Post-Q2 results, market seems to have entered an indecisive phase of trade having rallied well in the last 2 months, Vinod Nair said
The indecisiveness among bull-bear continued for the third consecutive week ended November 22, though the BSE Sensex touched another historic high of 40,816.38 driven by few stocks like Reliance Industries and Bharti Airtel.
The index gained 2.72 points to close at 40,359.41 while the Nifty50 rose 18.95 points to 11,914.40, forming Doji kind of indecisive chart pattern for third straight week.
The mixed trend was seen in broader markets as the BSE Midcap index was down only 0.23 percent whereas Smallcap index gained 0.21 percent during the week. The BSE 500 index, too, saw only 0.12 percent gains.
But one thing was common in above-mentioned indices, which was more than 40 percent constituents in each closed in the green and amongst them, lot of under-owned stocks including PSU banks, pharma, telecom etc saw buying interest especially after confidence or eagerness showed by the government to deal with every problem that caused economic slowdown since last year.
More importantly, if we look at BSE500 index, top 25 stocks rallied between 10-78 percent which included Vodafone Idea, UCO Bank, Tejas Networks, Corporation Bank, Zee Entertainment, Aditya Birla Capital, Dish TV, IDBI Bank, IRB Infrastructure, Coffee Day, Essel Propack, Glenmark Pharma, RBL Bank, Adani Green Energy, Oriental Bank of Commerce etc.
Most of these stocks have reason to rally for e.g. Vodafone India had received assurance from government about sustainability of telecom sector, UCO Bank and Corporation Bank will writeback their provisions to P&L after Essar Steel case resolution, Essel Group stocks including Zee Entertainment, Dish TV, Essel Propack climbed higher as pledge overhang turned off after stake sale in Zee etc.
On other side, only 8 stocks fell in double digits, following by single digit loss (1-9 percent) in more than 185 stocks.
Other important events of the week were Reliance Industries which became the first listed company to go near Rs 10 lakh crore market cap and DHFL, which as per media reports received strong buying interest from Adani Group.
Among midcaps, top 15 stocks rallied between 3-18 percent and half of them were banks. On the flip side, ADAG stocks like Reliance Capital, Reliance Infrastructure and Relinace Power were down between 12-22 percent, followed by Page Industries, Wockhardt, Mphasis, Whirlpool, Havells, Edelweiss etc which fell 5-8 percent.
The Nifty50 failed to hold onto 12,000 mark during the week, infact that has been a big hurdle amid consolidation and due to lack of fresh triggers, weak macros and premium valuation after showing 1,300 points run since September 20.
Post Q2 results, market seems to have entered an indecisive phase of trade having rallied well in the last 2 months and on global front investors were concerned over fresh worries over US-China trade tension, Vinod Nair, Head of Research at Geojit Financial told Moneycontrol.
Buoyancy in telecom sector was largely due to likelihood of hike in tariff and deferment of spectrum dues is likely to improve cash flow of these companies in the near term. Momentum build-up was seen in financials especially in PSU banks due to reduction in stressed assets and strengthening of IBC process. Better-than-expected results and value buying led to gains in Pharma. Auto and consumer stocks underperformed on account weak discretionary spending. Fresh concerns over stringent norms for US H1B visa dragged IT heavyweights.
"Nifty50 is trading at one year forward P/E of 19x & 26x on 12-month trailing basis which does not provide much leeway to perform in the short-term. Considering this, Nifty is likely to trade in a range of 11,600-12,000," Vinod Nair said.
"Going ahead, market focus will be on next week Q2GDP data which is expected to be below the 5 percent reported in Q1. It is probable that the forecasted growth of 6.1 percent for FY20 is likely to be downgraded further," he added.
FIIs remained net buyers to the tune of Rs 4,710 crore worth of shares during the week while the buying by DIIs (at Rs 330 crore) was much less than FIIs.Disclaimer: Reliance Industries, which owns Jio, is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.