Markets On A Buffer Before Budget, Expect a Rangebound Movement

Share Market Weekly

Our Analysis

As discussed in our earlier weekly, the benchmark indices took a breather, however, strong action was seen in the broader market. By the last weekend, it was evident that momentum on the street was waning and thats what exactly happened on the first day of this week, where Nifty marked its all-time high of 12430 and from there corrected like anything. The bears dragged the market almost by 400 points in a week span.

The monstrous death run created a bearish engulfing candle on the charts. The pattern was further followed by the immense selling in the next two days by the market participants. This time it was IMF's report on India's growth where they estimated it at 4.8 percent for the year. The lowered GDP guidance along with the not so overwhelming earnings from the heavyweights dragged the market further.

Along with all the domestic turbulence for the market, the outbreak of coronavirus in China steered the global sentiments and the global metal and oil prices. However, China now has taken serious actions to contain virus outreach. So one can expect the impact on the global markets to be short-lived and revive in the near term. With the positive global cues, Indian markets may sustain in the upcoming week.

Going ahead, we expect a consolidation in the Benchmark indices till budget 2020. Budget 2020 which is scheduled next weekend would remain the key trigger for the Indian markets as earnings are still failing to impress the participants. On the broader level, investors may pick the beaten-down stories with a one or more than one-year prospective. Nifty Mid and small-cap will continue their outperformance in the future course with a decisive bias

Technically, Nifty has managed to sustain above its 20 DEMA and closed around 12252 which is also above its key support 12225. This suggests that in the near term Nifty may consolidate between 12225 to 12370 levels. However, Budget 2020 would be the key event that would decide the further trend of the benchmark indices.

This Weeks Market Highlights:

Benchmark Indices:

1) On Monday, profit booking from the investors Sensex declined over 400 points whereas Nifty slipped below 12300..

2) On Tuesday, with weak global cues and IMF revising India GDP expectation led a carnage on the D-street where Sensex erased by 200 points

3) On Wednesday, Weakness continued for the third straight day amid volatility in the global markets. Sensex ended a choppy trading session at 41115.38 level, down 208.43 points

4) On Thursday, the market snatches a three-day losing streak with stock-specific developments and lower crude oil prices. Sensex ended in a green zone with a 271 point rally.

5) On Friday, Bulls continued their pace for the second consecutive day Sensex up by 227 points.

Broader Index & Global Market:

-China put a second city in lockdown in its attempts to prevent the spread of the coronavirus.

-After the regular policy-making council meeting, Christine Lagarde is due to set out the parameters of review for European Central Banks monetary policy. p>

Movers & Shakers

Shares of Bharti Infratel surged 12% during the week, after the Supreme Court on 21st January agreed to hear the modification plea filed by telecom operators for giving them more time to pay off AGR dues.

Shares of UPL slipped as much as 8% to Rs 543.3 on the BSE in a week after alleged news on income tax raid on the company premises.

Key Market Drivers

  • INR Prices
  • Brent Crude Prices
  • Budget 2020 talk

Event Watch

International:

  • 10-Year Treasury Gilt Auction
  • Spanish Unemployment Rate (Q4)
  • Dallas Fed Services Revenues (Jan)

Domestic:

  • Budget news
  • Bank Loan Growth
  • Federal Fiscal Deficit (Dec)
  • Deposit Growth
  • Infrastructure Output (YoY) (Dec)

Stocks To Watch

Bharti Airtel On Upside while, PNB Housing on Downside.