INSUBCONTINENT EXCLUSIVE:
The domestic equity market consolidated during week gone by after assimilating the US-China trade spat in a more matured manner
Surprisingly, India had mirrored global markets since the beginning of May this year
Therefore, irrespective of the election outcome, except for one-day knee-jerk reaction, the market will continue to mirror global financial
results, the market will continue to chart its course reflecting the global scenario
Across the world, foreigners have sold stocks in respective countries and Indian market has faced the same fate
This reflects the global shift in risk appetite
Nonetheless, the fall in May seen in India has got nothing to do with volatility in the number of seats, as speculated by political
analysts.
Speculation is doing the rounds that an MSCI India rejig is likely to see inclusion of stocks such as Info Edge and RBL, which are
at their 52-week highs, and removal of stocks such as Voda Idea and Cadila which are near their 52-week lows.
Indices are nothing but good
measures of a consensus view
Therefore, from a contrarian-investing perspective, higher returns are likely in Voda Idea and Cadila compared with that in Info Edge and
RBL from a three to five-year perspective
But this strategy is only for investors having huge risk appetite.
Event of the WeekBajaj Finance has truly delivered outstanding numbers
Existing customers have contributed 67% to the business and there has been a 33% rise in customers from 26.2 million to 34.5 million, which
acts as a double accelerator for delivering a 57 per cent PAT growth for March quarter compared with that in the previous year
But in general, corporate numbers were not encouraging given the liquidity crisis and status quo situation due to the elections.
Technical
OutlookNifty50 has started an upward journey after correcting 61.8 per cent of the rise since mid-February
Due to the election outcome, the market movement has been quite rapid, which can be advantageous for intraday traders if they are on the
Nifty50 is expected to touch the 11,700 -11,800 range by next week if this momentum continues
However, given the expected volatility, it is better to stay on the sidelines and take a reactive trade rather than a predictive trade
If the market moves extremely on either direction, contrarian bets with proper risk management should do better.
Expectations for the
Speculation is that NDA is will gain in the upward of 300 seats and if it does in the best-case scenario, then the market will test the
11,800 market and correct thereafter.
However, a negative surprise would cause a one-time massive knee-jerk reaction and the market can tank
up to 10,500-10,000 levels
It would be profitable for traders to take contrarian bets on either side and investors should ideally be silent spectators and let this
At the same time, if panic sets in, keep a shopping list ready with companies from sectors such as financialisation, consumption and FMCG
which are reasonably priced.
Nifty50 ended the week at 11,407, up 1.33 per cent.
