INSUBCONTINENT EXCLUSIVE:
The domestic equity market weakened significantly this week, dragging frontline stocks along with it
Many sectors witnessed across-the-board weakness in spite of absence of any big negative news
This phenomenon wherein the market falls seamlessly without any cogent reason signals that a disaster is looming ahead.
Companies across the
board have plans to raise capital, but through debt because they very well know that these times are not favourable for raising equity
capital as the mood of the market is seriously bruised
but unfortunately, they might have to postpone or cancel the issues, which will be a big negative trigger for the market on the face of
it.
Capital markets are highly liquid compared with other markets, and as the economy gets thirsty for capital, everyone including the
government will try and sell shares in the secondary market to raise funds, which is what the market is fearing the most
Hence, it is better to remain safe and keep your money in debt for the time being.
Event of the WeekAlthough optically, quarterly results
may look better in the AMC business, going by the numbers of HDFC AMC, but the underlying facts need to be studied before taking a plunge
AMCs will show a boost in their bottomline mainly due to the Sebi mandate banning upfront commissions, which will reduce fees and commission
as an expense in P-L of these companies to a very large extent.
But come next year, due to a larger base of PAT growth, these AMCs might not
be able to maintain the same growth rate
Good numbers are sometimes deceptive.
Technical OutlookNifty50 has broken a major uptrend, signaling the end of the bull market rally that
had begun in November 2018
The downfall will accelerate further as more and more traders shift sides and mount bearish bets.
The market has entered long and protracted
Traders should wait and sell on rise.
Expectations for the WeekMarkets are currently hoping that good corporate numbers might ease the
current rout, but eventually there will be disappointment
Cement company ACC delivered good numbers with a 39 per cent increase in net PAT for June quarter, but this was mainly due to the
margins will contract, which will cool down the rally in cement stocks
The market, in general, will remain bearish
Investors should conserve liquidity and at the same time consider booking profits in overvalued frontline stocks.
Nifty50 ended the week
1.14 per cent lower at 11,419
