Market in consolidation mood

Mumbai: The domestic market is likely to remain lacklustre during the week with the government policy announcements and global geo-political events driving the investor sentiments.

According to experts, broad market is likely to witness further correction as mid and small cap indices are clearly making a corrective pattern along with majority sectoral indices which are also moving sideways.

Traders should ideally avoid trading during such low volatility corrective phases, analysts said.

“As expected Nifty finally managed to surpass the first hurdle of 11900 on a closing basis the past week. The major charioteer for this move was clearly the banking pack which has been showing some encouraging signs since couple of days. The way both indices are shaped up, 12000 or beyond is not too far now for our markets. Hence, we remain sanguine and expect the immediate support base to shift higher towards 11867-11802,” said Sameet Chavan, Chief Analyst-Technical and Derivatives, Angel Broking.

The Nifty50 failed to go past 12,000 due to weak macros, premium valuation and lack of fresh triggers. Post Q2 results, market seems to have entered an indecisive phase of trade having rallied well in the last 2 months. On the global front investors were concerned over fresh worries over the US-China trade tension.

“Going ahead, the market focus will be on next week Q2 GDP data which is expected to be below the 5 per cent reported in Q1. It is probable that the forecasted growth of 6.1 per cent for FY20 is likely to be downgraded further. At the same time, Nifty50 is trading at one year forward P/E of 19x & 26x on 12-month trailing basis which does not provide much leeway to perform in the short-term. Considering this, Nifty is likely to trade in a range of 11,600-12,000,” said Vinod Nair, Head of Research at Geojit Financial Services.

Foreign funds continued to be net buyer in the markets. Foreign portfolio investors (FPIs) infused a net Rs17,722 crore into the Indian markets in November so far amid encouraging domestic and global cues.

According to depositories data, overseas investors pumped in a net sum of Rs 17,547.55 crore into equities and Rs 175.27 crore in the debt segment during November 1-22, taking the cumulative net investment to Rs 17,722.82 crore.

However, some experts said FPIs are still wary of increasing their allocation to the Indian markets. Umesh Mehta, Head of Research at Samco Securities, said, "FPIs have become relatively cautious on India given the high valuations and Nifty hovering near its all-time high levels. Huge divergence between the large and small/midcaps is making them weary to commit further in a big way to the Indian bourses."

Also, the expectation of weaker GDP numbers in the coming months, among other factors, is making them "hesitant to invest full throttle", he added.