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The weekly view by Vinod Nair, Head Of Research at Geojit Financial Services

Published in Investment Saturday, 18 November 2017 15:43

 

 

 

Week that was…

During the start of the week market was consolidating due to hike in bond yield and crude prices. However, markets rejoiced in the upgrade of domestic sovereign ratings and recouped its lost ground this week.

 

Weak macros like slow down in IIP to 3.8% in September versus 4.5% MoM & 5.7% YoY and rise in CPI inflation to 3.58% in October versus 3.28% also impacted the market. The hopes of near term rate cut by RBI faded, and volatility heighted due to geopolitical tensions in Middle East. Despite significant tax relief from GST council, setbacks like widening of trade deficit, inflationary concerns and likely impact of government fiscal plans due to tax cuts did not support sentiments. Global cues were not helping either amid uncertainty over US tax reform, slow down in Chinese factory output and growing political issues in UK.

 

Having said that, a relief rally was witnessed across the broad, with out performance seen in PSUBs due to advancement in capital infusion and a strong buying interest seen in defensive sectors like IT, Telecom and FMCG. Investors used recent correction as an opportunity for buying blue chips, while ease in crude prices added some comfort to the rally. This rally was further boosted when global rating agency, Moody's upgraded domestic sovereign rating to Baa2 from Baa3 and changed the outlook to stable from positive. Banking and Realty index outperformed this week with a gain of 1.5% & 3% respectively.

 

Week ahead… 

The domestic market outlook looks changed after Moody’s upgrade of Indian credit ratings. This upgrade is expected push liquidity into domestic market. The Q2 results have further given some hopes for revival in earnings growth in near term mainly for large cap companies. The tax relief from GST and announcement of recapitalization of PSUBs has significantly improved outlook of consumer related sectors. Thus we are bound to see the current positive momentum to continue. However investors will closely monitor the crude prices and US FED rate hike which are expected to bring some volatility. For the week ahead, with Q2 results out of the way, global cues will be the key driver for the markets, with underlining trend expected to be positive.     

 

 

 

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