“Market continued its positive movement for 6th day in a row amidst lackluster session, led by poor macro data and profit booking post the recent surge. Nifty ended almost flat at 11890, up 0.2%. All the sectors closed in green except Auto and IT. Media sector rose the most with gains of more than 7%, followed by metals and banks.
Auto sales for the month of October was mixed with Maruti, M&M, Escorts and Bajaj Auto reporting better than expected volumes, while TVS Motor reported poor sales data. Reports of better-than-expected festive sales, decent earnings season so far, hopes of stimulus from the government including further tax reforms, continued FIIs inflow and fall in oil price kept market sentiments positive. Even fiscal deficit for H1 came at 92.6% of budgeted estimates, lower than 95.3% in 1HFY19, helped by transfers from the RBI. However October Manufacturing PMI data came in at 2-year low, while the Core Sector witnessed worst performance in 14 years, shrinking 5.2% in September.
On the global front, concerns have emerged with regards to US-China trade deal, which could dampen the sentiments going forward. For now the market appears to be consolidating near its peak and awaiting for fresh triggers to cross its highs. With FII participation, broader markets have started performing which should continue next week as well. However, Nifty valuations appear fair at 22x FY20 PE, which may limit significant upside – while stock specific action is likely to continue.
Technically Nifty formed a Doji Candle on daily scale but a Bullish Candle on weekly scale which indicates major trend is positive while dips are being bought at immediate basis. It has been forming higher highs – higher lows on weekly scale and supports are gradually shifting higher. Now it has to continue to hold above 11820 levels to witness an up move towards 11950 then 12000-12103 zones while on the downside major support is seen at 11780 then 11700 zones.”
(Analysis by- Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Private Ltd.)