INSUBCONTINENT EXCLUSIVE:
The week gone by kept everyone submerged in the festive mood, and so was the market
Everyone seems to be suggesting that the worst is over, and this is golden time to invest in equity
The majority is confident that the Nifty will not fall below the 10,000 mark
Such commentaries have been triggered by a 20 per cent drop in crude oil prices, a strengthening rupee and corporate numbers that have been
Still, Mr Market is reluctant to move up, especially after a massive pull back of 6 per cent over the past two weeks
October 26, 2018.
When the Street is turning optimistic we are a little cautious about the continuation of the rally in the near term.
On
as crude oil prices have fallen relentlessly since that date and are currently down some 20 per cent, prompting a consensus call that oil
has entered the bear market.
We again disagree
Crude oil has corrected sharply, but the supply side disruptions caused due to the Iran sanctions might not take the prices any lower soon,
and therefore, prices are likely to stabilise at these levels, giving the much-needed relief to the Indian economy, especially to industries
like aviation, oil marketing companies and ancillary sectors.
Events of the WeekIn a dramatic turn of events, a surprise defeat for the
Republican Party in the House of Representatives is a sign of big relief for global equities
The defeat is a subtle message to the US President that authoritarian rule will not be tolerated; polarizing politics and protectionist
stance will not be welcomed by the Americans.
This should mend the ways of the current administration, which should bring cheers to the
market, and the fear of escalated trade wars seems less likely
This is long-term positive for global markets.
Technical OutlookThe Nifty50 had a swift upward rally of 6 per cent after a deep fall
Such rallies have taken the market to short-term overbought levels, necessitating a corrective phase
The market seems to be readying to retest the 10,000 mark on the Nifty50, as there are ample signs that the current rally has run its course
and cracks are emerging on the higher side
Traders are advised to book profits on long positions and shorts can be initiated at higher levels
However, if the Nifty50 moves above 10,750, it will signal the resumption of an uptrend.
Expectations for the WeekThe earnings season has
almost come to an end, which brought some cheers to the market, but the shortlived euphoria seems to be over as domestic issues such as
state elections will shift the focus back to Indian politics
Just as the recent US elections were a referendum on Trump policies, PM Modi faces a similar test this month, when three key states go to
Till that time, the market will stay sideways in profit-booking mood.
Investors should stay away for the time being and fresh funds should
be invested in liquid funds in the meantime.
Nifty ended the week at 10,585, down marginally by 0.12 per cent.
