Market will depend on RBI policy and IIP data : Amrapali Aadya Trading & Investments

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

Week began with Donald Trump protectionism policies and uncertainty over GAAR. Investors and traders remained cautious ahead of Union Budget schedule on Wednesday. Additionally, all the IT major remained blended in the trade after Donald Trump administration has drafted an executive order aimed at overhauling the work-visa programs, including the H1B and L1 visas. Finally on Wednesday, the Union budget tabled in the parliament and indices cheered as Jaitley's speech progresses in the Lok Sabha. Post demonetization, much awaited Union budget sent the wave of positivity in the market which brought the benchmark indices to trade with the gain of more than a percent for the day. Market participant took the budget as 'No Bad news is good news. In the budget, focus remained more on the growth of rural India keeping the fiscal consolidation in place and much needed boost to the stalled economic activities post demonetization. Additionally, several companies have reported better than expected quarterly results, hence adding fuel to the optimism.

Going ahead in coming week, several factors are likely to play important role in the deciding the direction of benchmark indices. Post Union budget, important RBI monetary policy which is due on coming Wednesday, are likely to be nonevent. Though, the fiscal discipline target set by Mr. Jaitley gives the best case for the rate cut in the event, however we still remain with dual mind of the receiving the cut in the immediate policy meet. Another vital economic data i.e. Industrial production (IIP) schedule in the same week is expected to remain on the softer note following the short disruption in the economic activity amid note ban. Nevertheless, we believe market seems to be already factored this soreness. Furthermore, quite a lot corporate are yet to declare their quarterly earnings in the coming week, we expect indices to take cues from their earnings growth as well. Last not the least, we expect approaching U.P. election fever to remain hovering on the stock market. Recent, U.P. opinion poll suggested slight difference between the vote shares of the BJP and newly form SP-congress alliance. 2017-18 union budget focus was mainly on rural development, thrust on infrastructure and poverty alleviation while keeping fiscal prudence in the right direction. We believe the proposed union budget would be successful in attractive opposition vote in the U.P. election. Hence, any further optimism in regards to victory of BJP in U.P. could further bring the cheers in the market. Overall, we expect market to remain waiting for a trigger to move upside on the back above mentioned reason and move accordingly. We advise investors and traders to keep eyes on IT and rural exposure sectors for the coming week.

Technical View:

Is the rally sustainable? Every investor is looking for the answer of this question after the recent rally. Earlier instances shows a relief rally generally fade way unlike one which was fueled by fundamental optimism. Market is likely to stay here after recent up move as it is on the back fundamental optimism. Technical indicator revealed market remains a buoyant as broader market and benchmarks both indices are approaching towards their 52 week highs despite of non-participation of two highly weighted sector such as Pharma and IT. Going ahead state election outcome to dictate the market trend which will be makes or break, till then there will be a consolidation between 8500 - 8900.

Source : Equity Bulls

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