Weekly Big Picture – Benchmark Indices Eke Out Gains; ITC Derails Nifty’s Journey to 10K

MarketSmith India _ Weekly Big Picture.MARKET PULSE

Status: Confirmed Uptrend

 Highlights:

Three up days, two down days

Weekly Market Review

The Indian market started on a positive note on Monday, as the market continued its momentum from last week. The benchmark indices scaled new all-time highs, and also registered fresh closing highs on Monday. On Tuesday, the key indices fell, as the market heavyweight ITC dropped more than 12%, after the GST council decided to increase the cess on cigarettes. After Tuesday, the market has witnessed a fight between the bulls and the bears, as the market seesawed between gains and losses on the remaining days of the week. Finally, by the close of the week, the key indices are within touching distance of their record highs registered on Monday.

The Nifty started the week at 9,908.15 and traded in the range of 9,792.05-9,928.20. The index finally closed at 9,915.25, up 0.29% from last Friday’s close.

After opening the week at 32,053.98 points, the Sensex closed at 32,028.29, advancing just 0.03% from the previous Friday’s closing price. During the week, the Sensex traded in a range of 31,626.44-32,131.92.

Meanwhile, the benchmark indices added a distribution day on Tuesday, as the sell-off in ITC dragged the indices lower on high volumes. Nevertheless, the distribution day count for the key indices stands at a comfortable level of 2.0, while the market condition remains in a Confirmed Uptrend.

The broader markets displayed a divergent trend this week. While the Nifty Smallcap index significantly outperformed the headline indices with a gain of 2.25%, the Nifty Midcap index shed 0.09% during the week.

The MarketSmith IND 47 Index, which lists the top 47 stocks in chart and fundamental characteristics, advanced 0.88%, this week.

The sectoral chart displayed a positive picture with all the sector composites advancing higher, except the Nifty FMCG index (-7.42%), and the PSU Bank index (-0.24%). The top gainers for the week were the Nifty IT, Media, and Metal indices with gains of 3.69%, 3.04%, and 2.01%, respectively.

The highlight of the week was Reliance Industries’ 40th AGM, where the Company made announcements about Reliance JioPhone, its much-touted affordable 4G phone. The Company announced that Reliance JioPhone would be available free of cost, and only a fully-refundable, one-time, a security deposit of INR 1,500 would be collected by the Company. The Company also announced that JioPhone users would get unlimited data at INR 153 per month, and also said that it would introduce a cable to connect the JioPhone to any TV set.

After the announcement of JioPhone, telecom and DTH stocks came under pressure. Major telecom companies, Bharti Airtel, Idea Cellular, and Reliance Communications, fell 2-8% intraday, as investors turned wary of these companies’ prospects. In the DTH space, Dish TV was down over 8.5% intraday, while Sun TV fell over 4%. Hathway Cable plunged nearly 5%, while the recently-listed GTPL Hathway too fell over 2%.

Q1 FY 2018 Results: During the next week, many Nifty companies will be declaring their results, which could guide the course of the market going ahead. Some of the prominent ones are HDFC Bank, Asian Paints, Axis Bank, Bharti Airtel, Hero Motocorp, HDFC, HCL Technologies, ICICI Bank, Maruti Suzuki, and Larsen & Toubro, to name a few.

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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