Weekly Big Picture : Nifty Adds a Distribution Day; Metal and Realty Stocks Gain During the Week

Weekly Action

Nifty, -0.2%; Sensex, -0.3%; Nifty Midcap, +1.7%; Nifty Smallcap, +3.5%; and Model Portfolio, +1.4%.

Market Pulse Confirmed Uptrend

Weekly Market Review

Indian markets traded range bound swinging between losses and gains during the current week. After a positive start to the week, Nifty ended 2019 with 12% gains on Tuesday and started the new decade with a close in the green on Wednesday. Further, the index fared well holding solid gains on Thursday as investor sentiment lifted on the backdrop of good GST collection and improved PMI data. However, on Friday, Nifty remained under selling pressure amid rise in geopolitical tensions leading to a surge in oil prices. During the week, one distribution day expired but at the same time two were added, taking its count to six. One distribution day is set to expire next week.

The broader market showed significant participation this week after showing signs of improvement in the  last week. Both Nifty Midcap and Smallcap closed holding gains of 1.7% and 3.5%, respectively. It was a mixed reaction on the sectoral front. Nifty Metal (+3.2%) and Realty (+1.2%) were the top advancers. While Nifty Media (-3.0%) and PSU Bank (-1.7%) were the top decliners.

On the macro front, in November, GST collection stood at Rs 1.03 lakh crore. Further, the output of eight core industries shrank by 1.5% as five of the eight sectors witnessed negative growth. India’s fiscal deficit in the first eight months of FY20 stood at $113.2B, which is 114.8% of the budgeted target for the current fiscal year. In addition, December manufacturing PMI rose to 52.7, where a figure above 50 indicates expansion.

Looking ahead, we can expect volatility in the market in the short term amid rise in geopolitical tensions. However, the Indian market is in a Confirmed Uptrend and trading above all key moving averages. Also, in the last few trading sessions, we witnessed significant participation from Midcap and Smallcap stocks in the rally. Under the current scenario, investors are advised to selectively increase risk in quality ideas emerging from early-stage bases and trading at all-time highs. Also, stocks that had pulled back in price on low volume when the market was consolidating, and have now rebounded from their moving averages when the market started making higher highs, can do well.

Key News

Bank Of Baroda raised subordinated non-convertible redeemable Basel III compliant tier II bonds worth  Rs 920 crore on private placement basis. The stock was down 3.5% today.

Rites bagged a management consultancy project from the government of Bangladesh worth Rs 99.94 crore related to 4-laning of National Highway in Bangladesh. The stock was up 3% today.

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

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