Indian Markets Outlook for the week – 28.Dec.2015 to 01.Jan.2016
Choppy
next week on F&O rollovers; bias positive
Next
week, trade in local equities is expected to be choppy and stock-specific due
to
rollover
of derivative positions, as the December series will expire. During the expiry
week,
market typically tends to be volatile. However, this time dealers expect
volatility
to be low. The overall bias is slightly positive as indices have ended up for
the
second consecutive week. But, the upside is seen capped as due to lack of any
major
positive triggers and year-end holidays globally.
Yesterday,
Nifty 50 and S&P BSE Sensex ended flat at 7861.05 points and 25838.71
points,
respectively, due to absence of any triggers. Breakout above 8000 (on Nifty
50)
would be the first confirmation of the resumption of the uptrend at least for
the
medium
term. The S&P BSE's Sensex closed flat at 25838.71 points. Most market
participants
see indices ending 2015 on a positive note and are hoping for a better
2016.
We
expect the mid-cap sector to continue to outperform large-caps in the next
year,
although
action may turn stock-specific, as valuations are getting expensive. The key
reason
for the out-performance of mid-caps is the fact that the positive impact of
operating
leverage and financial leverage has been more profound compared to large
caps.
This
trend is expected to continue on the back of an incremental fall in input costs
and
likely
reduction in interest rates in CY16. The mid-cap space is Bajaj Finserv, Jagran
Prakashan,
Jet Airways, Greaves Cotton, Ashoka Buildcon, Somany Ceramics, among
others.
Among sectors, technical charts indicate banks may remain weak next week.
During
the session, selling in banking stocks pulled down Nifty 50 and Sensex to the
day's
low of 7835.50 points and 25763.40 points, respectively. Although Nifty Bank
had
touched a high of 16939.60 points, it failed to sustain gains due to lack of
followup
buying
and this indicates that some selling is likely. In view of the expected
pressure
in banks, traders should keep their positions light on Nifty 50.
( www.rupeedesk.in )