The Relief Rally Post Correction On The Go, Best Is Yet To Come

Our Analysis

A 3-day week comes with high volatility and chaos among market participants. The fuel was spooked by the rise in global risk. Since, Argentina taking the 2nd-biggest crash since 1950 for any stock market, after a shocking election loss of Mauricio Macri, plunged the peso 15% against the US dollar. Additionally, the protests in Hong Kong & the report divining the US-China trade war to begin the recession dented the sentient of investors across the globe. Tracing that, Sensex began the week tumbling more than 600 points in a day. However, there was a short-covering rally on the expiry day which bought some relief in the bourses.

On the domestic front, the sign of the slowdown was evident in the figures of July automobile number which crashed by nearly 19 percent YoY, the worst decline since December 2000. Similarly, the data indicating the value of new projects announced during April to June 2019 fell by 79.5% YoY, recording the highest fall since September 2004. This is some of the significant indicators for the facts of the slowdown, examining that we do expect the market to remain under the bear hug and is difficult to predict a strong bounce-back until there is some comforting announcement from the government.

Technically, the market had made a short-term bottom and likely to trade in a range. On upside 11,250 will act as the strong resistance which is the 38.2 percent of Fibonacci retracement, While in downside 10,800 will play important support in Nifty. Going forward, The D-street in the absence of the domestic trigger is likely to track and react to the global clues. Accordingly, the trade talk, Crude & currency movement will be closely watched by the investors.

This Weeks Market Highlights:

Benchmark Indices:

1) On Tuesday, Indian benchmark indices after a pullback rally in last week resumed its downtrend with bears coming into the charge once again. The India Volatility index saw a surge of 13.61 percent in a day, resulting in the bloodshed settling across the segment. Reliance was only stock who tried to hold the indices, Nevertheless, Auto, banking & IT stock dragged the Sensex 623.75 point lower closing at 36952.16 & Nifty at 10,925.85.

2)On Wednesday, Benchmark indices ended higher but off day's high on the expiry day. backed by the metal, infra and banking stocks. the Sensex was up 353.37 points at 37,311.53, while Nifty was up 103.50 points at 11,029.40.

Broader Index & Global Market:

Globally, the US market was traded mixed, However, the US delaying the tariffs on some Chinese imports provided the much-needed relief to the market participant in the middle of the week. Yet, escalating tensions in Hong Kong, political uncertainty in Italy and fears of a full-blown financial crisis in Argentina were still denting the sentiment of the investors.

In the broader market, The Mid & Small Cap has traded mixed with stock specific action continued. As the Q1 result are in progress, the stock is witnessing big swing as per the result stated.

Movers & Shakers

Shares of RELIANCE surged more than 11 percent after the AGM meeting stating the deal with Saudi Aramco & debt reduction plan.

Shares of GLENMARK PHARMA dropped more than 9 percent in a week after the company posted a disappointing set of numbers for the first quarter ended June.

Key Market Drivers

• The US to delay China's tariffs.
• India's retail inflation eases marginally to 3.15% in July.
• India's industrial production grew 2% in June.
• Forex reserves fell by $697 million due to a decline in the currency.
• SEBI to ease criteria to provide smart cities issue funds through 'Muni Bonds'
• Govt is likely to permit 100% FDI in contract manufacturing.

Event Watch

International:

• EU CPI
• EU Construction Output YoY
• EU Markit Mfg PMI

Domestic:

• Crude price
• INR Price

Stocks To Watch

ZYDUSWELL & PIDILITIND On Upside while CUMMINSIND, CIPLA on Downside.