Market Outlook

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Market last week

Buoyancy in earnings helped the market to touch a new high as growth prospects of domestic economy overrode global headwinds caused by trade tensions. On the other hand, oil price hovering near the recent low and increasing exposure of FIIs in domestic equity gave direction to the market. However, weak global cues and volatility in rupee influenced profit booking in later half of the week trimmed some of the gains.

Market scaled to a new high on account of rise in FII inflows as earnings were largely in line with market expectation while positive guidance for sectors like consumer durable, pharma & select large caps helped market to gain positive momentum. Further, normal monsoon & government focus on rural segment also positively impacted consumer oriented stocks. Some respite was seen in mid & small cap stocks as worst of earnings seem to be over and investors are gradually turning positive with a bottom-up approach.

Week ahead

Consolidation in oil prices and in-line Q1 results were key reason for a trend reversal in domestic market. Sectors like NBFC, IT, FMCG were best performing sectors whereas worst performers were Auto & Cement. We are likely to see continuation of this momentum in the near term supported by improvement in earnings and reversal in FIIs flows. For the week ahead, CPI & WPI inflation data to be watchful, the consensus expects a moderation in both CPI & WPI.

Posted: August 2018

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