Weekly Big Picture – Key Composites End a Choppy Week with Minor Losses

MARKET PULSE

Status: Confirmed Uptrend

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.

Highlights:

Two up days, two down days

Weekly Market Review

The benchmark indices put on a sluggish performance this truncated week. After posting solid gains last week, the benchmark indices ended the week in red owing to Friday’s steep fall. The key indices are trading at about 1% off their all-time highs.

The Nifty started the week past the 9,300 mark at 9,339.85 and lost 0.20% or 18.75 points by the end of the week. It traded in the wide range of 9,269.90-9,377.10 and closed at 9,285.30.

After opening the week at 30,021.49 points, the Sensex posted a similar loss of 0.20% or 59.60 points, as it ended the week at 29,858.80. It traded in the range of 29,804-30,176.55.

Despite a witnessing a steep slump on Friday, the key indices escaped the week without any additional distribution days, owing to lower trading volumes. The current distribution day count for the Nifty and the Sensex remains at 3.0 and 4.0, respectively. The market condition remains in a Confirmed Uptrend.

Talking about the broader indices, the Nifty midcap, after making a fresh all-time high this week, snapped from its seven-week winning streak to post a loss of 0.21%. The Nifty Smallcap index extended its rally by 0.19%.

The William O’Neil IND 47 Index, which lists the top 47 stocks in chart and fundamental characteristics, gained 1.04% this week.

On the sectoral front, the Nifty PSU Bank, Realty, and IT indices were the top three gainers with increments of 2.49%, 1.55%, and 1.43%, respectively, while Nifty Media, Metal, and Energy were the top three losers with -4.10%, -3.96, and -2.76%, respectively.

Domestic and global economic developments kept investors on the watch throughout the week. Mounting issues over NPAs in the banking segment came under the government’s scanner as it issued an ordinance to amend the Banking Regulation Act that will empower the RBI to go after defaulters. In another move by the government, Indian steel makers took a breath of relief after the Cabinet approved the National Steel Policy, under which priority will be given to Indian steelmakers in government tenders for infrastructure projects. As for news from the other end of the globe, the U.S. Federal Reserve kept the key interest rates unchanged. Further, it viewed the slowdown in economy as transitory and remained optimistic about the future, hinting at at least a couple more interest rate hikes this year.

Talking of the trading action this week, benchmark indices traded sluggishly in the first two trading sessions. Volatility prevailed on Tuesday and Wednesday, as key composites were range bound and closed flat with no major move. Investors awaited the U.S. Federal Reserve’s verdict on key interest rate.

However, the benchmark indices staged a strong rebound in Thursday’s session to end the day with significant gains. The government’s amendments to the Banking Regulation Act and approval of the National Steel Policy fostered market growth. The Nifty clocked an all-time high on closing basis in the session.

The cheers were however short lived, as bears rampaged markets in today’s session, giving away all the week’s gains. Key indices witnessed a sharp correction amid weak metal prices and profit booking.

The following events could serve as a market mover in the coming weeks:

  • The April 2017 Consumer Price Index data: May 12, 2017
  • Q4 FY 2017 earnings results for Blue Star, Future Retail, Hero Motocorp, Siemens, Asian Paints, Force Motors, HCL Tech, Dr Reddys Lab, Havells India, Titan, and Nestle, among others.

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