INSUBCONTINENT EXCLUSIVE:
The stock market continued its anaemic rally on expectation of a cut in the securities transaction tax, but later rejoiced the announcement
of a relief package from the Finance Minister for the long forgotten real estate sector
The rhetoric in the market seems positive and sentiments look bullish, which was fuelled time and again by the government announcements
But in spite of all that, the market is yet to touch new highs, and somehow there is an inherent fear on Dalal Street
Bank Nifty currently has the lowest open interest in 12 months and open interest in Nifty50 is also low from its previous peak this
year.
This suggests although the market looks buoyant, people are afraid of committing more money at this level
FPIs are buying at an average of Rs 550 crore a day, unlike the DIIs, which are selling stocks of equal amounts.
Certainly, in the short
term, all does not seem well for the bourses although in the long term, the market is building up its structural runway, which could support
sales growth in India considering the bottom-up reality
Since, automobiles are assumed to be a proxy for consumer purchasing power, it can be reasonably concluded that although stock markets are
stock price saw adjustment from dismal quarterly performance, which was an apt reality check for the market
Though the company has reduced its growth guidance by almost 50 per cent, the stock still trades at 73 times its earnings
Such-super rich valuations sooner or later will reach reasonable levels
Hence, investors should remain safe by avoiding companies that are extremely expensive from a valuation perspective.
Technical
OutlookNifty50 has reversed from the upward sloping parallel line forming a bearish candle on the daily chart and a shooting star on the
weekly chart, indicating a correction ahead
The divergence of Nifty and Bank Nifty in the previous week, which earlier had hinted at a correction, has been confirmed this week with
both the indices showing weakness by the close of the week
earnings discounting season
But in spite of all this,
Nifty has still not crossed new highs
This being the case, hopes of the market climbing and sustaining beyond the 12,000 mark looks dim
Investors can consider booking profits in FMCG, consumer durables, consumer discretionary and insurance stocks and wait for a correction
before investing further.
Nifty closed the week 0.14% higher at 11,908.
