Weekly Big Picture : Corporate Tax Cut Announcement Drives Market Rally; Nifty Moved to Confirmed Uptrend

Market Pulse

Confirmed Uptrend

Weekly Action

Nifty, +1.8%; Sensex, +1.7%; Nifty Midcap, +2.3%; Nifty Smallcap, +0.4%; and Model Portfolio,+4.7%.

Weekly Market Review

Nifty, after closing on a high note last week, closed lower on Monday tracking weak cues from global markets and followed the losing streak on Tuesday and breached its 21-DMA. On Wednesday, the index traded in a narrow range but closed marginally higher. The sluggish momentum carried through Thursday and fell more than 1%. However, Friday turned out to be an eventful day with Nifty rallying more than 5% amid a positive announcement by the finance minister about a reduction in corporate tax rate to 22% from 30% earlier.

On the sectoral front, Nifty FMCG (+4.4%) was the top gainer, followed by Nifty Auto (+3.3%), Metal (+3.7%), and Bank (+3.1%). On the flipside, Nifty Media (-3.7%) was the top decliner followed by Nifty IT (-1.5%).

Today, Nifty had a follow-through day after it was up more than 5% on higher volume than yesterday and we moved the market to a Confirmed Uptrend from a Rally attempt. It retook its 50- and 200-DMA. However, it is trading ~1.2% below its 100-DMA. We would like the index to retake and hold its 100-DMA for further conviction. Despite a follow-through day, we are slightly cautious as the Nifty is still ~7% off-highs.

It is important that investors don’t play all their cards at once, rather take a pyramiding approach. i.e., adopting an investment approach where you begin with a small allocation and increase it as and when market advances further.

Stocks in News

Adani Transmissions Ltd acquired whole stake in Bikaner-Khetri Transmission Limited through share purchase agreement. The project includes approximately 480 circuit km of 765kV line along with associated transmission system. The stock was 0.25% higher.

Digital communication commission approved several telecom infrastructure projects worth Rs 2,536 crore for 4G connectivity which covers 2,215 villages in Arunachal and 763 villages in two districts of Assam.

What do you think? Please email us any questions or comments.

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