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Below is the Views On Daily Market Commentary by Mr. Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services Ltd
“Equity markets continued making record highs, with fourth straight session of gains despite weak macros. Both Sensex/Nifty closed at new high of 41,953/12,360, up 0.2% each. Majority of the sectors ended in green led by Media (+2%), FMCG (+1.4%), Metal (+0.9%) and IT(+0.8%). Meanwhile, Banking sector declined 0.3% followed by Realty which fell 0.1%. Broader market outperformed the benchmarks as Nifty Midcap 100/Nifty Smallcap 100 advanced 0.7%/0.8%.
CPI-based retail inflation shot up to a 67-month high of 7.4% in Dec'19 from 5.5% a month ago, led by food inflation which accelerated to over six-year high of 14.1%. However, CPI inflation excluding vegetables was at 4.1% in Dec'19 - the highest in 14 months, which is worrisome. Even if we assume a decline in vegetable prices over the next two months, headline inflation is likely to remain high, which signals that there is minimal hope for further rate cuts. However, market sentiments continue to be high on the back of tax sops expected from the budget, earnings recovery and the signing of an initial trade deal between US-China tomorrow which would open the gate for future talks. Going ahead, investors should remain cautious as the markets are at all-time high and should expect stock specific action as the Q3 earnings season progresses.
Technically, Nifty formed a Bullish candle on daily scale. Overall trend of the market is positive and supports are gradually shifting higher. Now, Nifty needs to sustain above its previous swing high of 12293 levels for continuation in ongoing up move towards 12450 - 12500 zones, while on the downside major support is seen at 12250 then 12150 levels.”
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