Market Outlook

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Market Last Week

Market had a blood bath this week fueled by concerns about tax surcharge on FPI’s and no earnings recovery visible in the ongoing Q1 result. Global sentiments was hurt by hawkish cut statement of FED and further tariff announcement by Trump on Chinese goods. Broad based selling was witnessed across the sectors where Bank Nifty  was down 3.82%, Nifty Auto was down by 3.18% and Nifty Metal by -8.67%. Given the weak sentiment in the broad market, even the good quality blue chips stocks witnessed consolidation. Foreign investors were net sellers in the tune of Rs.3903 crore during the week (till Thursday). A late recovery was seen on Friday based on hope that government may consider a relief for FPI’s on tax surcharge.

Market week ahead

We may see some bounce back if any relief is announced on FPI surcharges. For the week ahead, RBI policy meet will be a key event to watch for. Based on the current state of the economy a rate cut is warranted and consensus suggest 25bps cut in repo rate which may not be good enough to provide a respite to the markets. However, the other factors on which the market is concerned about are emerging trade-war, weak monsoon, extension in NPA issues and delay in corporate earnings. Having said that, investors may consider low leveraged and high quality stocks in sectors which have attractive outlook in the future such as Private & Rural Banking, Cement, Infrastructure EPC, Chemicals, Aviation & Consumer.

Posted: August 5, 2019

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