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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.

Will the new financial year bring good news for the bulls on D-Street?

Buy-on-dips should be the strategy for traders with a stop loss placed at 9,900 for Nifty.

Updated: Mar 31, 2018, 10.47 AM IST
The market is expected to gain momentum slowly in April and bounce back from the lows on expectations of good earnings numbers.
The domestic stock market had a short roller-coaster week, with the year ending and March series F&O contracts expiring on the same day. On the whole, the micro triggers in the form of earnings are showing signs of improvement. However, the macros pose a huge challenge in terms of rising yields, a jump in crude oil prices and increased barriers to international trade, which have created headwinds for our indices.

But the offshoots of recovery were visible in some of the sectors this week. The market principally reacted to global cues, but the same is likely to change from April when the first set of earnings numbers will be released.

All the pessimism has already been captured by the market; LTCG on equity has got priced in and F&O expiry should create a launch pad for good recovery at least in April while elections in Karnataka could again create jitters for the market in May.

But let’s hope for the best.

Indian bond yields cooled slightly on the government’s assurance that borrowings in the first half of FY2019 will be lower than expected, which if implemented in letter and spirit would slightly ease the pressure on interest rates.

This should help NBFCs keep their borrowing cost under control in an otherwise rising interest rate regime. Currently, there is too much pessimism that interest rates will rise further, which may not turn out to be a reality, given the sharp run-up we have already witnessed in bond yields.

The market has punished the highly priced IPO of ICICI Securities in the form of under-subscription. This should be a big lesson for merchant bankers that Indian investors have indeed become smarter.

Technical Outlook
The Nifty50 has bounced back sharply after seeing a 38.2 per cent correction of the entire rally beginning December 2016 till January 2018 (a total rise of 3,278 points). The correction (38.2 per cent of the entire rally) comes to 1,252 points, which when deducted from a high of 11,172, gives a target of 9,920 in the Nifty.

The index tested the 9,951 mark and sharply bounced back in spite of negative global clues, which indicates that a sustainable bounce is in the offing. The Nifty is expected to test the 10,600 level on the higher levels in the medium term. Buy-on-dips should be the strategy for traders with a stop loss placed at 9,900 for the Nifty.

Nifty snip 31

Events for the Week
The market is expected to gain momentum slowly in April and bounce back from the lows on expectations of good earnings numbers. Pharmaceuticals can surprise as the base of last year was low and any incremental growth in profit will have a high-beta impact on stock prices. There is still uncertainty regarding how the US markets will unfold and the impact of trade wars if it heightens. But the same has been more or less factored in and, therefore, the market should perform better than what the majority is expecting on the Street.

One should be patient and look out for sectors such as pharma, IT, NBFCs and good quality private sector banks. Investors should deploy a part of their capital in good quality stocks at current levels.

The Nifty ended the week 1.16 per cent higher and closed at 10,113.
(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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