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Last Updated : Mar 08, 2020 08:57 AM IST | Source: Moneycontrol.com

'Macro data will dictate trend in coming week; crucial support placed at 10,600 on Nifty'

Investors must take note of the economic data which will be released on March 12, Ritesh Asher has told Moneycontrol.

 
 
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Investors must take note of economic data which includes inflation rates, industrial production and manufacturing data that will be released on March 12. This will give a brief note on the current state of economic conditions, Ritesh Asher – Chief Strategy Officer (CSO) at KIFS Trade Capital, said in an interview with Moneycontrol’s Kshitij Anand.

Q. It has been a volatile week for the Indian markets with Nifty slipping below the 11,000 levels. What is the way ahead for the markets and what were the factors which led to the destruction?

A. A massive sell-off in global markets, fears of a prolonged world economic slowdown due to the coronavirus outbreak, disruption in the supply chain, weak corporate earnings, tumbling banking system and weak economic conditions such as lower GDP and rising inflation, are multiple hurdles restricting bulls to show its move in the current market scenario.

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We may see bears leading key benchmark index Nifty50 further south where the first line of defense for bears is placed near 10,600 level.

Q. What are the important levels to watch out for in the coming week on Nifty and Bank Nifty?

A. If we look at the price chart on the higher time frame, we see Nifty50 is trading near the channel support. For Nifty, the crucial support level is placed near 10,600, and if the index manages to surpass this level we may see further sell-off towards 10,300 levels while resistance is placed near 11,400 level.

Bank index is trading near the intermediate trend line support, where the important support level is placed near 26,000 and resistance of 28,200 level.

Q. What is the way out for shareholders of Yes Bank? Has it become a trading play? And, what about the funds which have invested in the bank and shareholders have an indirect exposure in it?

A. It is not a sudden event that the shareholder of Yes Bank has faced, the tension was present for the past few months and shareholders must have evaluated the risk before investing.

In the ongoing scenario, we do not see it as a trading as well as an investment play. If we talk about indirect exposure we need to understand what type of fund investors have exposure to.

Investors involved with higher risk will have to bear the heat but the picture remains unclear till the central bank uncover the revival scheme.

Q. Any important event that investors should watch out for in the coming week?

A. Investors must take note of economic data which includes inflation rates, industrial production data and manufacturing data that will be released on March 12, 2020. This will give a brief note on the current state of economic conditions.

The second major event will be US weekly job claims on the same day. The sentiments of the market will depend on the data presented.

Q. What is your near-term target for the Indian Rupee vs USD? And what are the sectors or stocks that are likely to get impacted the most? Can IT, pharma ride the coronavirus storm?

A. We may see USD/INR trading near the 75-76 level. The major impact of coronavirus will be seen in sectors that are majorly dependent on imports and export from affected countries like China, if we consider the pharma sector almost 70 percent of the raw materials India uses in drug manufacturing are imported from China.

The disruption in the supply chain will affect the industry on a bigger scale. Also, another majorly impacted industry is auto as many parts are imported from China.

Indian being the strong competitor of china, Indian manufacturers have high opportunities but it is going to be a slow and gradual process.

Q. Yes Bank debacle is just second next to PMC Bank. What does it tell about the banking system? Here both private and public sector banks have failed. Do you think this would weigh on financials for some more time?

A. Yes, we may see this effect hovering over the banking as well all financial systems after back to back failure of PMC and Yes bank.

But, this can be good learning as the Reserve Bank of India (RBI) will be more cautious about improving the financial structure of Indian banks by implementing strict norms and taking required measures.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their 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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First Published on Mar 8, 2020 08:57 am
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