Sudden Shock to Indian Markets - Karvy

The Central Statistics Office's (CSO) startling forecast of a 5% GDP growth for the year has sent the markets in a tailspin. On Friday the Sensex tumbled to its 2013 low of 19485 marking an unabated sevenday slide. Less than impressive results from Mahindra, and cement biggies Ambuja and ACC precipitated the fakll. CSOs numbers are not the most accurate oftentimes and it is likely to be revised upwards soon. But such a dramatically low estimate, when the RBI just last week expected a 5.5% GDP growth set the cat amongst the pigeons.

Another intriguing piece of data came from the Planning commission affiliated Indian Institute of Applied Manpower Research which suggested that for the last decade, job creation in the organized, non-farm sector had slowed down. As a result of the fall in the Sensex, the rupee too was dented. Its losses extended for the third straight session. During the week, the Sensex fell 1.5 and Nifty lost 1.6 percent, posting their biggest weekly losses since September 1, as the government's weaker-than-expected GDP growth forecast of 5 percent on Thursday disappointed the market.

For the week, the Nifty extended its corrective phase that begin form the recent high of 6112 levels, and has posted a fi ve-week low of 5883 level on Friday's session. The Nifty has lost about 1.50% W/W, the biggest weekly loss since 19th December, 2012. The IT and Auto sectoral indices had seen healthy participation outperforming the broader markets. On the other side, Consumer Durables, Metals, Energy, Realty, Capital Goods and Banking sectoral indices have underperformed the benchmark indices. Long positions can be assumed in Auto and IT if the Nifty sustains above 5900 levels. Short positions can be accumulated in Banking, Capital Goods, Cement, Realty, Metals, Pharma and Utilities if the Nifty breaches 5900 levels. Overall, we expect Nifty to trade in the range of 5850-6000 levels for next week. However, a breakthrough of this range would lead to high volatility in the market.

Source : Equity Bulls

Keywords