Daily Big Picture – Nifty, Sensex Make Merry; Broader Indices Feel the Heat

Today’s Action:

Key composites make fresh highs ahead of budget; Midcap and Smallcap indices face selling pressure.

Daily Market Review:

Benchmark indices began the week with fresh zeal as both the Nifty and the Sensex hit new highs in today’s session. The 2018 Economic Survey report boosted investor sentiment, as the survey predicted a 7-7.5% economic growth rate in FY 2019. The upcoming financial year is expected to reap the benefits of GST and demonetization. However, rising crude prices remain a concern and could be a major hindrance to growth with inflationary risk on cards.

Markets could remain volatile ahead of the union budget on February 1, 2018. We might observe some specific sectors like realty, housing finance stocks doing well in anticipation of government’s higher allocation to infrastructural development. However, it is important to closely monitor the mid- and small-cap stocks, as these stocks have witnessed some distribution of late.

The Nifty made an all time high today, before ending the day with a gain of 0.55%. The BSE Sensex advanced 0.65% and scaled fresh highs in today’s session.

Broader indices have come under the pump due to selling pressure in last few sessions. The Nifty Midcap and Smallcap indices  lost 0.85% and 1.68%, respectively.

While India’s key indices scaled new highs, the market breadth was in favor of losers today. On NSE, 428 shares increased against a decline of 1093 shares. A total of 28 shares remain unchanged.

Distribution count which keeps a check on heavy volume selling in recent times remains unchanged. The count for both the benchmark indices stays at one. With the key indices trading near their all-time highs and distribution count at a comfortable level, the Indian market remains in a Confirmed Uptrend.

On the sector front, today’s session turned out to be a mixed one. The Nifty Auto, IT and Financial Services indices topped the table with gains of 1.5%, 1% and 0.9%, respectively.. On the downside, the Nifty PSU Bank, Pharma and FMCG indices faced selling pressure, as they declined 1.4%, 1.1% and 0.6% ahead of the fiscal budget.

The MarketSmith India 47 index, which is a list of top 47 stocks in chart and fundamental characteristics, declined 1.64% today on account of weakness in mid- and small-cap names.

Coming to the Economic Survey report, there seems to be a silver lining for the real estate sector, as the sector attracted a total FDI of USD 257 million in the first half of 2017, which is more than doubled compared to 2016. This augurs well for companies in the real estate space.

From the earnings corner, Tech Mahindra Q3 earnings beat the consensus estimates by a huge margin. The Company’s net profit grew 10%, y/y to INR 924.4 crore. Once again, we observed an IT company surprising the street with its numbers in this quarter. Going by the numbers posted by some leading IT companies, this could well be one of the top performing sectors in Q3.

Current Outlook:

– Market environment conducive for new purchases, but remain selective.

– Focus on fundamentally strong stocks breaking out of strong technical patterns.

– Stay disciplined and exercise sound buy and sell rules.

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