INSUBCONTINENT EXCLUSIVE:
As expected, Mr Market indeed corrected sharply, making everyone question the 12,000 target for Nifty by Diwali
However, a swift bounce is natural, when the market trades at new highs
Indian bourses were inherently overbought, and therefore, the correction was all but a natural step for the market to correct the overbought
The scapegoat was none other than the dollar this time!
However, the bounce seen on Wednesday and Friday should not be taken as the
beginning of a new rally, because corrections seldom have such a short period
Given that Fed meeting and global headwinds remain key uncertainties, investors should not take this as a buying opportunity, but should
consider booking profits.
The fear over crude oil is overdone
Therefore, the most widely expected fear on the Street may not be the oil ghost, but global liquidity tightening by the US Fed, which the
bulls will have to wrestle with
Hence, the market should continue its corrective journey till reasonable valuations are reached.
Events of the WeekThe most popular and most
talked about topic on the Street was the rupee-dollar pair
In social media too, the exchange rate was mocked at across platforms
Exporters have been complacent and are not booking the dollar
At the same time, importers have increased their dollar hedges
All the above factors conclude that the fear has reached its pinnacle, and therefore, the rupee should rally from here on, providing a sigh
of relief to the current account deficit
In a way, this is positive for the market.
Technical OutlookThe domestic market has bounced after taking support at the 38 per cent
retracement from the July lows
Not all sectors are showing tendencies to bounce
At the same time, deeply oversold stocks are showing far stronger upward moves than the rest of the market
At present, there is no indication that this is the start of a new rally
Therefore, there is every likelihood that whipsaws will continue
This market needs price and time correction before it can make new highs
For traders, it is advisable to stay away from some time
Expectations for the WeekThe market will continue to trade in a whipsaw manner, which would be a nightmare for traders to take any view on
Although global headwinds are subsiding slowly, but high valuations should deter investors from making fresh buys at current levels
The tussle between FIIs and DIIs continues; FIIs have continued with their selling spree whereas DIIs were net buyers during the week gone
by.
The 10-year bond yields have increased from 7.13 per cent to 8.11 per cent in just a span of six months, which does not augur well for
At least, it is good for the country, as the rupee will stop its rout
Soon, equilibrium will be reached, which will give stability to the market
But till that time, the market will struggle to find its feet
There will be shorting opportunities for traders in FMCG and consumer durable sectors, which can be a sell-on-rally, while PSU banks and
OMCs could be good buys on dips for traders
Investors should, nonetheless, stay away or consider booking profits on every rise.
Nifty ended this week 0.63 per cent lower at 11,515.
