Mumbai, December 13: On Friday the benchmark 30-share Sensex closed 428 points or 1.05 per cent up at over 41,009 levels. Nifty too ended in the green with Nifty 50 index rising almost 115 points or 0.96 per cent at over 12,086 mark. Nifty went up for the second consecutive day to close above 12,000 as the certainty of US-China trade war solution along with a clear mandate in Britain elections have given investors the opportunity to take some risk. The leaders such as banks and financial outperformed the broader indices while auto and metal after a profit booking sessions were seen gaining traction.
Mustafa Nadeem, CEO, Epic Research said that the Brexit has been lagging on investors’ sentiment for more than a year and it was one of the factors that kept global markets uncertain, and now, since there is a certainty with a clear mandate; one concern is over. Secondly, global equity markets that are stalling near all-time highs, specifically, US indices, needed a rather definite push which is seen from this election results and on the top of it being “Very close to Deal with China” as trump tweeted was another major factor.
Dovish risk for market fading
Nadeem said, “With US Fed seems dovish and keeping rates steady for its 2020 outlook in the near term, the downside risk for the market seems to be fading away slowly.” The dollar has depreciated to July lows. USD-INR exchange rate is providing positive sentiment with prices moving to 70 levels.
Nifty had every factor to be taken positively despite global ratings being downgraded and market discounting the hope of much better tomorrow. Nadeem said that on the economic data front with indicators such as Index of Industrial Production (IIP) at -3.8 per cent, manufacturing prod at -2.1 per cent and inflation at 5.54 per cent; markets seem to be discounting the better tomorrow picture.
Nifty has been in this range of 11,850 – 12,100 since mid-November with some attempts to close above 12,150 levels. “A bearish engulfing pattern that was seen last week seems to have faded away with closing in the upper range of the previous week,” Nadeem said. It is now impending for Nifty to either move out of this range and gives a close above 12,150 levels to make sure the positive sentiments are poised with some fresh liquidity.
Economic data not supportive of markets
The economic data has not been very supportive of the markets in the last few months with every other data plunging while the government continues to put efforts on every front to make sure the revival in the economy is seen. It is expected that the market will continue to move higher as momentum is favoring the bulls while easing global sentiments is a much bigger boost for investors at this moment. Nifty still has a very important resistance at 12,200 – 12,250 levels on spot basis that needs to be taken out to make sure the trend sustains. The two rising windows at 11,920 and 12,000 will be important to watch for any buying at lower levels.