Market consolidation set to continue

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Illustration By: Telangana Today

The markets are now consolidating and its likely to continue, for some more time. There are no fresh triggers for the market immediately to continue the upwards march both on the domestic front and internationally. The major international events which the markets always look forward to is the fed raising the interest rates in USA by 25bps. and currently stands at 1-1.25. Our markets did not react at all, in fact we just shrugged it off as yet another event. The fed also announced liquidity tightening measures gradually which could have a minor effect on the currency going forward. for now INR-USD hovering around 64-64.5.

Nifty closed at 9,588 and the BSE sensex at 31,056 while Bank Nifty closed at 23,500 and Nifty IT closed at 10,189. The major events domestically were the non-performing asset (NPA) issue getting on fast track and around 12 companies/groups being identified for further action by the banks/RBI to resolve the issue, which constitute 25 per cent of the identified NPAs. Consolidation of the PSBs and other events saw a lot of action in the banking and financials. Also a news of an executive order in America to control/reduce drug prices sent the pharma companies stock prices down towards the end of the week.


marketAutos/Auto ancilliaries

Continue their march upwards led by Motherson Sumi, and Bosch. As the auto stocks were slightly taking a breather this week particularly belonged to auto ancilliary which attracted buying. Bosch is slowly inching towards the 25,000-mark and is attracting buying even at these levels. Lot of small companies saw some action.



marketHousing finance companies

Seems to be on a formula-1 race track as many companies were racing towards their life time highs. As reported earlier, this sector offers a multiyear business visibility and the scope for the interest rates in India set to go down rather go up, and real estate prices having corrected in many parts of India, and the thrust given by the government for affordable housing this sector is unstoppable. Investors should however exercise caution as the price rise is steep and fast. Can even wait for a correction.


 marketMedia/entertainment

Stocks in this sector were also in the limelight and attracted a strong buying, led by Balaji, Sun and Zee. Film exhibition leader PVR closed very firm towards the close, and so did ENIL entertainment networks india, owners of Radio Mirchi. Most of the stocks in this sector also reaching their lifetime highs. Over the next few years, all these companies can give good returns. So investment can be done in 2-3 price points.

 


marketBuilding materials

Many companies in this segment such as tile manufacturers/plywood and medium-density fibreboard (MDF) manufacturing companies including some of the construction material like cement and retailer of all material and the newly listed Shankara Building Products were soaring on the exchanges and attracted a lot of buying. Select the leaders and wait for a small correction before buying, as these branded companies are direct beneficiaries of GST.


marketPharmaceuticals

Stocks were attracting some buying and it looked as if the sector has crossed the wall of worry, in terms of regulatory issues from US FDA, and a lot of new drug approvals were coming on the fast track for many companies, hence most of the leaders atrracted buying for the first four days. But a strong dose of bad news in terms of a fear of an executive order in USA by the Trump administration to curb/regulate prices, sent shock waves and on friday we saw deep cracks in many front line stocks.


marketTextiles and Undergarments

The sector saw very strong buying and the stocks went through the roof. A good monsoon augurs well for the sector as a good cotton crop reduces the price of their main raw material, even blended yarn/cloth would see the inputs/raw material prices go down as there was a plunge in crude prices. Investors can selective buy in 2-3 different points in good brand names and the leaders.

 


markets
Balasubramanyam Prabhala. Director – Research, PCS securities.

The markets though resilient and are in no mood to correct will consolidate time wise before the next leg of the rally commences. Investors should either wait for a correction and be patient or buy in 2-3 price points. SIP investors in mutual funders can safely continue and buy more units on corrections. However, caution should be exercised as some investors get desperate and restless and tend to buy the laggards and expose themselves to a lot of risk of capital. Buy the leaders on declines and wait for a mild correction. Staying invested is important as the saying goes. Its not the timing of the market it is the time in the markets which decides our fortunes.