Holidays to keep market lacklustre

Indian equity markets were lacklustre this week, closing flat with marginal loss, given the Christmas holiday and absence of any major events. 

Smart recovery on the last day snapped the loss for the entire week. Positive comments from the US and China about the trade deal uplifted the market sentiments. Further, a key meeting between FM Nirmala Sitharaman and bank chiefs on Saturday, which is also expected to take up discussion on NPA recovery through both NCLT and non-NCLT means apart from a review of financial performance of the lenders and their business growth, also cheered the markets. Moreover, RBI announced another bond sale next week and the capital infusion was carried out in three PSU Banks (Allahabad Bank, UCO Bank and Indian Overseas Bank) , which boosted the sentiments.  However, Market sentiments had got dampened earlier this week post the reports that Government was unlikely to meet its disinvestment target for the fiscal year, which raised concerns over its fiscal deficit. 

Nifty 50 and Sensex closed down marginally by 0.2%/0.3% to close at 12,246/41,575 for the week. However, broader markets outperformed the benchmarks with Nifty Midcap100 up 0.6% for the week while Nifty Smallcap100 was up 1.1%. Sectorally it was a mixed bag with Metals, Media and Realty being top gainers in the range of 1.4%-2%, while Energy, Infra and FMCG were top losers in the range of 0.7%-0.8%.

FIIs continued to be net buyers for the third week in a row, buying equities worth more than Rs 845 crores till Thursday while DIIs were net sellers to the tune of Rs 2170 crores.

Year-end holidays next week is likely to keep markets lacklustre. Global markets are ending the year on high hopes of an early phase 1 deal between US and China which has improved the sentiments. On the domestic front, RBI is expected to conduct the operation twist for the second time next week in an effort to bring down the bond yields. Thus the positive momentum could continue in the near term on the back of strong liquidity flows and hopes of Budget stimulus to spur economic growth. Investors would continue to track global news flows along with pre-budget developments as it is hopeful of more positive announcements in order to revive consumption and investment.

Technically, the Nifty index kick-started the January derivatives series on a positive note as it opened with an upside gap and continued to make higher highs throughout the session. Eventually, the index concluded the session a tad below 12250 level and formed a positive candle on the daily chart. However, we witnessed a Doji candle on a weekly chart of Nifty. It moved within the territory of penultimate week’s range and thus formed an Inside Bar pattern on the weekly chart, indicating indecisiveness among the market participants. Nifty breached Lower Highs – Lower Lows sequence of last three sessions and till the time, it sustains above its support of 12100, we maintain a positive stance on market for an up move towards 12350 then 12400 zones.