Domestic Markets To Be Ruled By Trump’s Visit and China’s Normalcy

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Domestic Markets To Be Ruled By Trump’s Visit and China’s Normalcy
Yagnesh Kansara - 24 February 2020

Mumbai: US President Donald Trump’s India visit and any announcement from him with related to trade deal with India will dominate the market movements for the next week. Also, developments in China on Coronavirus front will also significantly guide the market throughout the week.

Commenting on this development, Vinod Nair, Head of Research at Geojit Financial Services said, “The markets will be looking to US president Trump’s visit to India and any indications towards the trade deal. Although no major announcements are expected, markets will be looking forward to commentary regarding the same. Defence stocks might be in focus. China is also expected to slowly limp back to normalcy as more factories resume work and the raw material constraints reduce, especially for the Auto, Pharma and electronics industry”.

Although the market started off the truncated trading week ended February 20, on a weak note, with two consecutive sessions of downtrend, it managed to recover briefly before ending down by almost 50 points for the week.

The markets tracked global cues and the hope that the impact of corona virus on the economy, both global and domestic, will be lesser than anticipated. The number of new infections from the virus seems to have stabilised and the Chinese government is bringing out measures to revive the economy, which meant that oil prices also firmed up during the week.

The minutes of the last US FOMC meeting highlighted the strength of the US Economy, but due to worries regarding the Coronavirus impact on trade, the Fed is likely to keep a dovish view on interest rates.

Domestically, Moody’s downgrade of India’s 2020 GDP growth projection, from 6.6 per cent to 5.4 per cent, and the Supreme Court’s AGR order which mainly impacted telecom and related banking stocks, weighed on the market sentiment.

For the ongoing Q3 results season, for Nifty 50, PAT has come in marginally below expectations with a growth of 21 per cent, YoY, mainly supported by the tax cuts. Out of 49 companies in the Nifty50, the results of 12 were above expectation, 12 were inline while 25 companies came in below expectation. metals, automobiles, Oil and Gas were the 3 sectors that performed the worst.

Commenting on the same, Siddhartha Khemka, Head, Retail Research, Motilal Oswal Financial Services, said, “We expect the markets to remain narrow and concentrated in the absence of any major event.”

The global markets cheered Chinese Central Bank’s effort of cut in interest rates to help ease credit for companies stricken by the virus outbreak. However, the concerns over the economic impact of the coronavirus on world economy still kept the investors on edge. Further, rise in crude oil prices too weighed on investor sentiment.

Shrikant Chouhan, Senior Vice-President, Equity Technical Research, Kotak Securitie, said, “Fear of the Long Week End and the Weekly Expiry of Nifty and Bank Nifty Options finally brought the market into profit booking mode on Thursday. Both the Nifty and the Sensex closed in negative terms. Technically, Nifty close may be considered good on a weekly basis. From the Lower Levels Nifty closed about 200 points higher”.

There is a bullish reversal formation on the Weekly basis and the Nifty will certainly challenge to the level of 12250 once. Above 12250, the Nifty would climb straight to 12500 levels. Levels 12030 and 11990 are very important for the market and if the Nifty falls below 11990 then it would be negative for the market, said Chouhan.

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