Indian Equity Markets had a volatile session on Thursday as markets try to balance it out between adverse global cues and renewed optimism in Indian companies after Tata Motors and SBI results lately. The markets opened weak on account of overnight weak closing in US markets, but consolidated at the lower levels and gradually recovered to close flat. The Industrial Production data for June came lower @ 7% against 14% on m-o-m basis, but ably covered by steller results by SBI which posted growth of 25% on y--y basis.
Among the sectors, Banking sector did pretty well on account of good SBI results. Stocks like PNB, Axis Bank too rallied alongside SBI which helped the benchmark indices recovered as weightage of banking stocks in the indices is quite high.
Fundamentally, stocks markets have few concerns which they need to overcome. The most important one is weak global cues. US and European economies are again facing the headwinds. The unemployment numbers, trade deficit data are indicating that growth has still not picked up in these ecoomies.These will surely impact the profitability of Indian companies as well, especially in Information Technology, Textiles, Oil & Gas sectors.
Another cause of concern is Inflation. Earlier the blame game was put on Food items which were called expensive due to weak monsoon last year. But the data in the last few months have indicated that it has now spread to non-food items as well. The steep slash in benchmark rates last year, though has propped up growth but also increase the inflation as well. Now central bank is hking the benchmark rates and that will surely going to hit the profitability of India companies as interest rates increase.
Technically, markets are already trading at almost all time high PE valuations of 20-21 times. The global and domestic level concerns do not justify such high valuations. The only suporting factor is the high amount of liquidity in the equities world due to almost zero benchmark rates overseas. It is causing immense speculation in the markets due to which we are seeing markets scaling new highs despite the fundamental concerns.
Henceforth, we advise clients to stay put from the markets for a while and keep themselves in cash by atleast 30%. Also one must trade with strict stop-losses and target levels to keep its books running.
Technically Nifty is trading in a narrow range throughout this month. Traders are advised to maintain "Sell on Rise" strategy till the time Nifty breaches 5470. Hence, one may sell Nifty @ 5425-5435 range with stop loss @ 5470 and target price of 5350. In case, Nifty breaches 5470, one may go long on Nifty with target price of 5525 and Stop-loss @ 5435.
Wishing you a great trading day today!!
Among the sectors, Banking sector did pretty well on account of good SBI results. Stocks like PNB, Axis Bank too rallied alongside SBI which helped the benchmark indices recovered as weightage of banking stocks in the indices is quite high.
Fundamentally, stocks markets have few concerns which they need to overcome. The most important one is weak global cues. US and European economies are again facing the headwinds. The unemployment numbers, trade deficit data are indicating that growth has still not picked up in these ecoomies.These will surely impact the profitability of Indian companies as well, especially in Information Technology, Textiles, Oil & Gas sectors.
Another cause of concern is Inflation. Earlier the blame game was put on Food items which were called expensive due to weak monsoon last year. But the data in the last few months have indicated that it has now spread to non-food items as well. The steep slash in benchmark rates last year, though has propped up growth but also increase the inflation as well. Now central bank is hking the benchmark rates and that will surely going to hit the profitability of India companies as interest rates increase.
Technically, markets are already trading at almost all time high PE valuations of 20-21 times. The global and domestic level concerns do not justify such high valuations. The only suporting factor is the high amount of liquidity in the equities world due to almost zero benchmark rates overseas. It is causing immense speculation in the markets due to which we are seeing markets scaling new highs despite the fundamental concerns.
Henceforth, we advise clients to stay put from the markets for a while and keep themselves in cash by atleast 30%. Also one must trade with strict stop-losses and target levels to keep its books running.
Technically Nifty is trading in a narrow range throughout this month. Traders are advised to maintain "Sell on Rise" strategy till the time Nifty breaches 5470. Hence, one may sell Nifty @ 5425-5435 range with stop loss @ 5470 and target price of 5350. In case, Nifty breaches 5470, one may go long on Nifty with target price of 5525 and Stop-loss @ 5435.
Wishing you a great trading day today!!
