INSUBCONTINENT EXCLUSIVE:
The domestic equity market had a roller-coaster ride this week with the dollar and crude oil hitting higher levels and taking the market
However, when crude oil relented, the market bounced back immediately
straight quarterly loss of Rs 7,718 crore on account of surging provisions for bad loans and erosion in profitability from its core lending
and securities trade business
The bellwether of the Indian economy did not meet the Street expectations; but the stock bounced back post results.
This shows there was
huge pessimism among investors and traders and SBI bounce post earning suggests the worst may be over at least for the interim period.
There
is very little room left for the stock to go down further in the short term
Also, the management commentary that the worst is over for the bank instills confidence that the coming financial year would be one of hope,
as there are chances of recovery of Rs 78,000 crore from the cases in the first two lists of companies referred to NCLT.
However, on further
analysis it looks like smaller PSU banks such as Allahabad Bank, PNB and a few others would recover a much higher amount in terms of
percentage of their market cap from IBC resolutions compared with that of SBI.
Events of the WeekSugar prices prone to highest cyclicality
are facing an existential crisis
Sugar prices have plunged 30-40 per cent, creating a dent in operating margins of companies, which are unable to pay farmers
But is this, the turning point for the mills is that the government is willing to help the battered industry by revisiting the fair and
remunerative prices offered
If the government indeed passes protective measures for sugar mills, stock prices are going to bounce, given that internationally sugar
prices have moved up 10 per cent, giving higher realisations to exporters.
Technical OutlookThe market has bounced back from the oversold
levels, and more such bounces are likely to happen after which Nifty is again expected to start its downward journey to touch lower support
Midcaps and smallcaps are expected to bounce more vigorously, as they had corrected more sharply in percentage terms
Traders should buy-on-dips at current weekly low with stop losses
Overall, the market is expected to remain volatile, so stop losses have to be little wider
Expectations for the weekThe domestic equity market can expect some volatility on account of expiry and earnings from a couple of companies
such as NTPC, Oil India and Aurobindo Pharma, among others
Key sectors to watch out for would be oil and gas, IT and cement
With rising uncertainty on the global front, the market is not in a hurry to begin a northbound journey
Investors can hold on to their investments and look to pick quality stocks to build long-term portfolios
Buy on dips should be the strategy.
The Nifty50 closed the week by a marginal 0.08 per cent higher at 10,605.
