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Stock Market Weekly Outlook- Gaurav Bora, Market Expert

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Markets will react to earning season, now it’s time smallcap & midcap will join the rally.

Gaurav Bora

Markets will react to earning season, now it’s time smallcap & midcap will join the rally; Nifty (-0.2%), Sensex (-0.2%). Mid Cap & Small Cap index gained +1.24% and +3.26% respectively in this week, small cap & midcap stocks are outperforming the market we are expecting bounce back from mid & smallcap stocks. FIIs bought equities worth 497 crore while DIIs bought equities worth 30 crore, now fund flow will become regular as holiday season will be over. Metals, IT and Reality sectors were gainers in last week. The focus in the coming week would be on earning season, companies will start declaring their Q3FY20 numbers from next week. Now market will closely keep an eye on geopolitical tension after the US killing of Iran’s top military commander in an air strike in Iraq ratcheted up tensions between Washington and Tehran. As we are heading towards union budget market is expecting steps from the government to fuel consumption demand in an economy where a reduction in income tax is an important point, while increasing farmer’s income is another. Abolishment of LTCG is biggest demand from investor and it will improve investor’s sentiment in the market. Infosys will announce Q3 results on 9th Jan 2019, we are expecting increase in revenue guidance and margin may increase by 1%.

Brent Oil prices surged as much as $3 a barrel on Friday after the US killing of Iran’s top military commander in an air strike and closed to $68.70/bbl, with this geopolitical tension between US and Iran we may see crude to cross $70/bbl mark in coming few days. The rupee remained under pressure in the past week on the back of a spike in crude oil prices after Iran’s top general was killed in US airstrikes in Baghdad. INR depreciated 45 paisa to end at 71.80 on Friday, Geo political tension in the Middle East may rise further and this may keep crude oil prices higher in the short term at least in result this may lead to some panic dollar demand from importers and it may weaken till 72.20 in coming time. Markets are also awaiting further details regarding the trade deal between the US and China which can give little relaxation to global markets.

Monday market may open on flat note as SGX Nifty at 12,238 (-10). Now a decisive range breakout with follow up action could drive the fresh leg of rally and Nifty has to sustain above 12,300. Overall, the trend continues to remain up, and we continue to maintain our bullish stance and our target of 12,400-12,450 zone. On upper side 12,300 will act as a stiff resistance for the market and 12,200 will act as crucial support. India VIX moved up by 10.49 percent at 12.69 levels. One has to look at volatility index if it bottoms out and surpasses above 12-13 zones, in that scenario wider swing may be seen in the market. On the options front, maximum Call open interest (OI) is at 12,300 followed by 12,250 strike while maximum Put OI is at 12,200 followed by 12,000 strike. Current option data shows a broad trading range between 12,000 to 12,500 levels on the Nifty. On lower side Nifty’s crucial support at 12,200 levels, on the higher side immediate hurdle is at 12,300.

Data shows we may see upside above 12,300 in coming week. So traders are advised to take fresh buy position above 12,300 we may see nifty rally to 12,500.

FOR INVESTORS THIS IS BUYING OPPORTUNITY ACCOUMLATE QUALITY STOCKS ON EVERY DIP, AS THIS VOLATILITY IS BECAUSE OF MAJOR EVENT BUT FUNDAMENTALS ARE VERY MUCH INTACT. VOLATILITY IS FRIEND OF INVESTOR.

Top Gainers of the Week:

Indiabulls Housing (+9.50%)

Tata Motors (+8.49%)

Gail (+5.99%)

Adani Port (+5.17%)

Sun Pharma (+4.37%)

Top Losers of the Week:

Zee Entertainment (-8.46%)

Bajaj Auto (-5.24%)

Eicher Motors (-4.65%)

Titan (-4.34%)

Asian Paints (-3.36%)

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