Moneycontrol Bureau
A disappointing October factory data, complete washout winter session of Parliament and Federal Reserve's hawkish rate outlook shattered the market in the week gone by. However, moderation in November wholesale and retail inflation (due to demonetisation) arrested the fall and raised hopes for an interest rate cut. The NSE Nifty reversed its previous week's gains and lost 1.5 percent while the Midcap index underperformed benchmarks, falling 2 percent.
A fall in market, however, is unlikely in the coming week due to lack of domestic as well as global cues. Though a bit of recovery is possible on the back of attractive valuations, overall the market is expected to be rangebound for not only the week but also the fortnight due to less volumes at FIIs desk, experts say. Usually in the last fortnight of every year, volumes are always thin due to Christmas vacation.
Experts say the range for Nifty may be 8300 on the upper side and 8000 on lower side in next week. They feel action will be seen in January and February, when the market will get firm direction and FIIs will be back from holiday. The actual impact of demonetisation will reflect in December quarter earnings and sales data, which will be announced in the next month and in the following month, the RBI policy and the Union Budget will be key to watch out for.
Market slowdown will continue till companies come out with their third quarter earnings in January, says Sudip Bandyopadhyay of Destimoney Securities.
Abnish Kumar Sudhanshu of Amrapali Aadya Trading says he expects demonetisation to keep playing its role in the equity market for short term and any good or bad news related to it could drive the market in respective direction. He advises investors to keep an eye on currency movement post the Federal Reserve decision of 25 basis points interest rate hike and anticipation of three hikes in 2017.
Demonetisation may hit growth for a few quarters but if it makes India's tax to GDP ratio grow by around 50 bps because of the deposits that have come in the formal economy, it will be a major long-term positive, Sajjid Chinoy, Asia Economist at JP Morgan says.
The fact that the government is confident of remonetising 60-70 percent of the currency by January, which is a positive, he believes.
Aditya Birla Money says in terms of valuations, the market slipped below the long term mean; this is the fourth sharpest valuation correction in the past decade, and certainly one of the fastest in terms of time, which indicates that the valuations are attractive to invest.
FIIs' outflow slowed down as they sold around Rs 850 crore worth of shares in November, so far against Rs 17,737 crore shares sold in previous month.
On Monday, shares of oil retailers IOC, HPCL and BPCL will be in focus after the petrol price hiked by Rs 2.21 per litre and diesel by Rs 1.79 per litre on last Friday.
Zee Learn and Tree House will also be in focus, especially after the Zee Group company has withdrawn its merger plan with Tree House, saying media reports of Tree House closing playgroup centres changed business dynamics.
Cipla will have a board meeting on Monday to consider fund raising plan while South Indian Bank called a board meeting on Wednesday to consider issue of equity shares on rights basis.
Globally, Bank of Japan's interest rate decision will be closely watched. US and UK GDP data will be announced next week.
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