The domestic equity market began the week with mild optimism rising through mid-week to cheer absence of any negative from US President Donald Trump, but continuous profit booking brought down the indices by the end of the week.
GDP numbers showed 7 per cent growth for Q3, which was a pleasant surprise to many economists, but the market knew it all. The market had continuously sprinted since the beginning of this financial year as seen with the 1,000-point rise in the Nifty50 over the past two months, contrary to majority opinion on the Street that the performance of the economy will get impacted due to demonetisation.
Even the so-called professional players – the FPIs or the FIIs – have not been able to stay invested in this 1000-point rally. But collectively, the market is far more intelligent and well-informed as to what the future holds for it. This is why it is said: people cannot predict correctly all the time and, therefore, it is advisable to follow the market rather than try and predict it.
Events of the week: ONGC is all set to take over complete control of HPCL from the government and forward integrate its operations. Whether or not the synergies will accrue, only time will tell, but one thing is for sure. Such divestment will not affect the liquidity of the market. Otherwise government divestment are the biggest show spoilers for a bull market.
Technical Outlook: The market has entered a narrow range of sideways corrections. On the weekly chart, there is a formation of small dark cloud, indicating that the upward momentum has stopped for a while. Weakness in the Nifty50 in spite of gains in the index heavyweights indicates that the market is actually in a swift corrective mode, but it is not visible in the front line indices.
The rally of the past two months has practically gone uncorrected and hence a natural correction is expected. The same is likely to continue for some more time. Traders are expected to trail long positional trades at 8,800 level on the Nifty. They should keep a low profile during corrective phases and go all-out when the market clearly breaks above the 9,100 level on the Nifty50.
Expectations for the week: The market is in no big hurry to move before the outcome of the state elections on March 12, which will give a signal to FPIs and domestic investors to commit fresh funds. There are many IPOs lined up for March and April; the rush is probably the highest in last five years.
Such rush of IPOs, approximately worth a billion dollar, also poses a threat for any short-term top for the market amid rising optimism. However, the qualities of the IPOs are good and must be subscribed to by investors for long-term gains.
The IPOs of Music Broadcast and Avenue Supermarts Ltd should be subscribed to. In view of this optimism in the IPO market and the keenly-awaited assembly election results, the market is likely to remain in range bound mode. The undercurrent of the market is strong and investors should hold on to their portfolios and accumulate more where prices of quality stocks have corrected.
The Nifty50 closed the week at 8,897, down 0.47 per cent.12