INSUBCONTINENT EXCLUSIVE:
saw these kinds of headlines in financial dailies, and guess what happens thereafter
Not once but every time the market witnesses such
pessimism, a recovery is inevitable
Indeed, the market experienced a V-shaped reversal in small and midcap stocks after a panic bottom caused by the ASM measures
Also, BSE smallcap index dropped to its lowest level since October, 2017 on Tuesday
There are no reasons shares should be sold just because exchanges have imposed stringent rules.
Fundamentals should guide an investor, and
not such a one-off event.
Event of the weekAfter over four years, RBI hiked interest rates by 25 bps which to a layman should be a negative
But the market surprisingly rose, why Because the rate hike was in the interest of our market to fend off any dollar exodus
The move was in tandem with the global monetary tightening policies adopted by our international peers and not motivated by domestic
factors.
Had RBI not raised the interest rate, there could have been a currency attack, which is not in the interest of our country, where
This could be a new normal
It would be interesting to see how investors look at HDFC from a larger trend perspective given the uncertainties on how the banking world
will be disrupted and who will take the lead in disrupting the business model.
The demand for HDFC Bank shares is indeed weak, which should
worry domestic investors.
Technical OutlookNifty50 and Nifty MidCap indices both have different trade setups
While Nifty50 has limited upside potential, there is a good possibility that the Midcaps would still go higher
The risk-to-reward ratio is far better in midcap shares than in frontline shares
Stop losses for midcap shares are small and potential targets are higher, which offer better risk-to-reward ratios
Buy midcap shares on decline with current weekly lows as stop losses.
Expectations for the weekThe domestic equity market can expect a lot
of activity in the PSU banking space after the President signed an ordinance to finetune the insolvency law
The Finance Minister and heads of PSU banks have discussed constructive action plans
Any positive outcome on the recovery front should lead to a rerating of PSU banks.
Few banks like Indian Bank and Vijaya Bank, hopefully,
should perform better, as their books are cleaner than their PSU peers
Additionally, markets are likely to take cues from global macros, as news flow on the domestic floe is almost over for now.
On the industry
front, we believe pharma stocks have made a confirmed double bottom pattern on the charts and have started an upward journey
Investors with a long-term investment horizon can pick pharma stocks in their portfolios.
For the week, Nifty50 closed 0.66 per cent higher
