Skip to main content

Week Ahead: Consolidation

After a four-day consolidation, the market gained strength in the later part of the week, hitting a record high of 9,377.10 (on bad loans reforms, ICICI Bank's earnings, new steel policy and status quo by US Federal Reserve) but those gains were also wiped out in the last session due to profit-booking and a sharp fall in commodities prices. Overall it was a rangebound week for the Nifty that lost 0.2 percent to end below 9,300 level.
The coming week is expected to see some more consolidation with minor correction as investors await French elections on May 7, more corporate earnings and macro data next week.
Experts feel the market is currently highly valued and seems to have priced in a likely recovery in corporate earnings and economy.
Valuations of Nifty stocks are at 22.2 times trailing twelve months P/E, the market does not appear cheap, Jimeet Modi, CEO of SAMCO Securities says.
It could head for a large correction if 9,000 gets broken on the downside as it is a very important level placed since the start of the up-move from January 2017, he feels.
The level of 9200 may act as a key support in the May series while the highest call base for this series is placed at 9500 strike with 5.3 million shares which is likely to act as an immediate target for Nifty, according to the research house.
Here are nine factors that will chart market direction next week:
Earnings
We will be in a fifth week of earnings season next week. Earnings so far are stable to positive, indicating the beginning of recovery. Experts expect faster earnings recovery in FY18.
Bharti Airtel, Hero Motocorp, HCL Technologies, Dr Reddy's Labs, ABB India, Bharti Infratel, Siemens, Zee Entertainment, Asian Paints, Glenmark and Titan are the important earnings to watch out for during the week.
Macro Data
Consumer price index or retail inflation (rural/urban/combined) for the month of April and industrial output (measured by index of industrial production) for March will be announced on May 12.
CPI inflation in March had increased to 3.81 percent compared with 3.65 percent in previous month while industrial output contracted 1.2 percent in February (hitting a four-month low) against 1.99 percent growth in February 2016, due to fall in the manufacturing sector.
Technical Outlook
Technical experts think the Nifty has strong support level at 9,000. If it breaks that support level then they expect a major correction in the market.
Money Flows
FIIs had resumed their liking for emerging markets as the risk on sentiment kicked-off post the 1st round verdict of French elections. However, they preferred to invest in South Korea and Taiwan as these markets were adversely impacted by geo-political tensions.
IPO and Listing
The Rs 1,200-crore IPO of Housing and Urban Development Corporation (HUDCO) will open for subscription on May 8, with a price band of Rs 56-60 per share.
Majority of brokerage houses recommended subscribing the issue with a long term view.
Textbook publisher S Chand and Company will list its equity shares on May 9. The listing is likely to be at good premium as the issue oversubscribed 59.5 times.
Global Cues
Coming Monday, globally markets will react to second round of French elections that to be held on May 7. According to media reports, Centrist Emmanuel Macron, who is in favour of keeping French in European Union, is likely to defeat National Front's Marine Le Pen.
US jobs data for April month announced on last Friday was much better-than-expected while unemployment rate also improved to 4.4 (the lowest in 10 years) from 4.5.
Bank of Japan will announce its policy on May 11.
China CPI inflation for April month is expected to announce on May 10 while US April core PPI will be announced on May 11. Europe's March industrial production and US' April core CPI are expected on May 12.

Comments

Post a Comment

Popular posts from this blog

Wizard of Dalal Street: Govind Parikh's investment mantra

Wizard of Dalal Street: Govind Parikh's investment mantra Govind Parikh of Govind Parikh Securities says selling right is more important than correct buying. He says it is necessary to keep a lot of cash. "We keep an average 10 percent cash in our portfolio," he says I like to buy things in a bad market. Additionally, don't look current cash flow, concentrate on future cash flows — that is what  I look at," says Govind Parikh of Govind Parikh Securities. He advises investors to buy good quality stocks when the market crashes. While sharing his investment philosophy with ace investor Ramesh Damani, on the Wizards of Dalal Street, Parikh says management integrity is very important when deciding which stock to bet on. He tells investors not to buy stocks impulsively. According to him, selling right is more important than correct buying. He says it is necessary to keep a lot of cash. "We keep an average 10 percent cash in our portfolio," he says. He al...
2 comments
Read more

Bank Nifty

Bank Nifty Bank Nifty is a Sell at Current Levels with a Stop Loss of 12,750 Once Below 12,400 the next major Support shall be only 12,000 Levels so a person can go short is bearish or buy putt if moderately bearish . 
7 comments
Read more

Budget 2018: Mega health plan to cost Rs 1 lakh crore

The mega healthcare plan for the poor, as announced in the Budget, will cost about Rs 1,00,000 crore annually and curtail states' autonomy to design their own policies in the sector, says a research paper, authored by a professor at economic think tank NIPFP. The paper's estimate is 10 times higher than the one made last week by Niti Aayog adviser Alok Kumar, who had said that the National Health Protection Scheme (NHPS) will cost around Rs 10,000-12,000 crore annually. National Institute of Public Finance and Policy (NIPFP) Assistant Professor Mita Choudhury said in the paper -- 'The National Health Protection Scheme in the Union  Budget 2018 : Is it in the Right Direction?' -- that resource requirements for implementing NHPS are likely to be very high. Not only would such a scheme impose a heavy burden on both the Union and the states' exchequers, it will also curtail states' autonomy to design their own policies in a sector that is constitutionally ma...
Post a Comment
Read more