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Last Updated : Jul 08, 2017 09:27 AM IST | Source: Moneycontrol.com

Mr. Market awaits confirmation: Nifty might well hit 9,800 in next 2 weeks

With earning season round the corner, it is time for stock specific action, and investors are certain to scout for outperformers among the GST tangle.


Anand James 

Indices were off to a rousing start last week, partly helped by the value buying opportunities post-F&O expiry related selling. The momentum fizzled off though through mid-week, but the market was active again towards the end of the week, as corporate earnings, monsoon progress, upcoming monsoon Parliament session and economic data took the center stage.

Fresh energy was seen in the banking sector also helped the market to gain momentum. Parliament’s monsoon session is starting on July 17, and the banking sector seems to be in anticipations of some favourable outcome on NPA resolution process from the sessions.

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Energy stocks were also saw activity after sharp moves in oil. But, if you keep aside these cues, the main theme last week has been GST throughout.

Even the soft PMI numbers hinted at the possibility that the manufacturing sector, already assumed to be affected by demonetisation, may take longer to recover from GST allied realignment.

Those sectors that had a visible positive impact from GST, like FMCG and fertilizers, also helped by good monsoons, went remained buoyant through the week, while the discount sales ahead of GST rollout and the operational and logistical doubts among other uncertainties curbed the sentiments.

This fear has clouded expectations towards quarterly numbers and had resulted in a subdued trade through the middle part of the week.

However, the repeated buying interest saw around 9,600 and multiple efforts to scale 9,700 is an indication that much of the negativity has already been priced in.

Of course, it is a long road ahead before the desired benefits of GST is enjoyed, and certainly, several issues will raise its ugly head every now and then, but it is also equally certain that the GST theme is less likely to affect market en-masse anymore.

With earning season round the corner, it is time for stock specific action, and investors are certain to scout for outperformers among the GST tangle.

FIIs, who had been piling on their investments in debt securities since February averaging 19,300 per month and have eased their exposure in this segment this month, and are seen very active in derivatives by over Rs 5,437 crores in the first week of July.

During this period, they had also taken out almost Rs 2,000 out of equities. However, with recent FOMC minutes and economic data reducing conviction about US rate hike, FII’s presence may be better in the following weeks.

For Nifty, the reluctance near the 9,700 last week, hints at the possibility of a soft start next week, but as most investors will approach the front line IT company results with low expectations, the 9580 region is less likely to be unsettled.

And until then, 9,820 may be a fair objective for the next fortnight. It is also instructive to note that despite recent volatility, option interest is also quite alive at the far out of the money strike of 10,000 strikes.

It is only a matter of time, or some confirmation from earnings figures before such conviction in option traders are passed on to the long-term equity investors too.

Disclaimer: The author is Chief Market Strategist at Geojit Financial Services. 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 Jul 8, 2017 09:27 am
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