Market Perspective For This Week

Mumbai, November 10: The benchmark 30-share Sensex ended the last week on a negative note with the index falling 330 points or 0.81 per cent on Friday, last trading day of the week. 

Nifty also followed suit with the 50-share index falling almost 104 points or 0.86 per cent, thus closing the last trading day at 11,908.15. Market watchers say Nifty ending below 12,000 mark was a significant blow to the markets.

Market experts said Moody's rating change on India from ‘stable’ to ‘negative’ dampened the market sentiment and caused the fall. 

Motilal Oswal, Managing Director and CEO, Motilal Oswal Financial Services, said that global rating agency Moody's Investors Service changed the outlook on India’s rating to ‘negative’ from ‘stable’ citing concerns on economic growth and increasing fiscal slippages.

In the coming week, the markets are expected to do better riding high on the hopes of thawing of strained US-China trade standoff. Apart from that, various measures taken up by the government to rev up growth engine will also have appositive impact on markets. Market watchers said both Sensex and Nifty will hover around 40,000 and 12,000 marks respectively, with around 200-250 plus minus variations.

“The government has been trying to stimulate growth through various measures including taking one of the biggest reforms in the form of corporate tax cut. RBI has also been supportive so far through its accommodative monetary policy. In our view, this will take time to work on the ground and reflect in numbers,” Oswal said.

One of the major concerns is on the fiscal front - with lower tax incomes and higher spending - leading to a ballooning deficit. “However, it appears that the government would be using the non-traditional routes including disinvestment or privatisation to fill the income gap,” Oswal added. 

The long-term fundamentals of Indian economy continues to remain strong with healthy growth and a domestic consumption driven economy.

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Private Ltd, said, “Equity Markets witnessed profit booking with BSE Sensex falling 0.8 per cent to close at 40,324 after closing at record levels for the past few days. NSE Nifty50 fell 0.9 per cent (104 points) to close below 12,000 at 11,908. Selling pressure came in the last hour of trade.”

Sentiment were also dampened after Moody's downgrade of India's sovereign outlook from 'stable' to 'negative' citing increasing risks to the country's economic growth as well as increasing pressure on fiscal deficit. 

Traders booked profit after Nifty climbed up over 4 per cent (451 points) in the last eleven trading sessions. In the sectoral trend, Auto, Banking, Tech, Metal, Pharma and Cement stocks declined while select private banks and Realty stocks gained. 

“While the lowering of rating outlook is negative, we believe that the government has been trying to stimulate growth and hence a shift from its previous fiscal prudence,” Khemka added.

Government reforms to hold keyGovernment has taken various measures including one of the boldest reforms in the form of corporate tax cut. RBI has also been supportive so far through its accommodative monetary policy. While these measures would take time to work on the ground, the near term concern is on the fiscal front - with lower tax incomes and higher spending - leading to a ballooning deficit.

Technically Nifty formed a Bearish Candle on daily scale while Doji Candle on weekly scale. Multiple supports are seen at lower zones while selling pressure is seen near 12,000- 12,050 levels. Now it has to continue to hold above 11,850 zones to witness an up move towards 12,035 then 12,103 levels while on the downside supports are seen at 11,780 – 11,750Moody’s rating impacts Rupee too.

According to Rushabh Maru, Research Analyst - Currency and Commodity, Anand Rathi Shares and Stock Brokers said that Moody's decision to change its outlook to negative from stable is a matter of concern.