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  • Jimeet Modi

    CEO, Samco Securities & StockNote
    The founder & CEO of SAMCO Securities, StockNote and the Indian Trading League Company, Modi believes that price is the most important factor in investing. He is credited with developing the AIRM (TM), an approach to screening stocks and businesses in a scientific manner. His role model is Warren Buffett.

Karnataka poll results to guide market mood; stay on sidelines till then

Markets will oscillate in a range-bound manner till clarity emerges in political conundrum.

ET CONTRIBUTORS|
Updated: Apr 28, 2018, 11.24 AM IST
0Comments
Markets during the week have marched higher and higher with low volatility in a show of strength despite fears of higher interest rates, rising crude prices and inflationary tendencies. Also, FIIs seem to have given up and changed their stance by turning bullish, which is clearly depicted in their rollover statistics. There are instances in history wherein negative correlations have happened in the past wherein the Nifty had risen and the rupee weakened, but that did not last long. Therefore, sooner or later, either the rupee will give in or the Nifty.

Axis Bank reported a surprise Q4 loss of Rs 2,189 crore and had the worst performance among private banks. However, surprisingly the prices moved ahead and reacted positively, which is a signal in itself that the bulls are in full control of the market. Numbers in general were good and as per expectations, with UltraTech, Indiabulls and other NBFCs reporting an encouraging set of numbers keeping the spirit of the market high.

Key Events of the Week
The 10-year US Treasury yields touched a 4-year high of 3 per cent. This supposedly was the main concern of the market. But based on the past track record, interest rates nearing around 4 per cent is a cause of worry for the equities. So, the current panic is premature and unfounded, more so when inflation in the US is still around 2 per cent, a good sign that interest rates will not rise too fast, too soon.

Technical Outlook
The Nifty50 has broken out from a strong resistance level of 10,650, which should ideally lead to a further rally till 11,000. But sometimes such breakout also turns out to be a failure and reversal can also occur. Traders can take long positions with a tight stop at 10,500 and in case stops are hit, short sell could be initiated with high recorded as stops for the trade. There are divergences between sectoral indices and therefore, the rally to 11,000 will not be easy and straight.

Jimeet Modi

Expectations for the Week
The fact that markets have risen by 6 per cent from its bottom in spite of negative global onslaughts indicates that they have truly discounted a good set of corporate numbers. Going ahead, the main trigger for the market would be mid-May election results, which could swing the mood either way for our indices. It’s expected that the markets will oscillate in a range-bound manner till clarity emerges in the political conundrum. Investors should stay on the sidelines and wait for the market to correct before taking long positions. The Nifty ended higher this week by 1.21 per cent to close at 10,692.30.
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

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