IT sector to remain in focus - Amrapali Aadya Trading & Investments

Mr. Abnish Kumar Sudhanshu, Director & Research Head, Amrapali Aadya Trading & Investments Pvt. Ltd.

Week began with nervousness on D-street. Throughout the week benchmark indices remained jumping up and down to close the week on negative terrain. Service PMI data, one of the economic indicators has disappointed the street by showcasing dismal number. In the coming week, benchmark indices to derive its clues from several global as well as domestic factors like US nonfarm payroll data, Union Budget, GST rollout, assembly election along with US HIB1 visa news. US nonfarm payroll data schedule for the today's evening is likely to provide some indication on future US Fed stance for interest rate hike. Furthermore, assembly elections in five States along with GST rollout to keep playing a very important role in the domestic market. So far opinion poll results are divided leaving no clues for any party winning with majority seats. However, benchmark indices are poised to get clear picture from the future polls and behave accordingly. We must say any news related to Victory of Modi govt in UP will lead to a rally in the market.

Moving ahead, key things to watch would also be Union Budget fever, which will keep playing its importance because we have held high hope from the Modi government in this budget. Since quite a sometime, GST dual control and cross empowerment issues continue to be pending and have been facing hurdles. Even during the fifth GST Council meeting on 3 and 4 December no unanimity could be reached on these two issues. Hence, any good news related to GST could add positive sentiments in the market. Still we would say weak policy uncertainties and poor investment outlook to keep hovering on the market. Moreover, benchmark indices to remain influenced by above mentioned factors and act accordingly. If we talk about the FII data, still they have been selling in the market so would rather wait and watch for the return to our country. During the week, we foresee indices to remain volatile amid several ongoing events, however IT sector to remain in focus after two US Congressmen have reintroduced a bill to curb the use of H-1B visas. Indian IT sector which is heavily dependent on H-1B is likely to be impacted most after the bill gets curbed. As per the news, new bill would require workers on the H-1B visa pay a minimum of $100,000, up from $60,000 currently. Furthermore, keeping the focus in budget, we would advise investors to look for exposure in Infrastructure companies.

Tech View

Market dipped on Friday's as traders opt to book profit on short term momentum oscillators reaching overbought level. Technical structure of the market looks shaky as market take away all the gain of Thursday and Friday when market not only break out the resistance channel of 8240 but also extended above its 200DMA of 8270 on Thursday and reached 8300 mark on Friday.

As market at the closing of Friday back to 8240 zone its look traders have skimmed the market and before taking renewed long call they will now have a keen watch on the long list of data coming out of US and domestic trigger such as early budget presentations, progress in GST roll out and most importantly political momentum going into the state polls. Market is heading for a sideways trading with positive biasness as expectations of FII back in Indian market and early budget is growing now.

Source : Equity Bulls

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