Stock Market Round Up For The Week Ended September 11, 2015

Written by: Mr. Jimeet Modi

The market this week made a panic bottom and rebounded in sync with global trend. Headline media reached its height of pessimism - ‘street fright: when all fell down' drifting Nifty to 15 months low at 7540, later bouncing back smartly to close the week at 7789 up 3.32% from the lows.

The somber mood of Dalal Street made Indian Captains to reach out the government for quick fix to the slowdown in the economy.

Fear Subsides But Confidence Still Missing: SAMCO Securities

The government responded by clearing the Gold monetization scheme to tap the 20000 tons of gold available with the Indian public thereby hoping to control part of huge forex outflow due to annual 800 tons of Gold imports.

Spectrum trading was also given go ahead to enable efficient usage and tackle call drop issues. FIIs selling continued during the month but the same was counter balanced by DIIs.

However extremely high negative sentiments in India and across the globe have subsided and sanity seems to be returning as markets are slowly recovering.      

Events of the Week:

Director General Safeguards (DGS) recommends 20% safeguard duty on steel imports much needed relief for the entire steel sector to safe guard against cheap imports from China, South Korea and Japan.

Handsome growth of 36% in the month of August in Indirect Tax collection growth raises the hopes for 7% plus growth rate for the year.    

Technical Outlook:

Nifty made a nadir low of 7540 in the middle of widespread pessimism and bounced back immediately with good breath.

The levels of 7500 shall now act as strong support levels for all the rallies unless broken decisively, which if done, would begin the new bear attack. Nifty is likely to face stiff resistance at 8000.

The series of lower tops and lower bottoms in the medium term are still being made by NIFT but if 7500 acts as a strong support than the turnaround would be for real and NIFTY can rise all the way up to 8500.

The coming week shall be volatile due to FED meeting and traders can remain on the sidelines and wait till the outcome is discounted. It is always better to react than to preempt.  

From long-term perspective, the market is still in its corrective phase, which may take longer time then what people expect to get over, before the upward journey resumes.

Expectations for the week:

The coming week would be historic as USFOMC is likely to announce its policy stance on interest rates on September 17, 2015. However US bond and equity markets have already priced in the rate increase, thus the outcome of event isn't going to create a stir as is widely expected.

The volatility across asset classes will reduce and prices will stabilize. Previous week's heavy bearish sentiments will lead to short covering and new buying can emerge post Fed meeting.

Commodities Stocks are expected to outperform in the short term as prices of underlying commodities have started to stabilize and are getting ready to move up wards.

Crude oil, copper, aluminum, zinc have reached extreme oversold levels and therefore a bounce is expected. While the broader markets are expected to stabilize, the undercurrent has turned slightly bullish in the short term.

Nifty ended the week up by 1.35% to close at 7789.30

Read more about: stock market
Story first published: Saturday, September 12, 2015, 10:32 [IST]
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