17th May 2019 | 14:47 PM IST

Be Cautiously Optimistic, As Election Results To Create Next Wave

Our Analysis

This week was one of the most thrilling weeks for the Indian share market. During the whole week, bulls & bears tussled to win each day with heavy volume. The US-China trade war escalations, key earnings release, and other global and domestic economic developments stormed D-street with skyrocketing volatility.

Pharma space was the most cautious one this week. Among the sector, sun pharma which dropped by 20 percent in a day was the biggest casualty of the week. The pharma sector of the Indian markets has paid the price for the price-fixing lawsuit against Teva Pharmaceuticals and 19 other Indian drug makers. The news led the crackdown in the pharma space. However, on a broader level, the expiry day cherished Nifty led a bounce above the 11,100 - 11,050 level.

Recently, US hiked tariffs on $200 billion worth of Chinese import against which Chinese officials are planning to impose retaliatory tariffs against the US. Moreover, the domestic announcement of IIP, CPI, WPI & Skymet monsoon report worsened the situation for investors. According to data, the distinct slowdown in the domestic manufacturing growth in the year 2018-19 can be seen as it fell to its 3-year low. Furthermore, retail inflation is also expected to heat up ahead as it inched up to 2.9 percent. The delayed monsoon with lower than normal rainfall was also predicted by Skymet report which will further fuel the flame for the agricultural sector and its output. The noises around the election results will definitely add to this and would aid volatility in the market.

Going ahead, In the upcoming week, no major announcements are lined up. However, the market participant will take clues from the last phase of the Lok Sabha election on May 19 and the results which are expected to arrive on 23rd May. Recent strong close (above 11250 levels) suggests the upside, however, the election results are the point of doldrums for bulls and bears. The volatility is the only constant for the investors in the upcoming week. The election results would remain the key to unlock future market trends.

This Week’s Market Highlights:

Benchmark Indices:

1) In the last hour of the trading session on Monday, cash-based panic selling dragged markets suddenly. The first entrant to this sliding race was Sun Pharma. The pharma giant plotted the biggest intraday decline post listing (20 percent), though somehow managed to close 5.43 percent lower. The factor has fueled the fear on D-street which led to hefty panic selling. The Sensex closed down by 372.17 points at 37090.82, while the Nifty dropped by 1.16 percent at 11148.20.
2) In the last session of Tuesday, benchmark indices witnessed a recovery from the day's low. The strength was seen in the heavyweights like Reliance, L&T, ITC & HDFC. Halting the nine-day losing streak the Sensex grew by 227 points at 37,318.53, while Nifty closed higher at 11,222, up 73.80 points.
3) On Wednesday, Indian share market in the last hour of trade has witnessed a sharp fall, erasing the gains of Tuesday's trade. The decline was largely guided by the HDFC Bank & Icici Bank. The benchmark indices which has shown the strength in the early session closed with the negative bias, the Sensex was down 203.65 points at 37,114.88, while Nifty was down by 65 points at 11,157.
4) On Thursday, Markets managed to post decent gains and settled around the days high. The first half of today's trading session was dull as widening trade deficit data and possible delay in monsoon was weighing on the sentiment of market participant. However, the tone changed in the latter half with a sharp recovery in select index majors which aided the benchmark to end around the days high. The Sensex grew by 278.60 at 37,393.48, while Nifty was up 100.10 points at 11,257.10
5) On Friday, Benchmark indices opened on flat with positive bias amid mixed global cues with Nifty above 11,250.

Broader Index & Global Market:

- On the global front, The US market was seen trading higher with the slightly softening comment by the Trump over the trade war coupled with upbeat earnings and strong economic data, Asian market had also track US market and was in the same path.

- In the broader market, The Mid & Small Cap had traded under pressure, Stock specific action continued to play. Pharma was the most beaten down sector whereas IT was among the top gainer in these weeks.

Movers & Shakers

Shares of BAJAJ FINANCE surged nearly 10 percent. the company after the company reported 57 percent year-on-year (YoY) jump in consolidated profit at Rs 1,176 crore compared with Rs 748 crore in the same quarter last year

Shares of YESBANK dropped more than 15 percent in a week after the RBI appointed an additional director former deputy governor R Gandhi on the board of the private sector lender.

Key Market Drivers

  • Forex reserves were recorded up by $171.9 mn to $418.7 bn.
  • Rainfall Numbers shows that the pre-monsoon showers (March to June) this year could end up the lowest of the last five years.
  • The retail price inflation rose to 2.92 percent in April, pushed higher by costlier food items. However, food inflation was still 1.1 percent in the month against 0.3 percent in the previous month.
  • April WPI Inflation At 3.07 percent. Food Inflation At 4.95 percent.
  • Skymet sticks to weak forecast for Monson.
  • India told Iran it will decide on its oil imports after elections end this month, in line with its economic interests, a government source said.
  • India postponed the retaliatory tariff deadline on US products till June 16.
  • Trade deficit widens to $15.3 bn in April
  • India's services exports rose by 6.6 percent to $17.94 billion in March.

Event Watch

International:

  • Japan GDP SA QoQ
  • Markit US Mfg PMI
  • Markit EU Mfg PMI
  • The US-China trade talk
  • Crude Movement

Domestic:

  • Election results
  • Election results
  • Q4FY2019 Earning
  • INR Price

Stocks To Watch

IBULHSGFIN & NMDC On Upside while SUNPHARMA & IOC on Downside.

 

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Niveza Editorial Desk : We are a team of stock market nerds trying to stay ahead of the herd. We spend our grey cells...
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