Indian Stock Market Outlook by Epic Research

Indian stock market declined last week despite strong recovery in the U.S. markets. Indian investors continued offloading their holding at higher levels, leading to selling pressure on majority of stocks. While blue-chip companies declined less compared to mid-caps, there were select stocks that managed to recover from their recent lows. If the momentum in the U.S. market continues, Indian stocks should see recovery.

Public Sector Banks suffered after a fraud at PNB was reported last week. PNB lost ground as investors dumped the stock. Other stocks in banking sector also suffered as some of the banks reported higher NPA and slippages in the quarterly results.

Epic Research team has offered its view for the Indian markets below...

Nifty ended down for a third consecutive week making an inside bar as domestic cues pulled down investors sentiments despite a flair run of bulls in global markets. The markets ended down on the back of negative domestic cues with one of the biggest frauds being unearthed this week. PNB reported a fraudulent activity in its Mumbai branch worth 11, 300 Crore, Almost 1.77 Billion, that is widespread to other 5-6 banks. Investors will further await the developments. We have seen a range bound trading this week but PSU banks were the culprit as the PSU Bank index ended down by more than 6.5%.

On the fundamentals front, We have seen IIP data coming at 7.1%, a bit weaker than a year ago at 8.8% for the same period but was way above the estimates sending in the positive signal and indicating the expansion in the underlying demand. Capital goods sector was up for a consecutively fifth week while consumer durables also were in positive territory indicating the fact that we are now far away from any hangover of GST implementation. WPI Data also showed some positivity with inflation falling to 5.1% vs 5.21% earlier as there was a drop in both food and fruit inflations along with some downfall in fuel as well.

Despite a pullback and a run up in global equity markets, domestic markets ended down making in an inside bar. An inside bar signifies a reversal pattern that indicates an indecisiveness that is prevailed. Since Both buyers and sellers become reluctant to push prices into a new range thus it remains inside the previous candle reflecting indecision.

In Short-term we expect the market to be in a range which was established between 10650 - 10400. Until and unless the market doesn't come out of this range we may see more consolidation to further cool off the volatility. Though the overall sentiments in markets have improved over time globally and we are seeing a short-term base formation in Indian equity markets as well. Investors should look for a meaningful dip towards 10450 - 10400 which can be bought for a short-term upside to 10650. A close of nifty below 10400 will nullify the trade.