MARKET PULSE
Status: Uptrend Under Pressure
Highlights:
Three up days, one down day
Weekly Market Review
The benchmark indices managed to recover some of the losses from the last week, as both the key indices notched up about 1% gains during the holiday-truncated week. The Nifty managed to eke out gains of 0.86% and 1.05%, respectively, on Monday and Wednesday on the back of short covering. Even as the market started on a positive footing on Thursday, the Nifty could not sustain its momentum and faced resistance near the 9,950 level, before closing for the day on a flat note, at 9,904.15. Today, Infosys dragged the key indices, with the Nifty declining 0.67%.
The Nifty started the week at 9,755.75 and traded in the range of 9,752.10-9,947.80. The index finally closed at 9,837.40, up 1.30% from last Friday’s close.
After opening at 31,299.52 points, the Sensex advanced 1.00% this week to close at 31,524.68. During the week, the Sensex traded in a range of 31,298.90-31,937.51.
The Nifty and the Sensex have picked up another distribution day in today’s session. The distribution day count for the Nifty and the Sensex currently stand at 6.0 and 7.0, respectively. The Nifty is currently trading about 3% off its all-time high, while the Sensex is down more than 3.5% from its peak. The market status is currently “Uptrend Under Pressure”.
The broader markets outperformed the frontline indices this week; the Nifty Midcap and Smallcap indices gained 3.94% and 4.93%, respectively.
The MarketSmith IND 47 Index, which lists the top 47 stocks in chart and fundamental characteristics, advanced 4.75% this week.
On the sectoral front, barring the Nifty IT index, which lost 0.72%, all indices put on gains for the week. The Nifty Realty, Metal, and FMCG indices topped the charts with gains of 6.43%, 5.22%, and 3.86%, respectively, during the week.
The headline news for today has been the resignation of Vishal Sikka as the Chief Executive Officer and Managing Director of Infosys with immediate effect. The SAP veteran has put in his papers after a protracted tussle with Infosys founders over issues of hefty compensation for the CEO and some seniors, and other corporate governance issues. Reacting to the news, the Infosys stock made a new 52-week low on the bourses, and finally closed for the day at INR 923.25 on the NSE, down 9.56% from yesterday’s close.
According to a report published by CARE Ratings, the gross non-performing assets (GNPAs) of 38 banks grew 16.6% on a sequential basis to reach INR 8,29,338 crore at the end of the quarter ending June 2017. The pace of NPA growth was the highest in the last six quarters, as the ratio of GNPAs to the total advances of the 38 banks increased to 10.21% in June 2017 compared with 8.42% in June 2016. IDBI Bank has the highest pie of its lending book turning sour, with a 24.11% GNPA ratio, while Yes Bank has the least stressed lending book with a GNPA ratio of 0.97%. In this context, government support becomes critical for the state-run banks so that they do not miss payments on additional tier 1 (AT1) bonds, which otherwise, could dampen the sentiment in the AT1 market.
There are no major events lined up for next week, which could serve as market movers.
Current Outlook:
– Be cautious with any new purchases.
– Make a defensive game plan for your portfolio.
– Stay disciplined and exercise sound sell rules.
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