Weekly Big Picture : Nifty Up 2% for the Week, Pharma and FMCG Stocks Among Top Gainers; FM Announces Merger of State-Run Banks

Market Pulse

Rally Attempt

Weekly Action

Nifty, +1.9%; Sensex, +1.7%; Nifty Midcap, +1.9%; Nifty Smallcap, +3.7%; and Model Portfolio,+0.4%. 

Weekly Market Review

Nifty, taking positives from a series of announcements by the government last Friday, gained around 230 points on Monday and retook 11,000. It kept the momentum going on Tuesday while RBI announced the surplus transfer. Nifty stayed above the Day 1 (Friday) low of 10,637 for the two consecutive sessions and we upgraded the market status to a Rally Attempt from a Downtrend. However, the next couple of sessions witnessed some selling pressure and Nifty breached its 21-DMA on Thursday.

On Friday, Nifty after opening ~50 points higher made day’s low of 10,874.80 ahead of Q1 GDP data and FM’s conference. It recovered sharply from its low to extend its gains toward day’s high of 11,042 and managed to close above 11,000. The FM announced a series of reformation measures, which includes merger of PSUs. The following are the list of banks merged:

• Canara Bank and Syndicate Bank

• Punjab National Bank, Oriental Bank of Commerce, and United Bank

• Indian Bank and Allahabad Bank

• Union Bank of India, Andhra Bank, and Corporation Bank

Besides, the FM also announced large loans above Rs 250 crore to be monitored by specialized agencies and no government interference in commercial decisions of banks. The GDP for Q1 FY20 slowed down to 5%. Earlier, the RBI projected GDP growth in the range of 5.8–6.6% in H1 FY20.

On the sectoral front, for a change, all the sectoral indices closed in the green. Nifty Realty (+9.3%), Pharma (+3.8%), and FMCG (+3.5%) were among the top gainers. In the broader market, Nifty Midcap (+1.9%) and Smallcap (+3.9%) outperformed this week.

Looking forward, we would like to see a follow-through day before shifting the market back to a Confirmed Uptrend. On the flip side, if Nifty breaches its correction low of 10,637, we will change the market status to a Downtrend.