Markets Weekly Sentiment_05082017

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.