Finally Government Started Putting Well-Timed Efforts To Revive Markets

Our Analysis

Indian share market got a heroic start this week, the rollback of the FPIs surcharges was the sole reason for the euphoria among the domestic investor. However, The delight was short-lived as the data showcasing the continues selling off of the FIIs, dented the sentiment of the market participants. The major reason for the continuity in FPIs selling was global trade discrepancies, the risk of recession and the fall in bond yields, which are having a ripple effect on the market. The consensus estimates a drop in domestic Q1FY20 GDP growth to 5.7 percent and weakening rupee impacted investors optimism on earnings outlook.

However, the government's continuous interventions and efforts towards new reforms to bring back the foreign investment can be witnessed through some of the recent announcements. A package to distress auto sector, new measures to simplify GST, exemption of startups from 'angel tax', a and upfront infusion of Rs 70,000 crore to public sector banks are some of them.

The Two positive news (RBI's surplus transfer and FPI surcharge withdrawal) may have changed the market sentiment for the short run but not the ground reality. The present slowdown in the Indian economy is cyclical as well as structural too. Although the Government's action is said to be well-timed, advancing ahead of the festive season, the slowdown wont wane off in a rush. Currently, We can witness a time correction with Nifty trading in a broader range, 10,830 is the immediate support, while in Upside closing above 11,140 can bring a strong bullish trend.

This Weeks Market Highlights:

Benchmark Indices:

1) On Monday, Indian benchmark indices after a long time have shown such a strength in the day. The rally was led by the banking & financial stocks, which boosted Nifty to jump 228.50 points or 2.11 percent to close at 11,057.90 & Sensesex at 37,494.12.

2) On Tuesday, the Indian share market for the third day in a row registered the positive gains in the d-street. However, on the daily chart, an indecisive Doji has formed indicating confusion among the market participant regarding the future trend. The Two positive news (RBI's surplus transfer and FPI surcharge withdrawal) may have changed the market sentiment for the short run but it hasn't changed the ground reality. Nevertheless, The Sensex rose by 0.39 percent to close at 37,641.27 and the Nifty rose by 0.43 percent to 11,105.35.

3) On Wednesday, The Indian share market had a free-fall from the first tick of market opening. The sentiment got worsened in the last trading session. The banking stock and taking the heat from the trade war, the metal stock failed once again with Tata steel & JSW steel lost 4 percent each. However, the INR depreciation helped the IT pack to be the major contributor for the Nifty. At last, the Sensex declined by 189.43 points at 37,451.84 and Nifty50 fell by 59.30 points to 11,046.10.

4) On Thursday, The August F&O series happened to be a continuation of negative closing. Mostly, banking and the financial stock were the reason for the drop in the benchmark Indices. However, the Pharma index outperformed the market, along with that, the metal sector recovered after a stiff fall in the past sessions in today's trade. At close, the Sensex declined by 382.91 points at 37,068.93, while Nifty was down by 97.80 points at 10,948.30.

5) On Friday, Indian equity indices nudged higher in opening trade mirroring their Asian peers.

Broader Index & Global Market:

- The global market traded mixed over this week, As the Treasury yield curve inversion raised US recession worries and uncertainty over any progress in trade negotiations between the United States and China took a toll.

- In the broader market, Followed the benchmark indices which had fluctuated between gains and loss in this week, The pharma and IT stock was trading strong, While banking and financials were the worst performers this week.

Movers & Shakers

Shares of MINDA CORP surged more than 45 percent after National Company Law Tribunal, New Delhi Bench (NCLT), has approved the scheme of amalgamation of five domestic Indian wholly-owned subsidiary companies.

Shares of Wockhardt dropped more than 4 percent in a week after The India Ratings downgrades Wockhardt to IND BB+.

Key Market Drivers

• Trump hits back at China with more tariffs amid the escalating trade war.
• RBI to transfer Rs 1.76 lakh crore surplus to the government.
• BSE launches interest rate options.
• Mutual fund industry eyes Rs 100 lakh cr AUM, 10 cr investor base in the next decade: AMFI.
• Stimulus measures to support sentiment but headwinds to drag growth to 6.4%: Moody's.
• Cabinet to think of relaxing FDI criteria.
• MFs cut investment to NBFCs but hike exposure to G-secs, T-bills in April-July
• Govt relaxes FDI norms: 100% FDI in coal mining, contract manufacturing; 26% in digital media
• Nestle India to replace Indiabulls Housing Finance in Nifty50 with effect from September 27.

Event Watch

International:

• China Caixin Mfg PMI
• US Markit Mfg PMI
• US Trade Balance
• US CPI YoY

Domestic:

• Crude price
• INR Price
• IN Markit India Mfg PMI

Stocks To Watch

SIEMENS & UPL On Upside while, SUNTV & RAYMOND on Downside.