Tuesday, 2 February 2016

Market Brief – 2nd Feb 2016

On the back of markets being over sold, staged a recovery on the news of marginal decline in fiscal deficit, strengthening rupee against dollar, rise in prices of Global equity markets, and stabilised commodity prices, aided the market to close the day and week on a positive note. The earning season reported by the companies was a mix of some good results, and some equally bad results, now since the earning season has ended the markets will look for other macro fundamental cues. One needs to see how Global markets perform in terms of the economy and the markets. One thing is for sure, that the year 2016 will be an extremely volatile year for the Global markets, including India.

Technically speaking,  if one recalls our earlier newsletters, all through we have maintained that 7200 on the Nifty is a paramount level to watch, and the markets in the previous week bounced from 7240 to close this week at 7560, this justifies short term bottom in place. The durability of this pull back rally will only be confirmed if market can manage to consistently trade above 7200 for a prolonged period. If market fails to capture 7700, and breaks below the crucial support of 7200, one would witness a huge bout of selling. Until then, markets would remain in a range between 7400 and 7700. From a medium term (intermediate) perception, a close above 8200 on the Nifty would qualify for a trend reversal. One needs to see how the markets behave to the underlying fundamentals.

Investors should be cautiously and stock specifically optimistic on the markets and be very selective in their approach. Companies with good fundamentals and growth should be bought for investments, at the same time rally should be used to exit from the laggard sectors like Metals and Mining, Capital Goods, Power & Utilities & Realty & Construction.

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