The domestic stock market opened in the positive territory but later nosedived due to weak global and local clues, with the InfosysBSE 2.01 % saga being the mood spoiler. The tussle between the owners and professionals came out in the forefront on media.
The induction of a professional management in LupinBSE 3.87 % some two decades ago and in PidiliteBSE 1.59 % two years ago have all made great wealth for shareholders, but somehow the same was not true in the case of Infosys.
Hopefully, things will change for the better and whoever new professionals come in should hopefully create wealth like the others. Investors should keep patience and ride the darker side, dawn will come soon at Infosys.
There is a buzz that Bharat Financials could be merged with IndusInd BankBSE 0.68 %. That may or may not be true, but the truth is every time the stock price discounts such an eventually.
Bharat Financials is the only stock among MFIs that is flirting with its 52-week high. Others are languishing at their lows.
News and events with respect to a particular stock often create short-term trading opportunities. The move by Tata GlobalBSE -1.20 % to restructure loss-making operations and launch the Himalayan water brand in the US caused the stock price to jump by a few percentage points. As the market is in directionless mode, this type of trades can help traders move the scorecard forward.
Events of the week
In continuation of ‘Operation Cleanup’ at PSU banks, the government has opened more merger possibilities. This will largely help reduce the cost of operations and revalue real estate assets at market values, necessitating lower capital infusion by the government in the PSU banks after such mergers. Otherwise, had each bank been recapitalised individually, capital infusion requirement by the government would have been much higher.Thus, the move has been in the interest of long-term investors.
Technical Outlook
On the weekly timeframe charts, a small Doji-shaped hammer formation indicated utter confusion in the market, indicating that it is neither ready to fall nor is it willing to go up, as the market is facing resistance at higher levels.
The medium-term trend lines have been broken decisively, indicating that the market is currently seeing a phase of correction. The expected bottom for the Nifty50 to settle down appears to be at 9,500.
All rallies should be taken with a pinch of salt, before initiating long positions. Investors should remain on the sidelines for now. Traders should also remain on the side lines till the market direction gets clear.
Expectations for the Week
The market is in a state of pause, which is referred to as timewise correction. Stock-specific price movements are happening largely due to news flow and events.
The market is seeing huge FPI flow since last few weeks, whereas steady inflows from domestic institutions are holding the market. Signs of jitters are visible too.
The market will certainly take cues in the near term from the commentaries of two most powerful central bankers, Janet Yellen and Mario Draghi, on their plans to unwind respective central bank balance sheets.
The world is facing alleviated risk of high valuation and implementation of an impending liquidity suction programme in the form of balance sheet unwinding.
Another risk the global market is facing is the confrontational attitude of US President Donald Trump. Had he been little cooperative, many issues would have been resolved. Such confrontational attitude is putting at risk his ability to get cooperation from within and outside his party, which is posing a threat to US growth, which eventually can have cascading effects on global markets.
Investors are advised to stay on the sidelines and wait for the correction to get over. Short bounces should not be considered as beginning of a rally. The Nifty50 closed the week at 9,857, up marginally by 0.2 per cent.
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