Outbreak of corona virus and yes bank fiasco made market nervous; Nifty (-1.9%), Sensex (-1.9%). Mid Cap & Small Cap index fell by -2.5% in past week. FIIs sold equities worth 10,720 crore while DIIs bought equities worth 10,093 crore. The consistent selling by FIIs in emerging markets including India due to the corona virus outbreak is a cause of worry for the market and it could be closely watched by the Street but on other side DIIs continued to support by buying in around similar amount in equities. Though the market looks oversold after 11% correction from its record high, some follow-up buying can lift market sentiments as this valuations looks much attractive for investment. IT stocks were only performers during last week due to appreciation in USDINR. This week will be short week with only four trading sessions as the market will remain shut on March 10 on account of Holi. On the domestic front development on resolution plan for Yes Bank along with spread of Corona virus cases would be actively tracked by market. RBI may announce rate cut and Yes Bank situation will be taken care of by SBI and LIC and this should improve market sentiment. SBI has been allowed to pick up to 49% stake including the 26% stake which will remain for next three years and will present its resolution plan possibly by March 9 after reading Yes Bank’s books. Once moratorium period of 30 days over SBI will take control of yes bank by infusing 2,450 crore initially and can put upto 10,000 crore in three years period if required and RBI is likely to offer 8,000-10,000 crore of special liquidity window.
Key macro data to watch out for would be the January industrial production and February CPI inflation numbers which will released on March 12. India’s industrial output contracted 0.3% in December 2019 against a growth of 1.8% in November 2019 due to fall in manufacturing output. Retail inflation in January jumped to near six-year high of 7.59%, up from 7.35% in the previous month due to rise in prices of vegetable and pulses. USDINR broke consolidation and depreciate 161 paisa during the week and closed at 73.78, fall in rupee is worry for India as hitting 17-month low among virus fears but there was likely RBI intervention to support the currency. Existing concerns over weakening demand due to the corona virus outbreak that has affected crude price and now OPEC and its allies failed to agree to a production cut, crude price fall 10% on March 6 to $45.27/bbl which is worst in more than five years. This sharp fall in oil price could play a big supportive role in India as India imports 80-85% of its requirement and there would be less pressure on fiscal deficit.
Monday market may open on negative note as SGX Nifty at 10,814 (-88). Nifty close below the psychological mark of 11,000 during the week as bears retained tight control over market, this volatility is likely to continue along with negative sentiment but index is oversold after losing 11% from high and bounce back can come. RSI indicators are indication short pullback towards 11,200 but if we see any follow-up selling then downside towards 10,650, Market sentiements cann’t improve until it reclaims 11,400 levels. On lower side 10,700 will act as crucial support. India VIX surge by 12% to end at 9 months high of 26, which is a major concern for the bulls and it has to cool down below 20 levels to give comfort to the bulls. On the options front, maximum Call open interest (OI) is at 11,500 followed by 11,300 strike while maximum Put OI is at 10,900 followed by 10,500 strike. Current option data shows a narrow trading range between 10,700 to 11,200 levels on Nifty. On lower side Nifty’s immediate support at 10,700 levels, on the higher side immediate hurdle is at 11,200. F&O data indicates that a decisive break below 10,900 could take Nifty towards 10,700 and then 10,500.
Top Gainers of the Week:
Dr Reddys (+8.33%)
Cipla (+8.03%)
Sun Pharma (+7.51%)
Eicher Motors (+6.87%)
HCL Tech (+5.96%)
Top Losers of the Week:
Yes Bank (-53.32%)
Tata Motors (-11.44%)
SBI (-10.73%)
Indiabulls Housing (-9.06%)
IndusInd Bank (-8.08%)
Gaurav Bora
(Market Expert)
