Amidst Thunderstorm; Stock-Specific Sunshine To Continue!
At the start of the week, worldwide markets were under a selling pressure as the maker of iPhones (Apple Inc.) had warned that it will not be able to meet its guidance for this quarter on account of supply and demand shortages induced by the virus. Market participants got cold feet that it will have a cascading impact on the rest of the companies as they might come out with their warnings. While everyone knew that the virus will dampen economic growth, Apple with its warning, belled the cat. Indian markets sliced through the all-important psychological 12,000 mark like a hot knife through butter. However, a recovery was seen at the tail end of Tuesday’s session and thereafter, there was no looking back for the bulls!
What has helped the markets to bounce back, that too at a brisk pace? Chinese government has initiated fiscal stimulus and monetary easing to combat the effects of Coronavirus. China is taking all necessary steps to ensure that the bottlenecks in production are removed fast. China posted the lowest daily rise in new Coronavirus cases since January 29. FED minutes indicated that the FOMC was pleasantly surprised with the strength of US economy. Also, they agreed that the threat of Coronavirus warranted close watching, which means that Fed is likely to cut rates despite resolving to hold rates, if the situation so warrants. Further, Finance Minister Nirmala Sitharaman mentioned that centre would come up with immediate measures required to address the operational issues being faced by the industry and ease congestion at ports as consignments from China pile-up amid Coronavirus scare, as reported by media.
We believe that China is likely to head back in action in full flow within a fortnight, which should be good news for our raw material-starved industries, which has disrupted supplies from China with the outbreak of Coronavirus. However, a silver lining in Indian economy is about to appear, after the dark cloud of Coronavirus slowed down China’s economy, as the world is now looking at other alternatives of Chinese markets. Though things might take time but certainly as we know, markets are far-sighted, not short-sighted and we believe that Indians would continue to propose and this sentimental shift would result into further flow of funds in India. Further, the upcoming visit by US President Trump will shift the focus of the entire world towards India. Market participants will keep a close watch on the visit of Donald Trump as the visit is aimed at smoothing ties strained by trade disputes.
Meanwhile, the yellow metal is back into reckoning as volatility in markets amid uncertainty regarding the global supply chain will return to normal directed investors to move towards safe havens. The gold prices moved above US$ 1,600/oz.
The technical landscape which was completely in favour of the bears at the start of the week has certainly changed its course. However, our call for the week is that the markets may witness a see-saw trading throughout the week, which means it may oscillate in a range of 11,940- 12,240. In case, Nifty closes above 12,240, we could witness a renewed interest from the momentum players and this may lift the markets further higher. At the same time, we believe a stock specific action is likely to continue and the market participants may take advantage of this and reap profits.
