Confirmation Of Strength In Nifty Only Above 11,400 Mark
There is a new trend going viral on the social media: age filter. Fuelled by FaceApp, this filter helps people to discover how they will look like when they are old. Users are going crazy about this app. But, on Dalal Street, there is a meme that you take picture of your portfolio and instead of the future price, this app will reflect the prices that were two-three years back. Yes, such has been the fall over the last week or so on D-Street. The Street had nothing to offer but toil, tears, sweat and blood. The well-known and marquee names such as the HDFC twins and Bajaj twins, which have been averse to correction since many months and in fact have driven index to record highs earlier, also finally succumbed to the broader market destruction. HDFC Baplay out as the monsoon this year has not been impressive. nk reported its earnings recently and the stock came under selling pressure on the back of weakness in the asset quality and slowdown in retail loan growth in Q1FY20. The Bajaj twins, the darling of investors for a long time, post the management interview had been on a roller-coaster ride as concerns over slowdown in growth intensified. However, one point is clear that the investors have turned sceptic about the performance of the big boys as these are not immune to economic slowdown. We believe the recovery could take some time to play out as the monsoon this year has not been impressive.
The ongoing earnings season has not given any major reason to cheer about to the investors as the results have been mixed and the management commentaries have remained drab. The slow rhythm of the overall economy and the persisting liquidity issue continue to weigh on the growth. To make matter worse, the IMF had cut the global growth by 0.1 per cent to 3.2 per cent and India’s growth rate by 0.3 per cent to 7 per cent.
The National Housing Bank (NHB) has asked the housing finance companies (HFCs) to desist from
offering loans under interest subvention scheme wherein developers pay interest for the construction period on behalf of the home buyer for a certain period. This certainly had a knee-jerk reaction on the realty stocks and some of the housing finance companies. This directive from the NHB might impact property sales in the near term. Among the good news, the IL&FS has said that its new board headed by Uday Kotak has taken steps in resolving the debt of over Rs 20,000 crore, which has resulted in significant interim outcome in the overall resolution process for the IL&FS group. The combating co-promoters of India’s largest passenger airline IndiGo-Rakesh Gangwal and Rahut Bhatia--could soon settle their dispute and thereby bring an end to their rivalry.
On the fund flow in the markets, there has been a juggling act by the FIIs and DIIs. While the FIIs in the month of July (till July 24) were net sellers to the tune of Rs 12,394.14 crore worth of equity, the DIIs provided a balance by being net buyers to the tune of Rs 13,167.73 crore.
The Indian stock markets have underperformed their global peers by a big margin and also recorded their longest losing streak and lowest close since mid-May on account of weak domestic cues. Lately, optimism is seen on the Wall Street on account of the budget and debt ceiling deal having been reached and the positive development in the trade talks as US delegates head to Shanghai early next week. In the coming week, spotlight will be on the trade talks between the US and China and the Federal Reserve meeting which will conclude on July 31.
Technically, 11108 to 11130 level will be a critical zone for the market in the near-term as it is the confluence of May month's swing low and the 200-DMA. We can expect a short-term bounce from anywhere in this zone. This bounce is important in terms of the size and the time. These factors are important for future price action. There will be confirmation of strength only above the 11,400 mark.
