Sensex: Sector specific movement to continue- Economic times section of Navbharat Times

The below is the English transcript of article by Ashish Kyal, CMT Director of Waves Strategy Advisors in Economic Times section of Navbharat Times.

Sensex showed strong bounce back after making a low near 25910 levels on 17^th October. This can also be attributed to the announcement of another reform of diesel price deregulation along with outcome of Maharashtra and Haryana state elections with BJP leading in both the states. This will help the central government to put further reforms on fast track. On the day of Diwali Muhurat trading Sensex inched closer to 27000 mark whereas Nifty managed to close above psychological 8000 level.

Monitoring Global growth will be important: IMF in its latest World Economic Outlook has raised concerns about slower than expected growth in developed economies due to high debt burdens and unemployment. It will be important to keep an eye on global growth going forward along with other macro-economic factors.

High Gold and Silver imports: The imports of precious metals have sharply increased in September. This has been a concern since reduction in Crude prices has still not helped the country to reduce its current account deficit (CAD) which has widened to record high levels. The rise in Gold prices from here on can further put pressure on CAD and government will be forced to take action to keep this under check.

The results have been mixed bag so far with a few stocks like TCS, HCL that did not live upto the expectations showing sharp selloff. On the other hand Oil and Gas sector stocks like HPCL, BPCL showed good uptrend after diesel price deregulation announcement. Bank Nifty index has managed to touch new highs at 16500 levels but Infra, Power and Metal index has still not shown any meaningful recovery. To sum it up it is a mixed signal and the sector specific activity can continue unless a strong trend emerges in either direction.

Week ahead: Overall, Sensex has managed to form a positive weekly bar which is keeping the short term trend positive. On upside break above the previous high near 27350 will be crucial and on downside recent low formed near 25900 will be an important support. 100 days Simple Moving average which provides the direction of medium term trend is also near 26000 level. So for positive trend to continue this level should be protected. However, given the sharp selloff seen in a few European markets over past few weeks and concern raised by IMF it will be important to use good risk and money management strategy in case there is reversal. 

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Sensex post elections, RBI policy, Budget!

Sensex post elections, Budget & RBI policy will be important! 

The below article was published in Economic Times section of NavBharat Times today morning:

Sensex post Election results: Sensex ended the month of May with a strong gain of nearly 8%. The main factor that was responsible for such strong gains is the expectations of stable government so that the policy decisions can be taken at faster rate and the environment remains more conducive for Institutional investors. However after the Elections results were announced on16^th May the index jumped making a high of 25375 i.e. above the psychological 25k mark but failed to sustain there and closed near day’s low on same day. The low and high made on that day was near 23870 and high was at 25375. Since then Sensex has not moved above the high or below the low of that day. From technical perspective a big bar made on day of event forms very important support and resistance and break of the above mentioned levels will be important for the trend in coming week.

India’s GDP growth: The GDP data released last week showed weaker than expected growth at mere 4.7% for the year 2013 – 2014. This data has been below the government estimates of 4.9% itself. GDP growth has remained below 5% for 2 consecutive years after many years. This itself is suggesting that there will be lot of pressure on the new Government given the subdued growth and the RBI stand to focus more on inflation rather than growth is also going to be challenging. However, the GDP data is declared for the past year and sentiments are positive that the new government actions will be impacting the economy positively over coming years!

Upcoming Budget:The forthcoming Budget will be important factor and the expectation is that more focus will be given on reviving the business confidence and fast implementation of pending projects and policies. Markets reaction to the Budget will be crucial and it will be important to observe if the day can cheer Dalal Street

RBI policy:All eyes will be on RBI policy which is to be announced on 3^rd June i.e. tomorrow. It will be important to see if amidst the slow growth RBI can take more liberal stand whose actions so far has been focused more on inflation rather than growth. In current monetary policy we expect RBI to maintain its “status quo” and will not make any changes to key policy rates. 

Week ahead: The rally in Indian market which started in August 2013 was majorly driven by expectations of stable government and elections. Now that the news is out there are lot of expectations from everyone from our newly elected PM Mr. Modi and its Mantri Mandal. Next few months will be crucial and market participants will closely observe how quickly the implementations and executions of various policies can be done. This will put lot of pressure on new government and any short of expectations can result into negative trigger. Over short term, prior week formed a bearish bar and index closed near the weekly lows at 24,217 levels. Further move below 23870 will result into a deeper correction and will indicate Sensex can trade subduedatleast for few more weeks and can start the correction of big rally that started in August 2013.

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