Comforting Resilience Of Nifty
Markets at this juncture seems in no mood to pamper bulls or bears as price whipsaw has been a key feature in the last week or so. It is indeed a testing time for those who are looking for a clear direction in the markets while the rallies have been short-lived and listless. In fact, momentum has been out of tune whenever the index has headed towards the 12k mark. However, what is heartening to know is that the inflow of the week till date from both the camps, that is, the FPIs and DIIs are positive. The FPIs have poured in about Rs 698 crore, while the DIIs is also not lagging far behind as they have bought shares worth Rs 653.2 crore.
The markets have digested a host of announcements in the last few days. To begin with, there is a lack of clarity on trade talks between US and China, as time is ticking away and the deadline of additional tariff of December 15 is just around the corner! Further, the State Bank of India reported bad loan divergence of Rs 11,932 for FY19 and the GST council expressed its concern over revenue shortfall. Alongside this, the government has continued its marathon of measure announcements to help revive the economy. The latest one among these has approved amendments to the Insolvency and Bankruptcy Code (IBC) to protect successful resolution applicants from criminal proceedings against offences committed by previous managements or promoters. Moreover, the amendment to a partial credit guarantee scheme, which was announced during the Budget, has also been approved. However, the recent incoming data also provides a reason to cheer for market participants as India’s fuel demand rose to highest level in the last 23 months which is 10.5 per cent higher as compared to the same period last year. Last week, we saw Manufacturing PMI rose to 51.2 in November from 50.6 in October. By the time you will be reading this piece, we would already be aware of October’s IIP and if we see any improvement in this data, it would actas an icing on the cake!
On the global front, Saudi Aramco gained 10 per cent on its debut day of trading in Riyadh, and pushed its market value to $1.9 trillion, making it the world's biggest initial public offering and the most-valued company in the globe. While in the west, the wise men of the Federal Open Market Committee (FOMC) and the policy-making arm of the US Federal Reserve, held rates steady as widely expected and also signaled it that it may keep them on hold throughout 2020.
In the absence of any major trigger in the markets, the traders would experience the market to be quite dull and boring. However, in the coming days, the market participants have some key triggers to chew in. Looming trade war negotiations deadline this weekend and on the domestic front, a host of macro data is set to dictate the trend of the markets. Talking on the technical front, there is no denying the fact that the 12k mark on Nifty has played a psychological block and this would help many to turn cautious. However, one should not miss the bigger picture charts which suggest that they can easily digest the short-term counter trend moves and we have seen that the corrective declines are shallow and the 11,800 mark that lend markets excellent support, makes us believe that once we are done with this range bound play. And, if some positive triggers come to play, we are heading for a good directional move. Hence, stay focused!
And a special reminder for the investors: Remember, portfolio diversification is the key to success in equity markets and sectoral allocation is an integral aspect of portfolio diversification. A right amount of portfolio needs to be invested in the right sectors. But do not book losses in panic, if you are convinced about the fundamentals of the stock. If you are holding on to a poor quality stock and keep on averaging in anticipation that the stocks will bounce, then here, you may go wrong. Thus, we recommend to book the loss immediately. Looking at the trend, it can be said that the markets will reward quality and punish poor quality, as it always does!
