Government Boost To Revive Market Trend, Time To Put On Hold

weekly share market news and updates

Our Analysis

As mentioned last week last weeks pullback rally was as good as an illusion and played the role of a trap for many retail investors. The week started with a resumed downfall at an extreme pace. Nifty 50 tumbled almost by 200 points during the week. The free-fall was so intense that there no support level has been respected during the week. The culprit for this influential fall was the banking stocks which were unstoppable on the weekly expiry. The major reason behind the pessimism was the comment of CEA which broke the hopes of the stimulus, the only positive development that was holding the market sentiment was also been crashed. Moreover, the rupee tumbled to its lowest this year against the US dollar breaching the level of 72.

At present, the market is driven by the sentiment, the positive global cues are also unable to boost or provide any relief for the Indian market. With no domestic trigger till the upcoming Friday, where India GDP data is expected markets are would behave in a similar manner. Nifty has already closed below 61.8 percent retracement of Oct-June rally. Therefore, the crucial target on the downside is at 10,495, which is 78.6% retracement. Unless there is some positive commentary from the government addressing the economy and slow down the downside targets are open. However, for investors, it would be an opportunity to utilize these dips to grab quality business in their portfolio and should not worry as the current situation shall also pass.

This Weeks Market Highlights:

Benchmark Indices:

1) On Monday, The last hour selling pressure erased all the intraday gains closing the benchmark indices marginally higher. The Sensex was up 52.16 points at 37,402.49, while Nifty was up 6.10 points at 11,053.90. Amongst the broader market indices, Midcap and Smallcap ended higher by 0.29% and 0.46% respectively.

2) On Tuesday, Indian equity benchmarks snapped their three-day gaining streak despite a recovery for automakers, Specifically Maruti which closed with the gains of 4 percent. Other than Auto, IT stocks again contributed, which kept Nifty above the 11,000 level. At closing, The Sensex declined by 74.48 points at 37,328.01, while Nifty was down 36.90 points at 11,017. The hit was higher in the broader market with mid & small-cap down by 0.85 & 0.62 percent.

3) On Wednesday, Another day for the Indian share market to fall after a rise at the start, Once again the auto and IT sector tried, but the fall was such impactful that the overall d-street ended in the red. However, Nifty survived the 11,900 level for the day. the Sensex declined by 267.64 points at 37,060.37, while Nifty was down by 98.30 points at 10,918.70. Following the benchmark, the broader market had also taken a hit of 1.57 & 1.95 percent in mid & small-cap.

4) On Thursday, On the thrilling weekly expiry day, The bears squeezed the bulls in the last leg of today's trade. Banking, Auto & reality stock were the culprits who plunged the market lower, whereas the IT sector was the only lone survival to close in green. At close, The Sensex fell 587 points lower at 36,472 while Nifty settled 1.7% lower at 10,736.

5) On Friday, It is a weak start for the Indian indices.

Broader Index & Global Market:

- The global market traded positive over this week as there was the stimulus announcement by Germany and interest rate reforms by China. However, all eyes will be on the Federal Reserve Chair Jerome Powell's speech on Friday for clues on the central bank's monetary policy.

- In the broader market, The cut was higher the selling was much painful and spread across all sectors. The reality, Auto, banking was worst hit however IT had survived somehow as the rupee which tumbled to its lowest this year against the US dollar.

Movers & Shakers

Shares of MAHANAGAR GAS surged more than 6 percent after Shell India, the local arm of Royal Dutch Shell Plc, sold its 10% stake in the city gas distribution for 770 crore. On 1 July 2016, When MGL got listed, Shell acquired a 34% stake in the company. Last year, it offloaded 24% of its shareholding8.5% in April and 14% in August. The remaining 10% they had sold this week. Thus, the major hangover of the promoter stake sale is behind and the stock is likely to witness better pricing for the companys valuations, which have been at historic lows of 11x PE. After the stake sale, many brokerage houses had also changed there rating to overweight.

Shares of CG POWER dropped more than 50 percent in a week after the company recognized "unauthorized transactions" and related financial irregularities in the company.

Key Market Drivers

  • Forex reserves at an all-time high of $430.57 bn
  • India's holding of US govt securities surges to $162.7 billion
  • SEBI constructing the framework to provide rating agencies path to get loan default information.
  • Govt removes the debenture reserve requirement for housing finance cos, NBFCs.
  • NSE revises eligibility criteria for inclusion in Nifty indices, "all equity shares that are traded (listed and traded and not listed but permitted to trade) at the exchange are eligible for inclusion in the Nifty indices,

Event Watch

International:

  • US GDP Annualized QoQ
  • China Manufacturing PMI

Domestic:

  • Crude price
  • INR Price
  • India GDP YoY

Stocks To Watch

TECHM & UPL On Upside while, L&TFIN & RAYMOND on Downside.