Nifty Pass the Stress test of New High
Markets turned out to be extremely volatile this week taking even the experts by surprise as to which way the market is heading. Corporate numbers were not appreciated even after delivering robust set of numbers which is a cause of worry. HUL posted a staggering 19% PAT growth but the stock was down by 7.6% post results. Mahindra CIE, JK Tyres and Mindtree had all delivered great set of numbers but still the stock prices were hammered which throws an important signal that the upside is limited atleast in the near term. Although markets are likely to touch new highs to test the strength of the bulls but given the internal weakness it seems more likely that markets would recede from its high levels and make a failed top.
Currently, the sentiments are low which comes from the fact that IPOs are getting below average response. However, all that is going to change when HDFC AMC comes out with its IPO next week at an attractive value proposition. The euphoric response to such an IPO could possibly mark the top in Nifty. We do recommend subscribe HDFC AMC from a long-term investing perspective.
Events of the Week:
The Government is planning a breakthrough policy decision which will decrease the logistic costs for the economy which is currently as high as 16% compared to global average of 10% to 12%, by allowing truckers to increase the load factor by 20-25%. This may lead to a slowdown in CV sales and therefore some companies may be impacted but it is good for the long-term competitiveness of the economy.
Technical Outlook:
Nifty50 is likely to touch previous highs after a small consolidation phase. Still the indicators have not reached over bought levels which make a strong case for Nifty touching 11170 levels in the short term. Momentum is intact which should allow Nifty to test higher levels. Given the breadth of the broader market is weak; there is every likely hood that higher levels will not sustain. Traders should buy with today's low as a stop.
Expectations for the Week
Since the Parliament sessions are going on some amount of political conundrum could drive market volatility. It is expected that reforms agenda will get accelerated which would be positive for the markets in general. Investors must maintain a cautious stance, as the year ahead is heavily clouded by political drama. Contra bets in Metals, Realty and Housing Finance companies which are heavily beaten down can be good bets going forward. Quarterly earnings of a few companies such as ACC, Asian Paints, Ambuja Cement, Indiabulls Ventures, Hero Motocorp, JSW Steel would be important to watch. In general Investors should now adopt wait and watch policy before taking fresh investment positions. Nifty50 closed the week marginally down by 0.07% to close at 11010.20.
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