Indian Stock Market Outlook by SAMCO

Indian Stock Market Outlook by SAMCO

Indian markets ended the week on a strong note as there were signs of trade deal between China and Trump administration. Indian markets are hovering around their all-time highs and traders can get anxious at higher levels. However, the market is showing strength and any small decline is considered as a buying opportunity by many traders. Stock Market outlook by discount broker SAMCO follows.....

The week began in red with markets showing signs of a correction, but thereafter, Nifty50 bounced back due to the liquidity inflows especially from domestic investors. Additionally, global cues kept the markets buoyant as there were no negative shockers. Instead, there seems to be some relief on the trade war front as the US President agrees on a phase one deal with China. Postponement of new tariffs on Chinese goods is a sigh of relief not only for the Chinese economy but for many others across the globe. In the bay as well, IPOs seem to be the mood of the season as investors pick up Ujjivan Small Finance Bank in hoards. All these factors are keeping Indian markets afloat as the undertone seems strong on the back of domestic institutional investors who are not willing to liquidate their holdings.

The Government too is stepping out of their comfort zone and firing all cylinders to push the growth rate. Recently, it made further amendments to the Insolvency and Bankruptcy Code by giving immunity for offenses committed by previous managements or promoters, if any. Given the underlying slowdown in the economy, such Government dispositions are sending apt signals which could boost the economy.

Event of the Week

In the recent Fed Meet, Chairman Jerome Powell envisions good visibility for the US economy for the next 1 year. A status quo stance implies a sustained expansion of economic activity which will further boost demand. Now, as the CRB Commodity Index is trading at its 10-year lows, it has very high chances of rising in the future given that demand is likely to pick up. Base metals and to some extent steel stocks should start giving out handsome returns to shareholders.

Technical Outlook

Nifty50 continues to show bullishness as it heads towards 12,100 levels. It has made a double bottom within a period of 3-4 weeks which indicates bullish bias in the medium term. It bounced back after taking support at 11,800, thereby showing strength. On the weekly chart, a hammer pattern is formed, indicating further upside with profit booking likely to be faced at 12,150. Traders should buy on dips with weekly lows as stops.

Expectations for the Week

After Boris Johnson wins the UK elections by a majority, markets will keenly await the verdict on Brexit as the fate of Indian companies having an exposure to the EU lies on this deal. Additionally, the GST council's meet next week will also keep the Street under pressure as there are expectations of tax hikes for certain goods. If rates increase, markets may witness corrections from current levels. Investors can invest in cyclical, commodity-related stocks with a focus on metal stocks. Nifty closed the week at 12,086, up by 1.4%.

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