Market Analysis: 14th November

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“Equity Markets managed to close in green amidst a volatile session with Sensex/Nifty up 0.4%/0.3%. Weak macro numbers and negative global cues kept the sentiments negative. Further Moody’s Investors Service lowered its forecast for India’s GDP for the current financial year. On the sectoral front, realty, pharma, metal, FMCG and PSU banking closed in red, while IT, financials, auto and banking ended in green. Global markets were also weak due to poor Chinese economic data, some disappointing earnings release, US-China trade war concern and the continuing unrest in Hong Kong which weighed on market sentiments.

CPI inflation spiked to a 16-month high of 4.6% in October on the back of costlier food items. Even though retail inflation has jumped to 4.6% YoY in Oct’19 from 3.3% just two months ago, we expect the RBI to place more priority on growth slowdown than higher inflation. Accordingly, we expect another rate cut in Dec’19. We continue expecting headline inflation to touch 5% around Dec’19-Jan’20 and stay put until Mar’20. Further, we expect core inflation to have bottomed out and pick up only gradually to 4% by Mar’20. Market would watch out for wholesale inflation numbers to be released today evening. GDP data is also likely to be released by the end of the month which is expected to go below 5%. Thus, going ahead, weak domestic growth and uncertain global cues might keep the markets range-bound.

Technically Nifty formed a small Bodied candle with comparatively long lower shadows on daily scale which indicates that dips are being bought while resistances are intact at higher levels. It has been forming lower lows from last four trading sessions as supports are drifting lower but a decisive hold of 11850 could pause in the recent consolidation to test the higher band of the trading zones. Now it has to hold above 11850 levels to witness an up move towards 11950 then 12000 zones while on the downside major supports is seen at 11780 levels.”

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