The domestic equity market traded largely sideways with an upward bias all through the week and Nifty ended higher. But smallcap and midcap indices still languished, indicating that the market is in no hurry to set a decisive path for itself yet.
Such divergent behaviour of the Indian bourses will generate no meaningful direction for the market. However, in the meantime, there are certain risks emerging from global markets. In the US itself, there is such divergence. Dow Jones is sitting near its all-time high with far lower momentum while S&P2000, the smallcap version of the US market, is far below its all-time high level, showing the unlikeliness that the bull run will continue in the US.
Despite months of efforts, China and the US still have not been able to resolve their trade dispute. Additionally, the US blanket sanction on Iran is also a destabilising initiative, which can derail global bull markets if the conflict escalates, and most likely it will.
Economically, the world is at its best time but politically, we are in our worst phase. This is the biggest risk to the bull market, which no one is factoring in currently.
Events of the Week
A mixed sentiment from the quarterly earnings kept the market on its toes during the week. Among the banks, HDFC Bank, Axis Bank and AU Small Finance Bank showed strong bottom line growth. Sterlite Tech reported a 68 per cent year on year PAT growth and Ultratech Cement 131 per cent. There were certain companies which belied analyst expectations, such as Maruti which experienced a degrowth of around 5 per cent, while ACC grew only 38 per cent and ICICI Securities degrew 11 per cent.
Nifty50 is trading cautiously near its all-time high level. Nifty50 had made a failed attempt to cross its all-time high mark, but since then it has been languishing around those levels. Such consolidation is expected to last longer, but
any decisive breakout above 11,900 level will signal a resumption of the uptrend. However, in order to protect the long positions, one needs to keep a stop below 11,500 in Nifty50, which can take the market much lower if the support is broken.
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