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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.

Market showing signs of stabilising as government finally tunes into its rhythm

Nifty50 is entering a consolidation phase with reduced velocity on the downside.

Updated: Aug 31, 2019, 11.34 AM IST
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The week ahead would be lacklustre amid dearth of triggers from the corporate side, and international triggers taking the driver’s seat.
During the week gone by, the market responded euphorically to the government’s first round of mini fiscal stimulus, but it fizzled out by the end of the week. Global markets, too, were in a similar consolidation phase awaiting big triggers on the geopolitical front.

The economic condition is very fragile, but the government is trying to stabilise the same through various fiscal and monetary incentives. The latest move to consolidate PSU banks, speed up GST refunds within a specified time speak a lot about its intent to lubricate and boost the economy in whatever way possible. The government has at last swung into action, which can help stabilise the market at these levels. Mutual fund inflows are still encouraging and the velocity of FPI selling is reducing.

The government seems to have assumed the role of the wicketkeeper and is ready to help industries in whatever way it can. It has already eased FDI investments, increased the liquidity tap for NBFCs, offered subsidies to incentivise exports and is also talking about scrappage policy to boost auto mart, which are all policies in the right direction that can help revive the economy albeit with a time lag.

Meanwhile, there can be unexpected international negatives that can impede the revival process. On the whole, the market should stabiles from here on.

Event of the Week
The much-talked-about bounty from RBI for the government in the form of higher dividends is seen as another stimulus in the making, which will help the government tide over the constraints in doing capex to revive growth. The government’s target of Rs 90,000 crore disinvestment in a subtle way will be met with incremental dividend of Rs 54,000 crore from RBI, in which case much liquidity will be saved from the secondary market.

Technical Outlook
Nifty50 is entering a consolidation phase with reduced velocity on the downside. The market is trying to gain strength and bounce from the oversold territory but selling has emerged at the higher levels as well. Nifty50 is expected to oscillate between 11,190 on the upper side and 10,800 on the lower side. However, the 11,350 level would be good resistance to cap the index. The market, in general, is expected to remain sideways in the coming week and traders should refrain from taking aggressive positions.

Nifty snip 31x

Expectations for the Week
The week ahead would be lacklustre amid dearth of triggers from the corporate side, and international triggers taking the driver’s seat. Inherently, the market seems to be stabilising, although the bulls and bears are poised equally in terms of strength. Given the beginning of a new F&O series, the bulls should have an upper hand as majority of the weak hands are out of the market and the bears could run for the cover, in case the new government announcements or other factors help improve market sentiments.

Investors should ideally begin systematic investments in smallcap and midcap funds/stocks so that 20 per cent of their liquid capital is invested in a staggered manner over the next six months.

Nifty50 closed the week 1.8 per cent higher at 11,023.
(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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