Sep 15, 2018

Indian Stock Market Commentary - 15 Sept 2018

               Last week the market saw high volatility as it was expected from it. However, the later half of the week was expected to be choppy and flat but gave the bounce back which surprised bulls more than the bears as they were not expecting it so fast and swiftly, that too without those moves in biggies like Reliance Industries and the likes which have been moving the markets upwards since last 1000 points of NIFTY Index.
               This week and the previous week starting from the first of this month saw decline without any new news factor in Indian stock markets, which brought down NIFTY from the lifetime high 11750 levels to 11250 levels, about 500 points decline in 10 days time. However the news of PM Modi convening an emergency meeting regarding the situation and announcing possible moves made the oversold market cheer up and rise for last two days of the week and recover half of the correction or 250 points. 
              However we do not think that the friday gap up open can sustain and we might see selling back to that gap in next week as the market discounts the measures announced by PM Modi on monday morning open. When there is no sufficient buying the markets could again get back to backfoot until the friday gap is filled and biggies like Reliance Industries and the IT pack does not again start to lead the markets. The pharmas are good on the way up, but they don't have the fire power to run the benchmark Indices. 
                 The measures announced by the government are mainly targeted to arrest the falling rupee and the impact of which will be not significant on the stock market correction or rally perspective. So, for now the technicals will continue to rule for the short term traders in the equities. 

              It is interesting to understand that the market was rising, for parts of it, due to the fall in the Indian currency, and all the benefits it gives to the exporters, IT firms, the pharma companies; but when the fall became steep and worries about the high inflation due to higher fuel prices (fuel is biggest import of our country) and its domino effects, the Current Account Deficit situation and possible rating downgrades; made the market to look and think the other side of the coin. 
             Having said all these, we believe that the next week is going to be as difficult to trade for bulls esp. as it was the last week, and we do not think that it will be one way ride up again and time to take positional longs is yet little far away. The stock specific moves on both side will continut to be available in specific pharma, IT, banking names. The hetherto leaders like RIL, etc. will continue to languish and not lead the market up. IT is taking a breather and without this rupee fall panic getting in place, it is unlikely we can see buying coming back in it again, they should be waited to be baught when it does, and it will.