Uncertainty Takes the Upper Hand
Just before the Indian markets enter into a long weekend with Friday being a holiday on account of Guru Nanak Jayanti, market participants harboured a lot of hope from Thursday’s session. This session was apparently quite significant for market participants as they waited with bated breath for the listing of the country’s largest IPO i.e. Paytm. Not only this, but the key benchmark indices moving southwards for the second day in a row on Wednesday were also expected to bring to life the sentiments of the market participants with this listing. However, its listing can be summed up in one phrase, ‘much ado about nothing’, since it turned out to be a gloomy one.
The stock of One 97 Communications, the parent entity of digital firm Paytm, was listed at Rs 1,950 apiece on the NSE and it ended the day with a loss of 27.40 per cent from its offer price of Rs 2,150. Overall, the month of November has been quite unproductive when it comes to Nifty’s performance as in the last three years i.e. 2018, 2019 and 2020 in the month of November the index gained 4.7, 1.5 and 11.4 per cent, respectively, and despite trading in positive terrain on a MTD basis in the month of November 2021, Nifty has delivered gains of a meagre 0.52 per cent. However, in spite of the fact that the Nifty index has been offbeat when compared to last year’s November performance, the relative outperformance by the broader markets is quite profound.
The Nifty Mid-Cap 100 and Small-Cap 100 have delivered returns of nearly 3 per cent each in November 2021, while the average monthly return for Nifty Mid-Cap 100 is 2.4 per cent and for Small-Cap 100 it’s just 0.9 per cent – something that we mentioned in our last editorial about the broader markets displaying relative strength and that high-beta names from the broader markets may outperform in the near term. Talking about cues from the US’ markets, the global equities are in a risk-off mood. And interestingly, when the equities are in a risk-off mood, market participants are pushed on a back-foot as their vision is blurred by signs of worries.
At times this worry concerns inflation or it is on account of growth but to cut the long story short, the market has decided to sulk and that’s very clear with new current worry being about lower housing starts. In the US, the housing starts fell 0.7 per cent in October and single-family starts, which account for the largest share of the housing market, dipped 3.9 per cent. As the saying goes, all the bad things happen at once and this seems to be true for global equities as UK’s October inflation print followed the US in printing a decade high of 4.2 per cent YoY on headline CPI. Meanwhile, what can provide solace to market participants in India is the fact that crude oil fell below the 80 mark on Wednesday.
However, even though this may be perceived as a comforting factor, if you look at why crude oil fell sharply, it was triggered by all the wrong reasons and hence we feel it will not be that much of an advantage for India. Thus, looking at the overall scenario, even the permabulls will want to be cautious as no one has any clear idea about what news will rattle the markets in the coming three days. Technically, the biggest make or break support is seen at the level of 17,613. A breach of this support level would result into breakdown of Trader Vic’s bearish 1-2-3 price pattern. Hence, keep a close watch on the level of 17,613 in the near term.
