A cautious start to the New Year! Bulls failed to regain control in the first week of the year 2019 as benchmark indices closed the week with losses of over 1% each.
On Friday, the S&P BSE Sensex recouped intraday losses and closed 181 points higher, thanks to supportive global cues. While the Nifty ended 55 points up to close at 10,727.
The index bounced back after retesting its crucial support placed at 50-days moving average but it is still trading below its long term moving average placed at 10,780.
The coming week promises lot of excitement. Earnings, macro data will dictate the trend for markets. IT majors TCS and Infosys will declare their results on 10th and 11th January. Other major companies that will announce their Q3 results next week are Tata Elxsi, Bajaj Corp, Delta Corp, Bandhan Bank, Karnataka Bank and IndusInd Bank.
On the domestic front, markets will also look forward to the industrial production data for November and the US and China's inflation data will be watched on the global front. A key trigger for the market will be GST meet and another round of cuts in tax rates on many of the items.
Rupee rebounded by 48 paise to settle at 69.72 against the US dollar in line with smart gains in domestic equities and uptrend in other emerging market currencies.
On the institutional front, FPIs were net sellers in Indian markets for Rs 157 crore, while DIIs were net buyers to the tune of Rs 240 crore, according to provisional data.
Big News:
FPIs trend has turned slightly negative. They pulled out more than Rs 1,000 crore from Indian markets so far in January.
FIIs were net sellers in 2018 after a period of six years. FIIs had reduced their exposure to emerging markets as US 10-year treasury yield rose to 3% and emerging market currencies depreciated against US dollar due to rising interest rate in US.
If you remember, rupee depreciated by little over 9% against the USD in 2018
Overseas investors pulled out over Rs 83,000 crore from the capital markets in 2018, after pouring in a record Rs 2 lakh crore in the preceding year (2017), on the back of rate hikes in the US, rise in global crude prices and rupee depreciation.
Moreover, experts suggest that flows are expected to be range-bound in 2019 as FPIs may continue with a cautious stance until there are concrete signs of economic recovery and certainty over the formation of a stable government.
Domestic mutual funds continued to pour into Indian equity markets. In 2018, domestic MF’s net inflow in equity stood at Rs 1.10 lakh cr. The inflows from domestic MF industry is expected to continue on the back of strong MF investments.
Stocks in news:
Jet Airways has now failed to disburse the December salary to some other categories of employees as well, a source said. A Reuters report over the weekend suggested that the airline is close to reaching a deal with State Bank of India (SBI) for a fresh loan of Rs 1,500 crore to meet its working capital needs, two people aware of the matter told Reuters.
State-owned BHEL said it has successfully commissioned a 800 MW thermal unit within a record time of 46 months in Telangana.
Banking services are likely to be affected on January 8-9 as a section of PSU bank employees would go on a two-day strike in support of the nation-wide strike call given by 10 central trade unions against the government's alleged anti-worker policy.
Technical View:
Nifty forms a Bearish Engulfing pattern on weekly charts
India VIX moved up by 5.83% at 16.16 in the last week but now finding barrier at lower hurdle of 17.50 zones.
Bank Nifty has been holding the strength compared to Nifty index and declines are being bought near to 27000 zones.
Derivatives setup suggests that support of 10600-10650 could provide comfort to bulls but intact Call writing at 11000 strike is going to restrict its momentum.
Three levels to watch: 10628, 10850, 10930
Max Call OI: 11000, 11500
Max Put OI: 10500, 10000
Technical Recommendations:
We spoke to 5nance.com and here’s what they have to recommend:
Escorts Ltd: Buy| LTP: Rs 724| Target: Rs. 759 | Stop-loss: Rs 680 | Upside: 5%
Hindalco Industries Ltd: Sell| LTP: Rs 210| Target: Rs. 201 | Stop-loss: Rs. 228| Downside: 4%
Jindal Steel & Power Ltd: Sell| LTP: Rs 152| Target: Rs 142| Stop-loss: Rs. 155 | Downside: 6%
Disclaimer: The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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