Stay Bullish, Nifty May See 12,300 Level In The Medium Term
Last week, multiple headlines trended in the market but the ones that grabbed the most eyeballs were the political drama happening in Maharashtra and the all-time high levels in the stock markets. If we look closely, the developments in the financial market and the state's political scenario were strikingly similar. The Nifty witnessed a strong consolidation and the tussle between the bulls and the bears continued for almost three weeks. Similarly, on the political front, the scuffle between the parties to form government in the financial capital of the country continued for a good part of the week. Finally, the bulls conquered a three-week-long battle between the bulls and the bears. Meanwhile, after an overdose of drama, clarity on the political front surfaced as well.
On Wednesday, the Nifty managed to close above the important psychological 12,100 mark and the BSE Sensex got past the 41,000 mark for the first time. Despite the celebration of all-time high levels on the benchmark indices, there remained a section of disappointed investors, not over a drastic fall in the stock prices of the Banking stock or NBFCs but a fraud done by a broking firm. A stockbroker had blatantly misused client funds, which came to light only when a large number of investors complained of not honoring fund transfer on their transactions on the social media platform.
Meanwhile, in the West, the scenario is quite similar to that of the Indian markets. The political uncertainty, impeachment, trade-war with Beijing – none of these concerns are affecting the upward march of the bulls as the three major indices continue to stack up record highs, courtesy rosier US economic data and ongoing hopes for a US-China trade deal. Considering the performance of the global and domestic markets as of now, they seem to be optimistic and forward-looking. Hopefully, recent measures, taken by the government, will drive the growth, significantly.
Coming back to our markets, the November series has been favorable for the bulls by and large as the Nifty has gained more than 2 per cent during the period of the series on the back of consistent flow of funds by FPIs and hopes of continued reforms from the government. The FPIs flow to date stands to the tune of Rs. 13,808 crores.
Amidst all this, the D-Street will keenly await the next biggest catalyst to trickle in, the Q2GDP data, which is scheduled to be released tomorrow. We suspect that the September quarter GDP numbers are likely to be unimpressive and, as per the consensus, the growth in GDP in Q2 would be between 4.2 and 4.7 per cent, lower than the 5 per cent achieved in Q1. Pretty sure that headlines regarding the deepening slowdown will begin to come in very soon and the high valuation of markets would be the talk of the town. However, we continue to reiterative that we are gung-ho on the markets and believe that there is more risk in being out of the markets than remaining in. What makes us believe that the markets would be on its upward spiral is that despite them being at their all-time highs, there is no euphoria and people are still gripped by fear. This rise in the markets is decisively different than what they experienced in 2017 or the mid of 2018.
In the coming week, traders will keep an eye on the RBI policy review, the outcome of which will be announced on December 05. Cement and Auto firms will release monthly sales data. Investors will keep an eye on auto sales data, especially, as the sector has been reeling through tough times. Although the stocks of these sectors have witnessed a decent rise in the last couple of months, would the sales figure aid this up move? only time will tell. Technically, the Nifty has seen a decisive breakout from this range very recently after a prolonged consolidation in the 240 points in the last three weeks. Going forward, we expect the index to march higher. It may attempt to test our assigned target of 12,300-12,380 in the near term.
