Today’s Action:
Benchmark indices hit record high; Sensex conquered 35,000 level
Daily Market Review:
After yesterday’s sell-off, the Indian stock indices reverted to their indefinite bullish trend on Wednesday. The announcement of reduction in additional borrowing by the Indian government in regards to fiscal deficit concerns and expectation of changes in GST strengthened the investor’s confidence.
The Indian market continues its record breaking spree in New Year 2018. The 30-pack Sensex conquered the milestone level of 35,000 whereas the Nifty hits lifetime high to move to 10,789 level. In the end, both the indices, Nifty and Sensex, were up more than 0.8% to close at 10,788.52 and 35,081.82, respectively.
Investors’ confidence in the broader market remains intact despite Tuesday’s heavy sell-off. The Nifty Midcap and Smallcap pocketed gains of 1.03% and 0.99%, respectively.
Strength was witnessed across the sector indices, barring the Nifty Media (-1.46%). The Nifty PSU Bank, Pharma, and Bank indices advanced the most with gains of 4.17%, 1.26%, and 1.20%, respectively.
On the contrary, the market breadth was negative as 766 shares advanced against a decline of 793 shares. A total of 53 shares remain unchanged.
Our proprietary list, MarketSmith India IND 47 rose 0.36% as 11 names in the index of leading growth stocks rose 2% or more.
Distribution, a synonymous with institutional selling can change the market direction. An increase in number stops the market rally. The bulls prefer the fact that the distribution has been relatively lower. From last two or three weeks, the distribution days has been low in number due to aging or falling from the count. Currently, the Nifty stands at three distribution days, whereas the Sensex has one distribution day. Hence, the overall market condition still looks optimistic, thereby reflecting on its current status of a Confirmed Uptrend.
To adhere to the stated fiscal deficit target of 3.2% for 2017-2018, the Indian government on Wednesday announced to bring down its additional borrowing to INR 20,000 crore, from the earlier announced INR 50,000 crore. The government believes that INR 20,000 crore will be sufficient to meet the financing needs of the country.
Meanwhile, the GST council is likely to consider the rates of nearly 70 items and the inclusion of real estate in its 24th council meeting, which is expected to be held tomorrow. It is the last council meeting before finance minister Arun Jaitley will present his last full Budget on February 1, before general elections in 2019.
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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