Markets had a volatile week. Falling for 3 days in a row, markets came back strongly on Thursday & Friday. Nifty hit a low of 10033 before bouncing back. Sentiment was hit hard by the election and global sell off. Gujarat goes into election mode. It will be worth seeing the results as the expectations and consensus is split wide open. Due to the confused sentiment markets behaved the same way. Another non event that markets needed to let go was the RBI policy. No rate change and no hawkish comments. Upward risk to inflation kept policy makers busy.
Technically speaking Nifty has covered a lot of ground from the lows. It breached previous supports and was dangerously lurking below previous lows of 10080. Next stop given the momentum can be 10330 before a breather can be expected. Pull back has been strong. Nifty needs a weekly close above 10409 to reverse the weekly down trend of lower lows and lower highs. This weeks low of 10033 becomes a good support.
Fundamentals are unfazed. Multiples continue to remain elevated. What has changed over the last two weeks is FII’s stance. Cash and future both have been sold heavily. As a matter of fact FII’s are net short the market. DII’s on the other hand continue to pour in money. It will be crucial to get Gujarat elections out-of-the-way before any meaningful things can be plotted.
Globally, the DOW and US markets held up well. Asian selling for now has stopped. Sentiment has stabilized. FED in all likely hood is bound to raise the interest rates and that seems to be sinking into the prices. Tech stocks are beginning to look rocky. They may be topping out. After almost a fabulous run most part of 2017 – the ‘December anomaly” is expected to play out.
Sector speak – Keep an eye of metal stocks. Nifty metal has seen a 10% correction. Should the recent lows of 3520 hold we can see a revival of the bullish trend. Also Nifty Infra looks promising post the recent moves. Keep an eye of Infra stocks for revival.