InvestorQ : How do you see the Nifty and Sensex panning out on Monday 14th November, after the sharp rise on Friday?
Angel dcosta made post

How do you see the Nifty and Sensex panning out on Monday 14th November, after the sharp rise on Friday?

diksha shah answered.
2 weeks ago

It was a boisterous reaction to lower than expected US inflation by the US markets on Thursday and the Indian markets followed suit on Friday. The Nifty and Sensex closed strong on Friday with Nifty gaining 321 points and the Sensex gaining over 1,100 points. On the back of the MSCI revision of merger treatment, both HDFC and HDFC Bank were the top gainers on Friday as total adjustment inflows are now projected at $4.27 billion.

The market movement on Friday was largely a reaction to the lower than expected inflation in the US. In addition, the India inflation on Monday is also expected to be around 60 bps lower than the previous month while the wholesale inflation is pegged nearly 200 bps lower at around 8.7%. The A/D ratio has been extremely positive as banks and IT stocks spurred the rally. Overall, the markets have given a positive reaction to news flows.

Foreign portfolio investors or FPIs were net buyers to the tune of Rs.3,958 crore on Friday even as domestic funds and LIC bought stocks worth Rs.616 crore in a slight shift in positioning by the domestic fund managers. FPIs have already infused more than $2.3 billion into equities in November so far, with around $300 million of selling in debt. The debt selling has been rather subdued despite Indian debt not included in JP Morgan indices.

Global market cues were also very positive for Monday starting. On Friday, the Dow was up 33 points while the NASDAQ surged 209 points on tapering of dollar expectations. Tech stocks are the most likely to gain from lower than expected rates and a weaker dollar. Europe was up mixed on Friday while the SGX Nifty is trading marginally lower in early trades on Monday, after a sharp rally on Friday. Expect a volatile day for the Nifty.

How does the outlook for the markets in terms of data flows and the market levels. After the frenetic rally on Friday, Monday could be more like a return to normalcy. Early indications are suggesting a flat to listless market opening and that is likely to be the theme for the day overall. Markets are factoring in a 200 bps fall in the WPI inflation and a 60 bps fall in the CPI inflation and both look very likely. If the inflation manages to better that, then we could see a positive rally in the Nifty. The results season is almost over, with the verdict hinting at higher sales but flat profits on a yoy basis. The decent profits were led by the banks and to a lesser extent by the IT companies. Low VIX will keep investors interested.