Markets Next Week: Indices May Continue Downward Trend

Business

oi-Sunil Fernandes

Benchmark indices may continue to maintain a downward bias in the next week, as investors digest the Donald Trump win.

By Sunil Fernandes

Updated: Saturday, November 12, 2016, 10:12 [IST]

Benchmark indices may continue to maintain a downward bias in the next week, as investors digest the Donald Trump win.

The Sensex may in fact breach the 26,500 levels in the coming week, as heavy selling from Foreign Portfolio Investors (FPIs) is highly likely.

It was a week that could be remembered for high volatility as the Donald Trump victory, saw the Nifty open a staggering 615 points lower on Wednesday, though we did recover ground on Thursday. Friday saw fresh selling pressure as bond yields in the US shot up.

There were worries that rising bond yields in the US could push FPIs out of emerging markets and into US bonds. In fact, markets like Brazil saw heavy selling pressure this week. Indian markets ultimately lost a few per cent tage points in comparison to the previous week.

Markets for next week

If you are expecting a tremendous market recovery next week, it s unlikely to happen. In fact, we believe that the markets could see further dips in the coming weeks. It is best to sit on cash for a period of time and wait for the dust to settle.

In any case stocks look slightly expensive at the current levels with the Sensex p/e at almost 21 times one year forward earnings. It is also likely that there maybe some impact of the withdrawal of the 500 and 1000 notes on the markets.

All in all it is going to be a tough week for the markets. It is best you avoid the same, as when the markets fall, good and bad stocks are all going to fall.

Perhaps, if index falls into the 25,000 points level, it would be a good time to buy.

GoodReturns.in