The real action in market should begin after the first week of January: Jimeet Modi, SAMCO Securities

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New Delhi | Updated: Dec 16, 2016 4:52 PM

The market began the week with negative mood on GST flip-flop and then recovered mildly.

bse-reuThe market began the week with negative mood on GST flip-flop and then recovered mildly. However, when US FED increased interest rate with a more hawkish stance, the market opened deep in the red but recovered swiftly within an hour of trading, indicating clearly that “no amount of bad news can now push Mr Indian Stock Market lower”.

“The FED’s guidance of three possible hikes in 2017 and 2018 each depicts the conviction in the growth possibilities in the US, which is extremely positive for emerging markets. Now India will have more opportunities to export from IT to textiles. Further, the utter optimism in US economic growth makes a likelyhood of bull market nearing its maturity, creating huge possibilities of new funds deployment in emerging markets for higher returns. Thus US interest rate hike foretells well for the Indian markets,” says Jimeet Modi, CEO, SAMCO Securities.

Events of the Week: The Power Minster has decided that NTPC will invest fresh Rs 50000 crore in creating new power generating capacities and weeding out old ones, which will give massive boost to wind and solar power generating capacities in times to come. This is the only way India can slowly shift from thermal to renewable power generation. The Cabinet has cleared the bill proposing more autonomy to major ports, which will in turn help in developing inland water ways and water transport systems in the country. This is a sunrise sector for investors to create sustained wealth.

Technical Outlook: The market seems to have entered into a period of low volatility and a narrow range which is a typical symptom of ongoing correction. The market is likely to oscillate in a narrow trading range oscillating between Nifty 8300 on the upper side and 8000 on the lower side. In these sideways, corrective times, the best strategy to approach individual stocks would be to trade breakouts. Traders can take smaller breakouts of, say, 55 days for momentum trading and investors can watch out for breakouts above 200 days for creating a portfolio of growth stocks. For conservative traders and investors buy on dips should be the strategy.

Expectations for the week: The market has entered a state of fatigue as the year is nearing an end. Neither the bad news – US interest rate hike or GST flip flop – is taking the market lower, nor is the good news of two year-low inflation cheering the market. However, now the support looks firmly in place for the market awaiting positive triggers to kick start the rally.

“But based on statistical evidence, it is observed that to restart the rally, the market may again have to revisit the old support levels to check whether there are still weak players left and only then the new rally can begin. Hopefully this time also the market will do the same. The real action should begin after the first week of January wherein the quarterly results season will begin and by that time global fund managers too will be back on the driver’s seat,” says Modi.

Investors should take this opportunity to do their home work and reassess all their holdings as a year-end exercise to reshuffle the portfolio by restructuring it in line with the new emerging opportunities by investing in those stocks and exiting slow-moving businesses. “Investors should keep on accumulating quality stocks as valuation has turned attractive,” advises Modi.

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