Negative Global Cues Weigh Down Benchmark Indices

MARKET PULSE

Status: Confirmed Uptrend

Current Outlook:

  • Market environment conducive for new purchases, but remain selective.
  • Focus on fundamentally strong stocks breaking out of sound base patterns.
  • Stay disciplined and exercise sound buy and sell rules.

Highlights:

One up day, three down days

Weekly Market Review

After pocketing decent gains in the last two weeks, the benchmark indices witnessed selling pressure in the midst of global geopolitical tensions. Following last week’s missile strikes on Syria, North Korea’s increasing nuclear activity came under the scanner of Asian countries this week. Global unrest weighed down the Indian markets at the time when equity indices were trading at their all-time highs.

The four-day trading week, had three down days and one up day. Though the key indices escaped recording the distribution day in a couple of instances, Friday’s high volume down day added a distribution day for both the key indices, taking the total distribution day count for the Sensex and the Nifty to 5.0 and 4.0, respectively. By the close of today’s session the Sensex and the Nifty settled with losses of 0.83% and 0.52%, respectively. The indices are just about 1.5% below their all-time highs, the reason we retained the current market condition at a Confirmed Uptrend.

The strength among the broader markets is intact as the Nifty Midcap and Smallcap indices continue to trend higher week-after-week. The indices advanced for a fifth straight week by adding 0.87% and 0.93%, respectively.

The William O’Neil IND 47 Index, which lists the top 47 stocks in chart and fundamental characteristics, continued to outshine the overall market by gaining 1.10% in this week..

On the sector performance front, the Nifty Pharma, PSU Bank, Realty, and Pvt Bank remained the clear winners by gaining 2.4%, 1.8%, 1.5%, and 1.4%, respectively, while the Nifty Metal and IT pulled back 4% each.

In the economic data released during the week, India’s consumer price index (CPI) inflation for March 2017 increased to 3.81%, as against 3.65% for February 2017. The retail inflation slowly picked up after months of weak demand triggered by the demonetisation move. Earlier this month, the RBI projected the CPI inflation to an average of about 4.5% in H1 FY 2018 and 5% in the later half.

Giving a brief picture of the market action for the week, the key indices continued to decline from where they ended in the previous week. Weak global cues continued to take a toll on investor sentiments. The day witnessed heavy selling of liquor shares post the announcement of the government’s plan to take down liquor shops in the state, by the Madhya Pradesh Chief Minister Shivraj Singh Chouhan.

In the following day, markets rebounded sharply from a three-day losing streak to post good gains on the major indices. Tuesday’s positive market breadth gave a much needed respite to investors, which was the only up day in the week.

However, gains were restricted to Tuesday’s session only as benchmark indices continued to trade in red on the next day. The upcoming earnings season and the CPI data kept investors on the watch, during the session.

The IT biggie, Infosys started-off the earnings season with a consensus missing result update earlier today. The Company reported a 2.83% decline in net profits for Q4 FY 2017. Further, the board of the Company announced a dividend of INR 14.75 per share. Further the Company’s guidance also fell way below the street estimates, leading to a heavy distribution of its shares. The day’s key indices declined further, magnifying weekly losses.

In the coming week, the following events could serve as a market mover:

  • WPI Inflation numbers: April 17, 2017.
  • Q4 FY 2017 earnings results for TCS, Yes Bank, IndusInd Bank, CRISIL, and HDFC Bank, among others.

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