Market To Consolidate Before Heading To a New All-Time High

Our Analysis

Budget 2020, a mixed bag of many aspects of the economy thats the one-liner which can explain it better than anything. Budget 2020 was based on the three themes, Aspirational India, Caring Society, and Economic Development. On the budget day, it was a clear carnage on D-street where investors dumped the market like anything. It was the steepest fall in last 5 months in terms of percentage.

However, post that bulls shown a never give up attitude and took the Sensex again on rising scales. The governments disinvestment plan was one of the most noteworthy decisions from Budget 2020. During the week RBIs accommodative stance further pumped the spirit in the market.

All in all the week was in bulls favour except the last day of the week. Increased manufacturing PMI, the governments realistic inflation guidance and expectations around the improved earnings on the back of improving economic conditions turned the bulls on. The sharp fall crude prices and good Agri output forecast was cherry on the cream for them.

We see the market to continue its uptrend in the long run with few breathers to create a good base. In the near term, we expect market to consolidate between 11950-12150 levels. However, any positivity in the trend may lead the current run-up to the all-time high of 12430. Considering all these aspects, investors should remain stock specific and should utilize all the corrections to average out the best portfolio stocks.

This Weeks Market Highlights:

Benchmark Indices:

1) On Monday, with the buying in selected blue-chips S&P BSE Sensex surged by 137 points to settle at 39,872

2) On Tuesday, recouping all the losses incurred on budget day, the market rebounded and witnessed a stellar run-up of 917 points to close at 40789 levels.

3) On Wednesday, with positive global cues and encouraging macro data points Sensex rallied 353 points to reclaim the 41,100 level.

4) On Thursday, Continuing upward journey, the sensex gained for the fourth straight day on Thursday after the Reserve Bank of India (RBI) kept the repo rate unchanged.

5) On Friday, Halting its four-day gaining streak, equity market ended in the negative territory. Sensex slipped by 164 points to settle at 41,142

Broader Index & Global Market:

-China's foreign exchange reserves unexpectedly rose in January as the yuan firmed after Beijing and Washington signed an initial trade deal, defusing an 18-month row that weighed on global growth.

-S&P Global Ratings cut its Chinese 2020 growth forecast to 5%, down from 5.7% on Friday, saying the impact of the coronavirus outbreak could take a heavy short-term toll.

Movers & Shakers

Shares of JSW steel surged 11.4% during the week after it bagged the 4th iron mine in Odisha auction.

Shares of ITC slipped as much as 9.2% to Rs.213.4 on the BSE in a week after the budget 2020, where the tax burden on the cigarettes was increased.

Key Market Drivers

• INR Prices
• Brent Crude Prices

Event Watch

International:

• Export Price Index (YoY)
• Core CPI (YoY) (Jan)
• China CPI, PPI (YoY)

Domestic:

• WPI Manufacturing Inflation (YoY) (Jan)
• Bank Loan Growth
• FX Reserves, USD
• Trade Balance

Stocks To Watch

Honeywell Automation On Upside while, GlaxoSmithKline Pharmaceuticals on Downside.