Indian Markets To Consolidate; Global Cues Not Comforting

Even as market experts reiterate the bull run being intact in the country's equity markets, some of the street smart traders may be stashing up cash to take advantage of the current correction in the markets. Markets are down by not more than 2 per cent from recent highs at the time of sending this report to print.

Globally the equity markets seem to have taken a breather with several key markets taking a momentary pause too. The US markets are trading close to its record highs and have retraced from record highs by almost 3.5 per cent as on September 28. Dow Jones Industrial Average traded flat inching up by 0.05 per cent whereas Nasdaq gained 2.57 percent in the later part of September. The Asian markets however struggled with Hang Seng losing ground by 3.24 per cent and Shanghai trading down by 3.20 per cent over the period under consideration. The European markets also traded weak with CAC 40 closing down by 1.86 per cent and DAX inching down by 1.70 per cent in past 15 days.

Sensex is down by 0.21 per cent in the last 15 days. RIL stock has been the highlight for past few trading sessions with the stock making its fresh 52 week highs as we file this report. Stocks in the telecom space have also been struggling since the Reliance JIO Infocomm Ltd announced its plans. Idea has been making its lows indicating the margin pressure due to expected price war in the industry.

Stocks like HPCL (+ 7.82 per cent), BPCL (+ 6.10 per cent), Bharat Forge (+6.10 per cent), Hindalco (+ 5.95 per cent) and Eicher Motors (+5.87 per cent) were seen gaining momentum in the recent trading sessions. Whereas Axis Bank (- 7.30 per cent), Gujarat Ambuja (- 5.29 per cent), Idea Cellular (- 5.01 per cent), Marico (- 4.51 per cent) and ICICI Bank (-3.90 per cent) were seen losing momentum in past week.

FPIs have been net buyers in the Indian equities to the tune of Rs 2063 crore in the past couple of weeks. The DIIs however have preferred to remain sellers by selling worth Rs 85.47 crore for the similar period. Mid-cap and small-cap stocks outperformed the broader markets as indicated by the indices gain. In 15 days' time frame mid-cap index gained 2.39 per cent and the small-cap index gained almost 2.51 per cent. Interestingly metal index gained almost 2.10 per cent outperforming the broader market. Banking stocks disappointed with the index sliding down by almost 1.30 per cent.

On the commodity front, gold prices remained within range. Crude oil along with metal prices have seen some recovery.
All eyes are set on the next RBI meet scheduled to take place on October 4. Stakeholders will be closely watching the new RBI governor, Urjit Patel's take on general economy and inflation levels in particular. We expect markets to be range bound with a downward bias. Investors can expect to get a bargain opportunity due to correction in prices to build a long term portfolio.