India Market Outlook for the week – 02 to 06.01.2017
India Market Outlook for the week – 02 to 06.01.2017
( www.rupeedesk.in )
The Domestic shares are likely to trade on a cautious note in the first week of the New Year, as traders expect profit booking to resume on the back of this week's 2.5% gain. A slew of macroeconomic data and Prime Minister Narendra Modi's speech on Saturday will also be in focus. In his speech, Modi is expected to detail the roadmap to deal with the impact of demonetization as well as announce some relief measures will also determine the direction equities take. The "mood is still pessimistic" after the government demonetization move announced on Nov 8 stole the lustre in the share market. The benchmark Nifty 50 has lost 4.2% between Nov 8 and yesterday, the last day of curbs on cash withdrawal. Unless a major announcement is made, profit taking by investors and traders is likely. We are expecting a lot of selling pressure in the market as the market has run-up a lot this week. It (Nifty 50) could fall back to 8000-level next week. The rise in the share market followed buying by domestic institutional investors who bought shares worth 43.5 bln rupees till Thursday, according to provisional data available with the exchanges. This was despite institutional investors being net sellers of Indian shares this week. The only way the market is going to go up now is if the FIIs turn around their view and say they are going to buy the value story emerging in the market. A slew of data points will also be eyed, starting with the December HIS Market Purchasing Managers' Index which will be detailed on Monday. Traders will be looking at the data to gauge the impact of cash curbs on the informal economy. After a tumultuous, shaky and sometimes shocking year for the share market, indices ended 2016 on a resilient note. Heading in to the New Year, the picture, though, still remain foggy as multiple events that transpired in 2016 play out on the ground next year. From the actual impact of demonetization to the beginning of Donald Trump's presidency in the US, the first half of 2017 offers a lot of nervousness for the market. We expect weakness in the market to continue till at least March. As for the remaining part, we expect the market to enter into a strong bull run. We could see a turnaround in earnings from June quarter onwards due to lower base effect from Q1 of 2016. The Budget is expected to be a game changer in the New Year with market participants anticipating a slew of cuts in direct taxes and other stimulus for the rural economy. The roll out of the goods and services tax and an accommodating Reserve Bank of India are other major factors which the markets will be pining their hopes on for a revival in sentiment. In the short term, market is expected to remain volatile, but as the long-term growth story of the Indian economy is intact, it is expected that market would see 10-12% upside from here on in the New Year. Not all are that optimistic though. Given the uncertainties unleashed in 2016, it will be too far-fetched to make comments on the market's performance in 2017 beyond March.
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India Market Outlook for the week – 02 to 06.01.2017
( www.rupeedesk.in )
The Domestic shares are likely to trade on a cautious note in the first week of the New Year, as traders expect profit booking to resume on the back of this week's 2.5% gain. A slew of macroeconomic data and Prime Minister Narendra Modi's speech on Saturday will also be in focus. In his speech, Modi is expected to detail the roadmap to deal with the impact of demonetization as well as announce some relief measures will also determine the direction equities take. The "mood is still pessimistic" after the government demonetization move announced on Nov 8 stole the lustre in the share market. The benchmark Nifty 50 has lost 4.2% between Nov 8 and yesterday, the last day of curbs on cash withdrawal. Unless a major announcement is made, profit taking by investors and traders is likely. We are expecting a lot of selling pressure in the market as the market has run-up a lot this week. It (Nifty 50) could fall back to 8000-level next week. The rise in the share market followed buying by domestic institutional investors who bought shares worth 43.5 bln rupees till Thursday, according to provisional data available with the exchanges. This was despite institutional investors being net sellers of Indian shares this week. The only way the market is going to go up now is if the FIIs turn around their view and say they are going to buy the value story emerging in the market. A slew of data points will also be eyed, starting with the December HIS Market Purchasing Managers' Index which will be detailed on Monday. Traders will be looking at the data to gauge the impact of cash curbs on the informal economy. After a tumultuous, shaky and sometimes shocking year for the share market, indices ended 2016 on a resilient note. Heading in to the New Year, the picture, though, still remain foggy as multiple events that transpired in 2016 play out on the ground next year. From the actual impact of demonetization to the beginning of Donald Trump's presidency in the US, the first half of 2017 offers a lot of nervousness for the market. We expect weakness in the market to continue till at least March. As for the remaining part, we expect the market to enter into a strong bull run. We could see a turnaround in earnings from June quarter onwards due to lower base effect from Q1 of 2016. The Budget is expected to be a game changer in the New Year with market participants anticipating a slew of cuts in direct taxes and other stimulus for the rural economy. The roll out of the goods and services tax and an accommodating Reserve Bank of India are other major factors which the markets will be pining their hopes on for a revival in sentiment. In the short term, market is expected to remain volatile, but as the long-term growth story of the Indian economy is intact, it is expected that market would see 10-12% upside from here on in the New Year. Not all are that optimistic though. Given the uncertainties unleashed in 2016, it will be too far-fetched to make comments on the market's performance in 2017 beyond March.
