Banknifty To Push Markets On Upside

IT, Pharma, Metal Stocks Push Markets to New Highs

Our Analysis

This week, In the absence of any major domestic trigger the bulls failed to keep the momentum. In between, the default by the PMC bank, along with the fraudulent allegation on IBULHSGFIN had prompted the investor to turn cautious and sell the equities, thus emerged a profit-booking in the d-street.
Further on the flipside, The improvised MoM Auto sales number happen to bring some positive momentum for the automobile industry, a long-lived pessimism seems to get vanished in this sector.

Besides all this, The much-awaited RBI policy came with a 25 bps rate cut. The extremely accommodative stance shows that the central bank and the government are in sync to revive the economy and would work together till they achieve the same. Eventually, the repo rate is likely to settle at 4.75 percent in this rate cut cycle. However, RBI lowering its growth forecast for the current fiscal is a key negative.

Going forward, The Q2 earnings are about to start with TCS and Infy from next week. On a technical note, Nifty had completed its 50 percent Fibonacci retracement from its high, on the downside the next levels to watch out would be 11,080-11,050, while 11,475 will be the steep resistance on the upside. Certainly, the frontline has corrected for its recent high, but the trend remains bullish. However, In all this chaos BankNIfty will be the only one who can survive the Bulls and would be the gamechanger in the coming days.

This Weeks Market Highlights:

Benchmark Indices:

1) Indian share market had witnessed a selling on Mondays trading session, however, the sharp recovery in the last hour managed the nifty to close above 11,450 marks. Taking a snap of a broader picture, the banking, Pharma & auto stock were excessively hurt. While the frontline indices were supported by the IT pack, gaining nearly 2 percent. At the close, the Sensex was down by 155.24 points at 38,667.33, while Nifty was down 37.90 points at 11,474.50.

2) On Tuesday, The PMC Bank situation & the IBULHSGFIN allegations of fraud had questioned the overall banking system, fueling the sentiment of the investor to dump the stock. The Sensex was down by 361.92 points at 38,305.41 and the Nifty50 fell by 114.60 points to 11,359.90. All sectoral indices closed in the red with Nifty Bank, Auto, FMCG, Metal, Pharma, and Realty declining 1-4 percent.

3) On Thursday, An indecisive day closed the frontline indices lower, forming a Doji candle on the daily chart of Nifty. It was a dull closing for the first weekly expiry of October series, the major culprit was the HDFC Twins down anyway between 1 to 2 percent. At the close, The Sensex declined by 198.54 points at 38106.87, and the Nifty was down by 46.80 points at 11313.10

4) On Friday, Indian equity benchmarks opened higher ahead of the RBI policy.

Broader Index & Global Market:

-Globally, there was a mixed performance amid the disappointing manufacturing and hiring data and the data showing US services-sector activity at a three-year low stoked expectations that the Federal Reserve could cut interest rates to stem a wider economic downturn

- The broader market is witnessing hefty buying interest in a specific stock or sector. Going ahead auto, IT, Banks after the recent correction is also looking good.

Movers & Shakers

Shares of BPCL surged more than 10 percent after the divestment proposal by the government. Adding, The stock had been re-rated by many brokerage houses giving an overweight stance and increasing the target.

Shares of IBULHSGFIN dropped more than 35 percent in a week after a court-ordered probe into allegations of fraud at the company.

Key Market Drivers

  • Govt may seek Rs 30,000 crore interim dividend from RBI.
  • Saudi Arabia to invest $100 billion in India.
  • IRCTC IPO to open today.
  • China September factory activity shrinks for the fifth month: official PMI.
  • The core sector output declined by 0.5% in August.
  • RBI is likely to reduce repo rates by 25 bps on October 4: Goldman Sachs.
  • Fiscal deficit reaches over 78% at Rs 5.54 lakh cr till August end.
  • North Korea fires a ballistic missile.

Event Watch

International:

  • CN Caixin PMI Composite
  • US CPI YoY
  • US Export price index

Domestic:

  • Crude price
  • INR Price
  • Q2 Results

Stocks To Watch

ACE & RITES On Upside while, JUSTDAIL & PRESTIGE on Downside.

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ABOUT AUTHOR

Niveza Editorial Desk : We are a team of stock market nerds trying to stay ahead of the herd. We spend our grey cells everyday to a pave a smooth road for our clients in the shaky world of stock market. While tracking the mood swings of the market we bring our clients the most rewarding deals.

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