RBI Policy, Auto Sales Data, Global Cues To Steer Markets Next Week

Mumbai, December 1: The markets ended the week gone by on a strong note where it witnessed profit booking on Friday but the buy on dip texture is still intact. Equity markets showed some cautiousness before the Q2 GDP data release on Friday evening. Profit booking after the recent rally and weakness in global markets impacted sentiments. On the last day of trading, the BSE Sensex fell 336 points or 0.82 per cent to 40,794 while the Nifty 50 was down 95 points or 0.78 per cent to 12,056 levels.

Markets outperform indices

Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services, said that the broader markets however outperformed with the NSE Mid-cap as well as small cap indices closing in green. “Concern of US-China trade deal have a negative impact on metal stocks. Auto stocks witnessed profit booking ahead of November monthly data announcement.”

Short term weakness expected

For Nifty 50 in the coming week, in the downside, 12,000-11,950 will act as a strong and immediate support zone and every dip will be a buying opportunity till Nifty trades above this zone while if Nifty slips below 11,950 levels then short-term weakness is expected towards 11,800 or 11,700 levels.

Mild negative reaction likely

Amar Ambani, Senior President & Research Head, Yes Securities, said that the GDP growth figure is as per our estimate for Q2 FY20. The stock market has been trending lower in the last couple of trading sessions, in anticipation of poor numbers. “While there may be a mild negative reaction on Monday, it will not change the medium term trajectory for equities,” Ambani said.

RBI may cut repo by 25 bps

For the fiscal year FY20, Yes Securities says the real GDP forecast stands at 5.2 per cent, with risks to further downside. After 135 basis rate cut delivered by the RBI since February 2019, expect the RBI to cut rates by an additional 25 bps in December, taking the repo rate to 4.90 per cent. “Going forward, we believe fiscal policy will need to play a dominant role in supporting overall growth. The government may choose to mildly deviate from its fiscal deficit target for this year as well as next fiscal,” Ambani added.

Banknifty driving the market

Amit Gupta, Co-Founder and CEO TradingBells, said, “In the upside, we can see 12,350 or 12,500 levels very soon. Banknifty is the leader of the current bull-run and it may continue its leadership where we can see 33,500 levels in the Banknifty in the near term.
“We have RBI credit policy next week on December 5 where MPC may continue its rate cut cycle as growth is a major concern for the time being and that will help the market to move higher despite growth worries,” Gupta said. Other than RBI policy, auto sales numbers and global cues will be important for the market next week.