We know that time of our readers is very valuable. Hence we are here trying to give a as brief review of Indian Stock Market as on date as much possible.
Please refer to the given charts in order to understand the article better.
What happened? :
Indian stock markets corrected from its lifetime high levels of 11000 plus to sub 11800 levels during September and October 2018. A decline of almost 15% from the peak.
Causes: Diwali psychological factors, sluggishness in global markets which are facing selling pressure due to tiredness from multi-year rally in USA and other markets, slow-down or stagnation in developed economies, trade-war situation among world’s biggest economies post USA President Trump’s tariff plans, lack of trend in global commodities prices, tightening of interest rates and its effects by US Fed.
Geopolitical tense situation in Syria and North Korea does not count. Currency market was also stable and hence a non-factor.
What is happening?
As stated above, Indian stock market has been languishing in a tight range of 10500-11000 during last 3 months with occasional bouts of high volatility where market was forced to touch the 10000 mark.
It is surprising how few stocks managed to keep the benchmark indices i.e., NIFTY and SENSEX above their recent lows and even towards the upper band of the range.
The introduction of weekly NIFTY OPTIONS also increased the already prevalent indecisiveness.
The Next Few Months:
A major event is coming on the horizons for Indian stock markets. The upcoming Loksabha elections where the masses of India will decide to re-elect the incumbent Modi government or not will be a major factor that will determine whether the current side-ways trend will persist for some more months in future or not.
While we are not changing our underlying view of sideways type market; it should be reviewed post-election results that are likely to happen during next 2-3 months.
We will also see increased volatility in markets on both sides. However the trend will remain undecided on either side.
It wouldn’t be immature to caution against the PSU and midcap technical bounce back that we have seen recently. The intermediate downtrend can resume sharply on turns of events.
The Global Picture:
There is not much to take home in terms of forecasting value from the world economy and financial markets as of now. The initial fears of long due correction resuming in Dow Jones (US Benchmark Index) have receded at least for now. However, that remains an imminent danger to shatter the already fragile state of most of the world’s stock markets which have been seemingly looking to return from a prolonged honeymoon period.
Global commodities and forex markets as well has not much to offer on either side.
What we said?
We have been maintaining a side-ways market view since few months with bouts of ‘big-days’ primarily motivated by one-off events such as budget-day, RBI monetary committee meetings, global markets sell-off/shoot ups and so on.
While the midcap stocks which have been beaten down 20-50 per cent saw a good technical rise mixed with long-term investors buying as well as expected and repeatedly forecasted by us.
Individual stock movements offered ton of money for those who understood the overall scenario. For e.g., DHFL, Yes Bank, PFC, Bata India, Reliance ADAG stocks and so on. The reasons consisted of individual stock news factors to defensive buying from institutional funds.
You can go and check back our past published market views to match how our market forecasting fared.
Word for investors:
Stick with large cap stocks. Many of them are trading within a fairly attractive valuation band. Venture into bottom fishing in mid cap, small cap stocks only if you are confident enough and know what you are doing.
Word for traders:
Use options strategy involving more than one strike prices. Courageous traders can trade in stock futures to grab bigger action while there will be many intra day opportunities to play in Nifty and Bank Nifty futures.
You can contact our RESEARCH TEAM at MEGHA CAPITAL for any query or inquiry regarding our professional services.
Please visit our website www.meghacapital.in for more.