Getting the jitters

Indo-Pak tension ratchets up and US Presidential election run-up results in global volatility

Last week, the market closed down by around 1.31 per cent due to global cues, especially Chinese economic data. Chinese quarterly data on exports was much below street expectations, exports lowered by around 10 per cent kept and kept the global market jittery. Nifty closed below 8600 at 8583. It has support at 8536 and 8500. Resistances for Nifty are at 8670 and 8721. It is prudent to have small trading positions due to global volatility. The US election, Indo-Pak and North Korea-US tensions, the weakening of the pound against the dollar is also cause for concern, ahead of BREXIT.

The market may move on stock specific mode, due to quarterly earnings season. IT sector stocks may remain sideways to positive, Pharma sector will continue to remain lacklustre. ULTRATECH Cement and ACC quarterly earnings will give direction to cement stocks. Metal and FMCG stocks may remain weak after Unilever Plc disappointing quarterly earnings. Automobile, oil producers and consumer durable stocks may gain further momentum next week.

The Banking Nifty looks weak. It has support at 18800, if there is a major sell-off then it may even test 18500 levels. Banking Nifty has resistances at 19280 and 19571. Major rally is expected only after the Q3 earning season.
Last week, the WPI inflation number came out, in line with market expectations. WPI inflation declined by 3.57 per cent, to 3.74 per cent. India’s trade deficit narrows by 18 per cent, year on year basis in September. India’s export grew by 4.62 per cent and imports declined marginally down by around2.54 per cent.

Continuous decline in WPI inflation is good for the economy, which may prompt RBI to reduce interest rates in its policy meet. DHFC, Biocon, V Guard, KPIT, Lakshmi Vilas Bank, Orient Paper, ULTRATECH CEM, Zanzar Tek, Canfin Homes, Havells, Mastek, Bayer Crop, NIIT LTD, Tata Coffee, LIC Housing, Praj Industries, ACC, ATUL, CAIRN, GHCL, Mind Tree and Wipro are scheduled to announce their quarterly earnings this week. Crude is likely to move up towards $ 51.60 and $52.99 per barrel. Minor correction is expected due to the overbought situation, and strong dollar. Crude will remain firm till the OPEC meeting is over.

The numbers game
TCS and Infosys came out with numbers. TCS numbers were at par with the analyst’s expectation. Infosys on the other hand, came out with a moderately good set of numbers. Many large clients are reducing their spending on technology due to fear of BREXIT and its repercussions. We saw profit booking in HUL, Unilever, the parent company of HUL’s performance affected sentiments. Unilever Plc reported a disappointing revenue growth in Q3. US Industrial production, Manufacturing Production, Inflation Rate, Continuing Jobless claims and Initial Jobless claims are expected this week. Inflation rate, Balance of Trade, GDP Growth and unemployment rates will come out this week from EURO Zone, Industrial Production and Bank of Japan’s quarterly reports are due.

Alex K Mathews is the founder of www.thedailybrunch.com

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