continues to be a very strong weekly support for bulls. Like last week 10130 or a close above 10100 is required for fresh legs. Till then the markets over all are likely to consolidate.
Just like any other week, fundamentals have not changed. Some results are good, some are bad, some are worse. The markets continue to remain at an elevated level. P/E is stretched and well near historical highs. Valuations do not warrant any fresh capital to be committed at this level. Some pockets of the market however do provide some value. Contrarian buying opportunities can be seen in places. Lack of negative triggers coupled with ample liquidity is keeping the market afloat.
Globally the rally continues to support. Last week APPLE ensured that DOW hits 22k! A record for the index. Results continue to surprise wall street. Markets across the world are having similar patterns. Waves of liquidity and complacency in terms of risk taking are keeping them afloat.
Sectors to watch will be pharma and metals. Major sector indices are at record resistance levels. Technically fatigue and exhaustion can be seen. However these levels can be taken out after a brief stint of consolidation.
Markets had a volatile week. The ITC jolt created a gap down for the markets. But after a few flat sessions Nifty managed to close at another weekly high firmly above 9900. Sentiment remains bullish with a cautious tone and it seems market is taking a pause before the next move. Being expiry week and result season expect the market to remain in a tight range with a firm base of 9800 as far as Nifty is concerned.
RIL and Wipro were in news as RIL clocked excellent results with Wipro not doing so bad either. RIL announced a bonus issue with a news packed AGM where as Wipro said it will buy back 11000cr worth of shares. The result season will continue on D-Street and individual issues will continue to have reactions. Pharma sentiment seems to be getting better as news flow remains on the positive side.
Technically Nifty has a base in place at 9800 and till that is defended bears will struggle. Having said that call writing has been prevalent at 10k. Some put writing is also evident in 9900 strike. If news flow and global set up is steady one is likely to see the expiry above 9900.
Fundamentally the market are still overbought. Nothing has changed since last week. Markets are near all time high multiples. There is a lot of liquidity and clear lack of negative trigger and that is keeping the market afloat. FIIs have been buyers and strong DII flows continue to keep the buy on dips momentum going. One must keep eyes and ears open as even the slightest of negative triggers and absurd reasons may pull the market down.
IT seems a strong play as Nifty IT index is on its way to hit the top end of the 1000 point range of 10k-11k. Pharma has had a very decent run however one has to be cautious on positions as Nifty Pharma approached a very critical resistance at 10200-300. The sugar space shall continue to see some action so that is one space to watch out for next week.
Markets were up for the third straight week. Nifty ended up half a percentage point 7 points shy of 8800. RBI policy was a non event. Result heavy week say individual reactions and a mix batch of results for a lot of companies. The 8800-8900 journey is likely to be faced with a lot of supply and resistance.
Global markets all across the world hit their respective life highs. Dow is strong above 20k and although looking overbought the euphoria continues. This will have a clear ripple effect for our markets as well. Like stated in my last blog although exhaustion and overheated indicators point to a stall in the current rally, markets could well be headed higher.
Results season will continue on D-Street and individual stocks will have reactions of their own. Markets will still be in a sideways to bullish tone. Correction is overdue but it seldom happens when all expect it to. Sentiment seems bullish and some caution is advised.
I still restate last weeks outlook. Fundamentally as well as Technically market looks overbought. At 22-23x PE and mix results, such hefty valuations are difficult to justify. Charts show some stalling and sideways movement could happen. If a negative trigger is played out correction may be on its way. Having said that all longs must be protected with stop-loss and no shorts should be open.
In individual stocks one can look at Machino Plastics. Results are expected on the 16th and stock has given a breakout with volumes. One can look for targets of 290-295 with a stop-loss of 230. CMP stands at 258.
Keep an eye on the liquidity, FII flow and the beginning of UP elections for the next week. These may well dictate markets domestically. Globally speaking it’s all too calm as of now and nobody knows when or what the next trigger of news flow will be