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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.

Light at the end of the tunnel! Dalal Street showing signs of a rebound

FPI inflows will take the market higher and eventually change the sentiments.

Updated: Sep 07, 2019, 10.16 AM IST
The domestic equity market opened the week gone by on a negative note in reaction to the poor GDP numbers, but soon recovered by the close of the week. Rightly so, as GDP numbers are historical and are post-mortem data, which the stock market knows and discounts well in advance.

Statistically, such low GDP numbers have been a launching pad for swift recoveries for the market, because when such low numbers are recorded, everyone including the government tries to push the economic engine hard. It is speculated that the government might push the auto sector growth, either through a GST rate cut or through a scrappage policy of some kind. In either case, it is no time to sell the auto stocks, it is too late now.

At last, the good news on the trade war front should bring some respite to the global and local equity carnage. Across the World, stocks are rebounding, but India somehow seems to be subdued by domestic blues. Soon, FPI inflows will take the market higher and eventually change the sentiments. It is time to, therefore, accumulate some quality stocks, at least for the short to medium term.

Events of the week

Scarcity of growth capital has gone to such an extent that even at these low valuations and weak sentiments, companies are trying to raise risk capital through QIPs/private placement. Aditya Birla Capital and Bajaj Finance have already swung into action to raise capital at these lower valuations. No sooner the market revives, there will be a massive lineup of government and listed companies to raise capital from the secondary market, which although is good for the country, but will keep the secondary market range-bound.

Technical Outlook:-

Nifty has been forming Hammer patterns since last two weeks, indicating its refusal to go further down. Given the consolidation stage of the market, Nifty50 is again on the verge of testing the 11,200 level on the higher side and will face resistance around 11,350, being the 50% retracements of the entire fall. Traders should buy on dips for nominal profits as the market will witness profit booking at higher levels.

jimeet modi copy

Expectation for the week :–

Markets is likely to cheer the truce on the trade war front and an improved geopolitical situation. Markets should steadily crawl up from this deeply oversold zone. The government steps to address the concerns of the economy through weekly press conferences should lead to some confidence building.

We recommend investors to accumulate quality stocks in metals, private and PSU banks from a medium-term perspective as they are highly oversold.

Nifty50 closed the week at 10,946, down 0.70 per cent.
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of
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