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Below is the views on the weekly note of markets performance by Mr. V K Sharma, Head PCG & Capital Markets Strategy, HDFC Securities.
Nifty continued its winning streak for the fifth consecutive week
Nifty and Bank Nifty continued their upward journey for a fifth consecutive week where they gained by 0.26% and 0.7% respectively. Foreigners have bought more than 42,000 Cr worth of Indian stocks since 19 Feb. Relentless buying from FIIs’ coupled with the stronger rupee are the main reason for India outperforming the most of the Asian peers.
Nifty Midcap and Small-cap indices consolidated in the narrow range where Nifty Midcap Index fell 0.68% while Nifty small cap Index closed flat.
The wise men of the FOMC, the policy making arm of the U.S. Federal reserve, kept interest rates unchanged on Wednesday.
These are the conclusions from the policy statement, dot-plot and press meet.
* No further hikes in 2019
* Balance Sheet Contraction to end in September
* GDP estimate for 2019 cut to 2.1% from 2.3%
* PCE inflation forecast cut to 1.8% from 1.9%.
This meeting marked a watershed as this Q1 is the first calendar quarter in which the Fed has not raised rates since third quarter of 2017.
The Fed could not have been more accommodative. More important than no rate hike is that the balance sheet contraction, which is happening at a rate of $ 50 billion a month will end in September. From derivative markets,
we decipher long build up in the Nifty Futures’, short covering in the Bank Nifty Futures’, Put writing at 11300-11500 level and FIIs’ buying in the Index futures’ segment. These cues indicate that one should remain optimistic for the coming March Expiry week with the stop loss of 11300 levels.
The markets no doubt are in an overbought zone, but they can be over bought for a longer period of time than short sellers can be in business. The next logical resistance for the markets is at 11,760, the all-time high mark, the Nifty seen saw in August last.
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