Markets watch Trump's India visit

Indian equity markets ended the week on a negative note, witnessing huge volatility on account of mixed global and domestic cues. The global sentiments were dampened on the concerns over the economic impact of the coronavirus on the world economy. However, the new cases of coronavirus have showed a decline and the market is hopeful that the impact on the global economy would be short-lived. Further, the stimulus by the Chinese government to help the economy is also being cheered by the investors.

On the domestic side, the sentiments got dampened after Moody’s Investors Service cut India’s 2020 GDP growth forecast to 5.4% from 6.6% and its 2021 GDP forecast to 5.8% from 6.7%, on the back of coronavirus outbreak. It added that any recovery in the country may be lower than expected. Even India’s merchandise trade deficit widened to a seven-month high in Jan’20, due to a faster decline in exports than imports.

In addition, the Supreme Court refused to accept Vodafone Idea’s proposal to pay adjusted gross revenue dues in a staggered manner. All this together led to negative sentiments in the market. However, the government hinted at considering some relief for the troubled telecom sector which uplifted the market later.

Further, the FM stated that the Indian government will soon announce measures to deal with the impact of the Coronavirus outbreak on the domestic industry and the economy, which boosted the overall hopes.

Both Nifty 50 and Sensex were down marginally by 0.3%/0.2% to close at 12,081/41,170 for the week. However, broader market participation was mixed with Nifty Midcap100 being up 0.7% while Nifty Smallcap100 ending flat. The majority of the sectors ended in red with Auto being the biggest loser, followed by PSU Banks and Realty. On the other hand, Media was the biggest gainer.

Foreign institutional investors (FIIs) were net buyers, buying equities worth more than Rs 850 crore while DIIs were net sellers to the tune of Rs 570 crore.

Going ahead, investors will focus on the US President Donald Trump’s India visit next week and would await clarity on the major trade deal that the two countries are working on. It would also await the GDP data of both India and the US which would be announced next week.

The market would continue tracking the global developments around coronavirus and thus could continue witnessing volatility. We expect the markets to remain narrow and concentrated in the absence of any major trigger.

Technically, Nifty formed a small-bodied candle with a long lower shadow on the weekly time frame, which indicates that dips got bought into. At the current juncture, Nifty’s support stands at 12,030 levels, and until this holds we maintain our positive stance for a bounce towards 12,200-12,300 levels.

(The writer is Head of Research at Motilal Oswal)