Market Analysis 13th November

Smallcap lose, Zee Media tanks 20%, hitting lower circuit; HEG, Indiabulls Ventures down 13-15% each

Equity Markets continue to be range-bound with Sensex/ Nifty50 both down 0.6% to close at 40,116/11,840 on account of weak domestic and global cues. September IIP fell to 8-Year low at -4.3%, while rating agency Moody’s downgraded India’s outlook from stable to negative. Even USDINR spiked to 2-month high which added pressure in the market. On the global front, uncertainty over US-China trade deal and unrest in Hong Kong kept the sentiments negative. All the sectors ended in red except energy, with Media being the biggest loser (-4.5%), followed by Banking, Metals, pharma, infra, FMCG and IT.

The IIP declined 4.3% in Sep’19 compared to growth of 4.6% in the year-ago period. With such a drastic decline in IIP in Sep’19, we expect real GDP growth to be closer to 4.6% in 2QFY20 (RBI’s forecast of 5.3%). Moreover, with IIP appears poised for further weakening in 2HFY20, it raises doubts over a meaningful recovery in real GDP growth. Globally confusing signals over the progress in US-China trade talks and concern about intensifying unrest in Hong Kong also dented market sentiments. Market is also awaiting CPI inflation data for October which will be released later today. Going ahead, weak domestic growth and uncertain global cues might keep the markets range-bound.

Technically Nifty formed a Bearish Candle on daily scale as selling pressure was seen at higher levels. It has broken its multiple support and started to trade below previous week low with negative crossover on Mechanical indicators. Now if it sustains below 11850 zones then short term trend could turn negative to test the next major support of 11780 then 11700 zones while on the upside hurdles are seen at 11950 then 12000 zones. ”

By- Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Private Ltd.