JOIN US'Overall market trend remains positive'
Equity markets again regained momentum and made new highs during the week, on the back of positive global cues. Nifty and Sensex hit a fresh high of 16,722.05 and 56188.23 respectively during the week before closing at 16705 and 56125, with gains of 255 and 795 points up 1.5% and 1.4% respectively.
The broader market snapped its sharp underperformance and bounded back with Nifty Midcap100 and Nifty Smallcap100 surging 2.1% and 1.9% higher. Except for auto that declined 1.1% and media that fell 0.7%, all other sectors ended in green, with IT, metals and energy witnessing the biggest gains – up ~3% each.
Apart from them, banks, financials, pharma, infra and realty were up 1-2%. FIIs however, were net sellers, having sold equities to the tune of Rs 6,800 crore this week while DIIs were buyers to the tune of Rs 6400 crore.
Global cues turned positive after full USFDA approval was given to Pfizer/BioNTech vaccine and US House passed a measure approving $3.5 trillion budget blueprint.
On the domestic front, broader market recovered while Nifty and Sensex touched new highs propelled by positive global cues. Further opening up of the economy, improving economic data points and pickup in vaccinations also lent support to the market.
Government’s announcement of the National Monetisation Pipeline (NMP) added to the positivity, through which the government will list out its infrastructure assets worth around Rs 6 lakh crore to be given to the private sector over the next four years on long term lease.
Technically, Nifty formed a Bullish candle on daily scale with long lower shadow while it continues to make higher highs - higher lows from the last four weeks.
Now it has to continue to hold above 16,700 zones to extend the move towards new life time high territory of 16800 and 17000 zones while on the downside support is seen at 16500 and 16,380 levels.
Going ahead, all eyes would be on keenly awaited Powell’s statement in Jackson Hole wherein he is expected to lay the roadmap for tapering the Fed’s bond purchases.
Further, a couple of global economic data points are due next week which would provide clarity on economic recovery.
Domestically, the result season is over with better than expected delivery and now with vaccination drive going on in full swing, economic recovery is expected gain pace.
However sharp outperformance in the past 18 months had led to concerns on valuation front. Further the likely impact on liquidity due to changes in global monetary policy led investors shift away from mid-caps to large caps.
While mid-caps have started participating in the market up move once again, we believe that large caps offer better margin of safety in the current environment and could continue to remain in focus in the near term as well.
From the long term perspective, the overall trend of the market remains positive led by the opening up of the economy, improving economic data points and pickup in vaccinations.
(The writer is Head-Retail Research at MOFSL)